The province of Ontario will harmonize the existing 8% provincial sales tax (PST) with the 5% federal goods and services tax (GST) effective July 1, 2010. The Ontario harmonized sales tax (HST) will be amalgamating the existing PST and GST, for a combined rate of 13%.
Currently, legal fees and disbursements are only subject to the 5% GST. However, effective July 1, 2010 all legal fees and disbursements will be subject to the full 13% HST.
Generally, the new HST will apply to the provision of goods and services in the same manner as GST currently applies. For our clients who are currently permitted to claim input tax credits in respect of GST, the new tax will have a minimal impact on your business, as a full input tax credit will be available for HST paid on taxable goods and services, subject to certain restrictions. For individuals this is generally not true and the tax will be a sad reality that we can do nothing to minimize.
Should you have any questions or require any further information please do not hesitate to contact your lawyer at Thomson, Rogers to discuss this issue further.
