The following is a guest post by Christina Zurowski, co-founder of Veridical Tax Advisors Inc., a Canadian sales tax advisory firm specializing in Canadian sales tax advisory services for both Canadian and international businesses, and returning guest blogger, Diane Yetter, founder of the Sales Tax Institute.
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What is that expression – there is nothing sure other than death and taxes? When we are talking about sales tax the expression may more aptly be, nothing is sure other than death and changes to sales tax.
The changes in the Canadian sales tax system over the last few years, and the upcoming changes for 2013, clearly prove that point and have left many organizations scrambling to stay on top of their Canadian compliance obligations. 2013 is not proving to be any different with the unprecedented deharmonization and return to a Goods and Services Tax (“GST”) and Provincial Sales Tax (“PST”) system in British Columbia (“BC”), harmonization in Prince Edward Island (“PEI”), and a “quasi” further harmonization in the province of Quebec.
Staying on top of these changes can be a daunting task – knowing the key issues to communicate to other departments so that your organization remains compliant on both the collection side – so that invoicing to your customers is correct; and on the purchasing side so that the tax is appropriately paid, and where possible, recovered.
Do we have plan in place?
- What is the risk to our business for not implementing these changes on a timely basis, either from a customer relation perspective, out of pocket cost, or tax compliance perspective?
- Who should lead the sales tax transition project?
- Which systems are impacted (often more than just your invoicing systems)?
- Who or which departments need to be involved to ensure that all systems are appropriately updated?
- What is the effective date of the changes?
- What are the transitional rules and the key dates for these changes?
- Can we complete adequate testing of all changes prior to the implementation date?
- What types or degree of training is required internally, to our customers, or others?
Some additional questions related to the “deharmonization” of BC from the Harmonized Sales Tax (“HST”) regime on April 1, 2013 are:
- How do the new registration and filing requirements impact our organization?
- What are the key changes to the new BC sales tax that make the transition back not as easy as simple as reverting back to the old BC sales tax tables that were in place prior to July 1, 2010?
- Are there any significant legislative changes that may impact our business?
PEI is harmonizing with the GST effective April 1, 2013. For the most part, the transition should mimic the transition most organizations experienced for Ontario and British Columbia in 2010. However, because each province that harmonizes has the ability to make certain specific modifications, organizations need to consider the potential impact of unique changes for PEI.
Quebec has announced that it is further harmonizing its provincial sales tax with the federal GST/HST. However, organizations must understand that this is not a true harmonization as Quebec is continuing to administer the Quebec Sales Tax (“QST”) separately. So the GST and QST must continue to be administered separately (filing, collection, payment and audit). While there are some significant changes for organizations to consider to ensure all the changes related to this further harmonization are accounted for, much of the benefit that is usually experienced with harmonization are lost here, i.e., one legislation and one administration.
If you would like to learn more about how to help your business navigate the ongoing changes in Canadian sales tax and/or evaluate your organization’s degree of readiness, the Sales Tax Institutewill be offering a webinar on “Upcoming Changes to Canada’s Harmonization Landscape and What it Means to You” on December 12, 2012 (register here). The webinar will be presented by Christina Zurowski of Veridical Tax Advisors.
More About the Guest Bloggers:
Christina Zurowski is one of the founding principals of Veridical Tax Advisors Inc., a firm specializing in Canadian sales tax advisory services. Christina is a frequent and recurring presenter at various conferences, including the CICA GST/HST Symposium and GST In Depth Tutorial as well as various US speaking engagements.
Diane Yetter is President and Founder of YETTER, a sales tax consulting firm, and a strategist, advisor, and renowned speaker in the field of sales and use tax. A highly regarded tax professional, Diane was recently named one of Accounting TODAY’s 100 Most Influential People in Accounting. Diane is also Executive Director of Sales Tax Institute offering sales and use tax classes and training. Veridical Tax Advisors, YETTER and the Sales Tax Institute are members of the TaxForwardAlliance.
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