Hst For Businesses In Ontario By Accountant Mississauga Oakville

HST for businesses in Ontario by Accountant Mississauga Oakville

by

Allan Madan

HST for businesses in Ontario by Accountant Mississauga Oakville

If you are a business owner, it is very important that you read this article because HST came into effect on July 1st, 2010 and will certainly impact your business.

What is HST? – HST for business in Ontario – Accountant Mississauga Oakville

HST stands for the “Harmonized Sales Tax,” which is levied at a rate of 13% on the sale of goods and services in Ontario. Prior to HST, there were two types of sales taxes in Ontario. One was the Federal GST (Goods and Services Tax) charged at a rate of 5%, and the other was the Ontario PST (Provincial Sales Tax) charged at the rate of 8%. GST applied to both goods and services, while PST applied mostly to goods and a few select services.

“HST for businesses in Ontario is here to stay, and it’s important for business owners to understand the implications to their business,” says Allan Madan, Accountant in Mississauga and Oakville.

Why did the government introduce HST in the first place?

The reason the government introduced HST is to streamline the two sales taxes. So, instead of having to pay 5% GST and 8% PST, it is simply easier to pay one tax of 13%.

More importantly, HST eliminates hidden taxes. As a business owner under the old tax regime, you would pay PST on many expenses and purchases. The PST of 8% was non-recoverable to you as a business owner, and therefore decreased your profit margins and increased your expenses.

You should speak with your accountant in Mississauga / Oakville to determine the effect that HST has on your business’ bottom line.

HST is Recoverable – HST for business in Ontario – Accountant Mississauga Oakville

HST paid on purchases and expenses is recoverable. An input tax credit, which is the tax term for HST paid on purchases and expenses, is fully refundable when your business files its HST Return. HST Returns are filed either quarterly or annually depending on your business’ sales volume.

By eliminating the Ontario PST, which is a non-recoverable sales tax, and by implementing the HST, which is a recoverable sales tax, business margins and profits have increased. In addition, the HST makes Ontario a more business competitive province, because many other provinces in Canada already have the HST.

HST Rebates – HST for business in Ontario – Accountant Mississauga Oakville

HST rebate cheques are being mailed to businesses in Ontario by the Ontario government to compensate business owners for having to streamline their business processes to account for the new sales tax. If you are a small business owner and you have sales of less than 2 million dollars, you should receive a check of up to $1,000.

“If you haven’t got yours yet, I encourage you to call the Ontario Ministry of Finance as soon as possible,” says Allan Madan, Accountant Mississauga, Oakville.

Disadvantage of HST – HST for business in Ontario

The major downside of HST is that HST is applicable on services. Under the old tax regime, services were generally subject to the 5% GST and not the 8% Ontario PST. Therefore, businesses that sell services now have to charge 13% HST, which is an increase of 8%.

Unlike business consumers, individual consumers cannot recover the HST. Therefore, individual consumers will certainly be upset about the 8% sales tax increase, which can negatively impact your company’s sales.

Many accounts in Oakville and Mississauga have differing opinions on the benefits of HST in Ontario, and only time will tell if enacting HST in Ontario was the right decision.

About the Author – Allan Madan – Accountant Mississauga Allan Madan is a Chartered Accountant in the Mississauga and Oakville regions of Ontario, Canada. If you found this article useful, Allan Madan encourages you to visit his website

madanca.com

for additional tax tips and more information on this topic. You can also call Allan Madan at 905-268-0150.To get access to your Free Report, “20 Tax Secrets on How to Beat the Tax Man,” see

siteproweb.com/20-free-tax-secrets-from-allan-madan

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