TORONTO—In the first of two webinars hosted by RGD Ontario last week, Toronto-based Segal LLP chartered accountant Allan Taitz discussed the upcoming Harmonized Sales Tax and its effect on the design industry.

HST, which goes into effect this Thursday, July 1, is composed of 5% federal tax and 8% provincial tax for a total of 13%. Generally, the rules for HST are similar to those for GST with some exceptions.

Suppliers have been required to collect HST since April. Recipients may be required to self-assess Ontario HST from October 15, 2009 to April 30, 2010, says Taitz. This would be the case if the supply is not exclusively used for commercial activity, if the supply is set to Input Tax Credit (ITC) restriction, if a non-consumer is using a simplified procedure for calculating Net Tax (i.e. small business, certain charities), or if a selected listed financial institution is using the special attribution method for determining Net Tax.

Where service is concerned, HST is applied when the service is performed after June 2010, says Taitz. It can be pro-rated if some of the service is done before July and the rest is completed after. No HST is required if 90% or more of the service is completed before July. Similar rules apply for memberships and admissions, he says.

General items that are not taxed under HST include:

• Children’s clothing and footwear
• Children’s car and booster seats
• Diapers
• Books
• Feminine hygiene products
• Print newspapers
• Prepared food and beverages sold for under $4

Contact: Rgdontario.com, Segalllp.com

How are you preparing for the impending HST? Are customers concerned? Are you offering discounts to help alleviate some of the inflation from this new tax?