The Harmonized Sales Tax will soon be applied to every province, and almost every Canadian small business.
The Canadian government's decision to extent the Harmonized Sales Tax will take effect in July 2010. It might be worthwhile to investigate what the HST means for small businesses.
The HST essentially stipulates that small business owners collect the GST and provincial RST on goods and services simultaneously. The HST tax rate is set at 13 percent, with 8 percent allocated for provincial governments and 5 percent for the federal government.
Most of the nation's SMEs have been collecting HST for quite some time. But for entrepreneurs who have never collected this small business tax, the implementation of HST will translate into increased sale prices and software updates to ensure registers charge the correct amount.
A survey from the Canadian Federation of Independent Business' Ontario Sales Tax Reform survey shows that 57 percent of small business owners new to the HST already collect both RST and GST. For this majority of entrepreneurs, the HST might actually be a good thing - it will result in higher input tax credits and less tax filing paperwork on upcoming tax returns.
