Direct Shipping and GST/HST

July 12, 2012

GST / HST Basics

Taxable, Exempt and Zero Rated

• What is the difference?• What are the implications?• When do you need to register?

HST Review – Two Years Later

• Rates across the country - what are they• If you are registered for GST you are registered

for HST• HST is applicable to everything GST is

applicable to• Ability to claim ITC’s if you are carrying on

taxable activities

GST/HST & PST Rates

• BC 12% HST• AB 5% GST• SK 5% GST and 5% PST• MB 5% GST and 7% PST• ON 13% HST• QC 5% GST and 9.5% QST• PEI 5% GST and 10% PST• NS 15% HST• NB 13% HST• NFLD 13% HST• Territories 5% GST

Direct Shipping Rules

• What are you selling?

• Where are you selling?

Place of Supply - Examples

• Wine– Winery is in BC– Trucking Co. from BC delivers case of wine to

Moosejaw– Terms of contract are FOB Penticton– Winery arranges for delivery and adds freight charge

to invoice– What rate of tax is applicable? 12% or 5%?– Is there any PST applicable?

Examples

• Wine and T-shirts ( 10 cases of each)– Winery is located in Oliver– Customer is located in Markham, ON– Terms are FOB Oliver– Customer sends their own truck to pick up the goods

– What is the rate of tax applicable?

Examples – Online Sales

• Mr. Orchard wants to order some limited edition wine from his favourite winery in Naramata.

• Mr. Orchard lives in Calgary and completes the transaction online from his home in Calgary.

• Mr. Orchard is coming to the Okanagan so has made arrangements to pick up the wine on his next trip here.

• What rate of tax is payable?

Shipping

• Mr. and Mrs. Smith are visiting Kelowna for a summer vacation. They decide to order three cases of wine from their favorite winery. As they are flying they arrange with the winery to have the winery ship the wine back to their home in Saskatoon after they finish their holiday.

• What rate of tax is applicable?

What Happens After April 1, 2013

We will go back to the GST at 5% and PST at 7%, (Liquor tax at 10%)

Legislation was released May 2012

Regulations – with all the details will be released in the Fall of 2012

GST & PST

• Invoices issued after April 1, 2013 will be subject to GST and PST if applicable

• Example:• Your accountant is working on your year end in March of

2013 and everything is finished April 2013. The invoice for the work is issued April 18, 2013. The invoice will just have GST at 5%

GST & PST examples

Purchase of wine making equipment. Contract is negotiated in February of 2013. The equipment is shipped and delivered on May 1, 2013. Once the equipment is delivered the supplier issues an invoice.

What rate of tax is applicable? 12% HST, 5% GST, 7% PST or a combination?

Final Year of HST in BC

• Biggest impact is for residential construction• Enhanced Rebates available for Residential projects• Penalties applicable to builders who do not provide proper

disclosure

What do You Need to Do Now?

• Review your computer systems and other processes

• Review ongoing long term projects• Review Inter-corporate Transactions• Call MNP

We Can Help

Any Questions?

Heather Weber, CGA

250-979-2575