Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



GST/HST Rate Reduction to 5% on Midnight January 1, 2008

Effective midnight on January 1, 2008 (as the crystal ball finishes its drop in Times Square), the rate of Canada's federal goods and services tax (GST) will reduce from 6% to 5%.  In anticipation of the reduction and to help businesses and importers of goods, services and intangible property, on December 18, 2007, the Canada Revenue Agency GST/HST Notice 226 "GST/HST Rate Reduction in 2008".  Please click on GST/HST Notice 226 "GST/HST Rate Reduction in 2008" if you would like to download a copy of the GST/HST Notice.

Please note that combined GST/HST or GST/QST rates are imposed in respect of supplies in or imports into New Brunswick, Newfoundland/Labrador, Nova Scotia and Quebec - with the result that the effective GST/HST or GST/QST rates are higher.  The GST component of the rate is being reduced.  Further, note that the provinces of British Columbia, Ontario, Manitoba, Saskatchewan, and Prince Edward Island also impose single stage sales taxes. These sales tax rates are not being reduced.

GST/HST Notice 226 "GST/HST Rate Reduction in 2008" contains a detailed set of questions and answers written by the Canada Revenue Agency to assist businesses and importers adjust to reflect the rate reduction.

If you have specific questions that are not answered in GST HST Notice 226 "GST/HST Rate Reduction in 2008", please contact the Canada Revenue Agency (1-866-959-7797) or Canadian GST practitioners. Cyndee Todgham Cherniak has been practicing in the GST area for 13 years and can be contacted at 416-307-4168.

Please note that the Canada Revenue Agency is not bound by the advice it gives over the telephone and may ask you to write to them seeking a ruling or GST/HST interpretation.  It is beneficial to seek the assistance of a Canadian GST practitioner to ensure that the facts are complete and the questions are communicated clearly because you risk delays and incorrect answers if the communications are not clear.  Most importantly, a GST lawyer may be able to preserve your legal rights and minimize compliance risks during the transition.  Wokring with a GST practitioner to determine the correct approach may provide you with a due diligence defence (to reduce of waive penalties) in the future should you be assessed.  Lawyer's work product should be protected by solicitor-client privilege.

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