Updated GST information online

The GST drops 1%, from 7% to 6%, beginning July 1. The federal component of the Harmonized Sales Tax (which applies in Nova Scotia, New Brunswick and Newfoundland and Labrador) also drops 1% on that date, meaning the HST is reduced from 15% to 14%.

The reduced GST rate applies to invoices billed on July 1 or later, even if the work was performed prior to July 1. Accordingly, lawyers are not required to prorate their unbilled work in progress.

The Canada Revenue Agency website now features updated information that lawyers will find helpful for their own billing of GST and also for the application of GST in various transactions: see “Reduction in the Rate of GST/HST” at www.cra-arc.gc.ca/agency/budget/2006/gstrateqa-e.html#infob..

On the webpage you’ll find a Q & A section as well as several information sheets on tax transition issues. Lawyers involved in real estate transactions will wish to consult “GI-015 GST/HST Rate Reduction and Purchasers of New Housing” which addresses the application of GST in taxable sales of real property, transitional rules for residential complexes and rebates.

The GST changes were introduced in Bill C-13 (Budget Implementation Act, 2006) as amendments to sections 256.3 to 256 of the Excise Tax Act.