Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

The Irony is that Harmonization May Cost the Ontario Government More

Goods and service providers and others who currently do not charge the Ontario Government ORST may have to start charging the Ontario Government the Provincial Component of the HST after harmonization.

At the present time, the Ontario Government does not pay Ontario Retail Sales Tax on exempt tangible personal property, services that are not taxable services, real property and intangible property.

At the present time, many Ontario government departments and crown corporations do not pay GST to goods and services providers on the basis of an agreement between the federal Government and the provincial government listing provincial government departments and entities that should not be taxed by the federal Government.

After harmonization, the rules may change. It cannot be said for certain based on the publicly available information today - BUT, it is possible that the provincial government will be required to pay the Provincial Component of the HST (8%) on its purchases after harmonization. As a result, businesses who sell to the Ontario Government need to watch the development of the HST rules in order to determine whether they are required to charge any HST or not.

Let's look for a moment at what is required in the provinces of New Brunswick, Nova Scotia, Newfoundland and Labrador.  TB-1 "Policy on the Application of the Goods and Services Tax and the Harmonized Sales Tax in the Departments and Agencies of the Government of Canada" sets out the rules relating to the Federal Government and GST Memorandum 500-6-2 "Special Compliance Measures - Provincial Governments" sets out the rules relating to provincial governments.

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