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Administration of the Provincial Sales Tax Reformed in Ontario and British Columbia 

On July 1, 2010, the Harmonized Sales Tax (HST) will be introduced in Ontario and British Columbia by combining each province's sales tax with the GST. Further to this tax reform, new measures will apply to certain clienteles.

To simplify the administration of the HST, the HST will generally apply to the same tax base as the GST and under the same rules. The tax rate will be 13% in Ontario and 12% in British Columbia.

The following information is provided to help businesses prepare for the sales tax administration reform. It is the only information available at this time. Legislative provisions should be adopted by the time the HST becomes effective.

Transitional measures

Transitional rules will be used to determine whether the current retail sales tax or the provincial portion of the HST will apply to a transaction made soon before or after the effective date of July 1, 2010.

In general, the transitional rules apply as of the earliest of the following two dates:

  • the date on which consideration for a supply becomes due
  • the date on which consideration is paid without having become due

Under the Excise Tax Act, consideration for a supply becomes due on the earliest of the following dates:

  • the date the supplier first issues an invoice for the supply 
  • the date of the invoice 
  • the date the supplier would have issued an invoice for the supply had it not been for an undue delay
  • the date the recipient of the supply is required to pay the consideration pursuant to a written agreement

The transitional rules principally apply to the supply of tangible and intangible personal property, real estate and services, on the basis of whether consideration becomes due or is paid:

  • after June 30, 2010
  • after April 30, 2010, but before July 1, 2010
  • after October 14, 2009, but before May 1, 2010

For more information about the transitional measures, consult the Administration of the Provincial Sales Tax Reformed in Ontario and British Columbia section of our website.

Input tax credits and temporary restrictions

As a rule, businesses registered for the GST/HST may claim input tax credits (ITCs) for the HST paid on purchases of taxable goods and services.

However, financial institutions and large businesses whose annual taxable sales, including exempt goods, exceed 10 million dollars, cannot claim ITCs for the following goods and services used in taxable activities:

  • energy (except for energy acquired by farming operations or used to manufacture goods for sale)
  • telecommunication services (except for Internet access and toll-free telephone numbers)
  • road vehicles weighing less than 3,000 kilograms (including parts and certain services)
  • fuel required to power such vehicles
  • food, beverages and entertainment

These temporary restrictions are in effect for the implementation stage of the HST and only apply to the provincial portion of the tax.

New requirements pertaining to the filing of tax returns

Financial institutions and large businesses

Financial institutions and large businesses must provide additional information when filing their tax returns. They will be required to detail the ITCs corresponding to purchases subject to restrictions in Ontario and British Columbia.


The GST/HST collected on the sale of new housing must be indicated separately on the builder's tax return where the sales contract, taking of possession and property transfer happen partially before and partially after July 1, 2010.

Builders will also have to report separately the portion of inputs claimed corresponding to new housing rebates transferred by buyers.

Consult the Canada Revenue Agency document entitled Harmonization of the Sales Tax in Ontario and British Columbia.

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