Effective July 1, 2010 Ontario will become an HST participating province. This change will have a substantial impact on the cost of services for Ontario consumers. For the most part, the cost of services to Ontario consumers will increase by 8% and that’s a bitter pill. Have you thought about how you are going to communicate and manage that change?

Step One – Identify the effect of the HST on your costs. If you are a service company, Retail Sales Taxes may have been a business deduction to you previously; they will be a 100% refundable input tax going forward. This figure may allow you some room for price negotiation room with customers.

Step Two – Identify which customers will be most affected. Business to business sales will not be affected due to the flow through nature of the HST. You may be in a better place in terms of B2B pricing. Business to consumer sales will see a price increase of 8% if they were only paying the GST previously.

Step Three – Communicate the change to your customers early and often. Allow your customers to pay for services they receive prior to July 1st in advance to avoid the tax. If your services include a portion for materials, have the materials delivered by June 30 to avoid tax on that portion. Let your customers know that you care about their concerns and are willing to work with them.

For more information about implementing the HST in your business, please contact us at 905 492 6383.

The above tax comments are intended to be general guidelines and not specific tax advice. Individual circumstances will vary. Please contact us for more information.
Summit Certified Management Accountants – We specialize in accounting for Small Businesses and individuals. Call us for personalized service with your Personal Taxes, Corporate Taxes (T2), Bookkeeping and Payroll needs. We help clients in Pickering, Ajax, Whitby, Oshawa and Toronto.