A new BMO survey shows that Ontario business owners are apprehensive when it comes to how they will be affected by the introduction of the harmonized sales tax (HST) on July 1.
The survey, conducted by Harris/Decima, found that 51 per cent of Ontario business owners expect the impact will be negative, while 33 per cent believe it will have a positive effect.
“The Ontario Government estimates that the HST will save businesses in the province about $4.5 billion annually,” said Sal Guatieri, Senior Economist, BMO Capital Markets. “The savings will encourage investment, helping to boost productivity and the province’s competitiveness.”
“Businesses in Ontario will be affected by the implementation of HST as it will lower costs and should encourage investment in the province,” said Mark Shoniker, Director, Commercial Banking, BMO Bank of Montreal. “But businesses will also have to make some adjustments so they are ready for the changes that will come with the HST.”
Tips and Advice on Preparing for the HST Include:
Revise Your Budgets
Some items you would normally purchase and recover under the provincial sales tax (PST) may not be recoverable with the HST, which could affect your budget. Conversely, most businesses that now sell GST-taxable goods and services, including exports, will be able to claim input tax credits (ITCs) for any HST paid on assets and expenses.
Adjust cash flow forecasts
Purchases that are currently exempt from PST, such as telephone equipment and computers or office supplies, will now include HST which can be claimed as an ITC. The cash flow for your business may be affected because of the time interval between paying for the HST and getting the ITC refund. Take this lag into consideration and revise the projections for your cash flow.
All invoices should be changed to include the new tax rate on applicable goods and services. They should state the proper rate, your GST/HST registration number and any other information that should be indicated according to Canadian Revenue Agency regulations.
Review eligibility for credit
Businesses that make less than $2 million in annual revenue from taxable sales are eligible for a $1,000 credit from the Ontario government. If your business falls into this revenue category, fill out a form to receive the credit.