Date: May 2010

To: Chief Financial Officers, Deputy Chief Financial Officers and Functional Heads of Administration

Subject: HST: Treasury Board Authorities, Transition to HST in Ontario and British Columbia, New Place of Supply Rules and Increase to HST Rate in Nova Scotia

Further to the HST Bulletin for Ontario and British Columbia sent by my office on February 25, 2010, we would like to share additional information and updates received since then. Please note that certain provisions could apply as of May 1, 2010.

TREASURY BOARD AUTHORITIES AND HST CHANGES

For departmental transactions and Treasury Board submissions approved prior to the decision to adopt the HST in Ontario and British Columbia, or to the announced HST increases in Nova Scotia, which did not include HST in the estimated expenditure amounts, there is no requirement to seek new or amended Treasury Board approval authority for expenditures related to the introduction of HST in Ontario and British Columbia, or to the increased HST in Nova Scotia.

Should you require further information regarding the impact of the GST/HST on transactions requiring Treasury Board approval, please contact your TBS program sector.

TRANSITION TO HST IN ONTARIO AND BRITISH COLUMBIA

Following are items of particular interest to federal departments.

Employee Reimbursements paid on or after July 1, 2010

The factor rates for the calculation of the amount of HST on reimbursable expenses are as follows:

  1. 12/112ths (or 10.71%) of the total amount of reimbursable expenses incurred in Ontario
  2. 11/111ths (or 9.91%) of the total amount of reimbursable expenses incurred in British Columbia

Employee Allowances paid on or after July 1, 2010

The factor rates for the calculation of the amount of HST on allowances are as follows:

  1. 13/113ths (or 11.50%) of allowances paid for expenses incurred in Ontario;
  2. 12/112ths (or 10.71%) of allowances paid for expenses incurred in British Columbia

Municipal Rebates

Since September 1, 1992, the federal government registrant has been designated as a municipality for the purposes of section 259(1) of the Excise Tax Act, i.e., for the making of the supplies described in sections 22 and 23 of Part VI of Schedule V ( water, sewer and drainage services). As a result of this designation, a 100% rebate is available for the GST and the federal part of the HST paid or payable on inputs consumed, used or supplied in the course of the designated activities that involve making these exempt supplies.

With respect to the provincial part of the HST paid or payable on inputs consumed, used or supplied in the course of the designated activities that involve making these exempt supplies, the HST rebate available for the provincial part for municipalities located in Ontario is 78% while the HST rebate for the provincial part for municipalities located in British Columbia is 75%.

NEW PLACE OF SUPPLY RULES FOR HST

The Department of Finance has announced proposed changes to the Harmonized Sales Tax (HST) place of supply rules in the regulations made pursuant to the Excise Tax Act. These rules specify whether, and at what rate, suppliers must charge the provincial component of the HST on their supplies of taxable property and services in Canada.

CRA has published GST/HST Technical Information Bulletin B103 that explains these proposed rules.

Note that the new place of supply rules explained in this publication would, subject to legislative approval, apply to any supply made on or after May 1, 2010, and any supply made after February 25, 2010 and before May 1, 2010, if the consideration for the supply has not become due, and has not been paid, before May 1, 2010.

INCREASED HST RATE IN NOVA SCOTIA

Effective July 1, 2010, the HST rate in Nova Scotia will be increased to 15 per cent.

Under a new Comprehensive Integrated Tax Co-ordination Agreement with the federal government, the provincial portion of the HST will change from 8 per cent to 10 per cent. The provincial government has released transitional rules to prepare both consumers and suppliers for this rate change and other HST adjustments. The rules are found on the following website:

Please note that the increased rate could apply as of May 1, 2010.

Employee Reimbursements paid on or after July 1, 2010

The new factor rate for the calculation of the amount of HST on employee reimbursements is 14/114ths (or 12.28%) of the total amount of reimbursable expenses incurred in Nova Scotia.

Employee Allowances paid on or after July 1, 2010

The new factor rate for the calculation of the amount of HST on allowances paid for expenses incurred in Nova Scotia is 15/115 or 13.04%. .

Municipal Rebate

Since September 1, 1992, the federal government registrant has been designated as a municipality for the purposes of section 259(1) of the Excise Tax Act, i.e., for the making of the supplies described in sections 22 and 23 of Part VI of Schedule V ( water, sewer and drainage services). As a result of this designation, a 100% rebate is available for the GST and the federal part of the HST paid or payable on inputs consumed, used or supplied in the course of the designated activities that involve making these exempt supplies.

Note that Nova Scotia has not changed the rebate factor for municipalities for the provincial part of the HST; it remains 57.14%.

TBS/OCG INQUIRIES

Financial Management Community: Should you require further information about this notice please contact Anna Marinelli CGA, Financial Management Policy Division, at 613-954-3692 or by e-mail at Contact Anna Marinelli by email: Anna.Marinelli@tbs-sct.gc.ca

All others: Should you require further information regarding the impact of the GST/HST on transactions requiring Treasury Board approval, please contact your TBS program sector.

Original signed by Bill Matthews

Assistant Comptroller General
Financial Management and Analysis Sector
Office of the Comptroller General

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