FAQ: Ontario’s new ‘single sales tax’ - Macleans.ca

FAQ: Ontario’s new ‘single sales tax’

Answers to the most common questions about the new harmonized tax

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How much is it going to be?
The tax will be 13 per cent—the sum of the existing PST (8 per cent) and the GST (5 per cent).

When does it come into effect?
July 1, 2010.

What’s the point of putting the two together if the tax rate is no different than the current one?
The McGuinty government claims the measure will save businesses as much as $500 million by making it quicker and easier to file taxes. The move will also exempt companies from paying any sales tax on purchases aimed at making taxable goods for sale and for which they currently pay the PST. Exported good would be similarly exempt.

Are there any other exemptions?
Yes. Books, children’s clothing and shoes, children’s car seats and car booster seats, diapers and feminine hygiene products—all of which were already tax-exempt—will not be subject to the single sales tax.

Will it increase the tax on any items?
Home renovations, gasoline, home-heating oil, haircuts and fast food, for which the PST doesn’t currently apply, will be subject to the harmonized rate. So prices for those items will increase by eight per cent.

Can I get any of it back?
The province claims its wide-ranging tax reform package, which includes tax cuts for businesses and individuals, will end up slashing the vast majority of Ontarians’ tax bill by about 10 per cent. It has also negotiated to have Ottawa help offset the costs of the new single sales tax by mailing rebate cheques to most residents.

How does the rebate work and when do I get the money?
Families earning less than $160,000 and individuals earning less than $80,000 will receive $1,000 and $300, respectively. The first cheques will be mailed out in June 2010, with subsequent payments taking place in December 2010 and June 2011.

How much money will the government make?
Finance department officials say the entire tax reform package will cost the province $2.3 billion, not counting the $4.3 billion Ottawa will contribute to ease the transition to a harmonized tax. The single sales tax, however, will generate over $2 billion in extra revenue for the province.