IMPORTANT UPDATE!

CRA has a transitionary period effective May 1st that requires some products and services purchased May 1st or after, that will be used or consumed after July 1st, may be subject to HST.  There are many details regarding this however the general rules for BC and Ontario are:  insurance products are not subject to any tax with the exception of extended warranties; extended warranties that include oil and filter services that will be consumed after July 1st, are subject to HST now.  To obtain a definate response from CRA Rulings to determine if the extended warranty policy/policies you sell are subject to this transitionary period, a formal request must be faxed to them to review the specific policy in question.  Considering this, the vendors of extended warranty policies should have CRA Rulings determine if their policy/policies are exempt from the May 1st transitionary rules.  General guildelines are open to interpretation and can present a tax liability to your dealership at a later date if they deem that your dealership did not follow the proper tax procedures.  CRA Rulings are final and any changes to HST interpretations will be superceded by a formal CRA Ruling on specific policy/policies.  Transitionary rulings applicable to Etch and Anti-Theft products should be directed to your product vendor so they can get a formal CRA Ruling on that policy also.

Canada Revenue Agency has published an info sheet that “…explains whether the goods and services tax (GST) or the HST applies to sales of exclusive products made by direct sellers and independent sales contractors (ISCs) in Ontario and British Columbia during the period that includes July 1, 2010…”

For the full publication, click here

Worth the time to attend!The Canada Revenue Agency is hosting FREE seminars in various cities and towns throughout BC to help ensure that businesses receive the information they need for the transition to the federal administration of the harmonized sales tax in BritishColumbia.  Registration is required as seating is limited.  Refer to the city listings for dates, times and locations available in your area.

If you have a customer that is considering to purchase a warranty “later”, remind them that you can save them 7% if they purchase it today…after July 1, 2010, that same warranty will be subject to 12% HST rather than only 5% GST today!

An important note for motor vehicle dealerships:  Although HST is officially in full effect on July 1, 2010, there is a transition period that begins May 1, 2010.  For example, “goods” purchased, such as a vehicle, after May 1, 2010 but not taken delivery/possession of until after July 1, 2010 (a factory order for example), are subject to the 12% HST.  This makes no difference to the customer but it will affect internal accounting applications.  The transitioning phase from May 1, 2010 to July 1, 2010 has many caveats to be aware of and your questions about how HST affects the various aspects of an automotive dealership will be addressed at these information sessions.

What’s YOUR Willingness to be a Top Performer?

This information is a direct excerpt from the CRA web site. Although it is general information provided for ALL vendors, it will apply to business managers in the auto industry, if faced with any of these circumstances. Knowledge is Power, be aware of these critical updates before you are confronted with something you are unfamiliar with:

“Individuals claiming a GST/HST exemption
Vendors should be aware that a number of individuals are claiming exemptions and in some cases are presenting a card not recognized by the CRA in an attempt to avoid paying the GST/HST. Examples of invalid tax exemption cards include: Corporation Sole, Indigo Foundation of the Child, and International Humanity House cards. Such cards do not entitle individuals to exemption from the GST/HST. As well, a bill-of-sale from a previous transaction, showing that no tax was charged, does not lend any validity to a card such as those listed above.

The only individuals who can purchase taxable goods and services without paying the GST/HST are Indians who present a Certificate of Indian Status card that is issued by Indian and Northern Affairs Canada and who receive goods or services on a reserve. Please note however, that citizens of First Nations having a final or self-government agreement ending Indian Act tax relief while retaining their Certificate of Indian Status card are no longer entitled to tax relief. This set of circumstances is discussed in GST/HST Notice 238, First Nations Having a Self-Government Agreement Ending Indian Act Tax Relief – Determining Tax Relief for Indian Members who are not Citizens. As well, Métis individuals who present their Métis cards are not entitled to tax relief.

Please note that registrant vendors who do not collect the GST/HST from an individual falsely claiming to be exempt from the GST/HST must still remit the tax that should have been collected.

If you have questions about the GST/HST call the Business Enquiries line at 1-800-959-5525. For more information on tax myths visit the CRA Internet site at www.cra.gc.ca/myths. For more information about sales to Indians and the GST/HST, please consult GST/HST Technical Information Bulletin B-039, GST/HST Administrative Policy: Application of GST/HST to Indians.”

Click Here for Direct Link to News Publication

NOTE:  Members of Profit Drivers web site have direct access to GST/HST Technical Information Bulletin B-039, see TAX, INSURANCE & LEGAL menu tab, “Application of GST to Native Status Buyers” subheading.

What’s YOUR Willingness to be a Top Performer?