HST Pertaining to Psychological Services
The OPA has consulted its accountant regarding the Harmonized Sales Tax (HST) pertaining to psychological services.
If GST is currently charged on services that are not GST exempt, it will be a requirement to charge HST when it comes into effect on July 1st, 2010. Where services are GST exempt, the HST will not apply.
The following article on HST was featured in the November 2009 issue of Psych Bytes:
Preparing for the Harmonized Sales Tax
Recently, the proposed HST has been in the news again. While some point to anticipated savings and financial incentives for business, others worry about the possible impact on low wage earners. If tax cuts are indeed offered for salary earners next year, will similar savings also be passed on to those who are self-employed? What are the implications for psychologists? Let us know your concerns and ideas.
What are the implications for your professional association?
When considering our financial status within our budget planning process, the OPA Finance and Audit Committee recommended once again that our membership dues not be increased in 2010. At the same time, our Finance & Audit Committee also recommended that in 2010 the GST should be charged on our membership dues, in order to allow our association to be able to recoup tax credits on eligible GST expenses.
The OPA Board of Directors agreed with these recommendations, and considered this potential dilemma. We decided that as we did not want to raise the overall cost of membership during this time of economic constraint, we will actually reduce the base membership fee by 5% to $485.71, and then charge GST on that revised base rate. The overall result is that your membership dues in 2010 will remain at $510.
By charging GST on membership dues, OPA will now be entitled to claim Input Tax Credits (ITC) for 100% of the GST paid while providing your membership services, and will this will substantially decrease our expenses. We are focused on efficient and effective service.
For those of you in private practice who also collect and recoup GST related professional expenses: Members who charge GST for services, will be able to claim the GST back.
The reason for this change is the anticipated transition to the Harmonized Sales Tax (HST). As of July 1, 2010, GST and PST will be merged to form a 13% HST. Our accountants at BDO Dunwoody have advised us that this will mean a significant increase in expenses next year – one which could severely restrict our mandate. Once the HST is implemented, we will be able to claim back 100% of the GST and HST paid, which will ultimately reduce our expenses.
We have committed to this process for the 2010 membership year, and the OPA Board of Directors will review this process and outcome before making a decision for the following year. We welcome your thoughts and comments.
Dr. Connie Kushnir
Links you may find useful:
Implications for consumers:
http://www.rev.gov.on.ca/en/taxchange/consumers.html
http://www.rev.gov.on.ca/en/taxchange/families.html
Implications for private practitioners (small business):
http://www.rev.gov.on.ca/en/taxchange/business.html
“If a small supplier chooses to register, it will be eligible to claim input tax credits related to its taxable supplies when it files its tax return.” http://www.rev.gov.on.ca/en/taxchange/faq.html#q7
Revenue Canada overview: Goods and services tax/harmonized sales tax (GST/HST)
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html
Revenue Canada: applying for rebates: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rbts/menu-eng.html
Service Canada rebates for low-income
http://www.servicecanada.gc.ca/eng/goc/gst_credit.shtml
Opinion from National Post: “Although businesses will have to pay tax on more items, they will be able to recover that tax.”
http://www.nationalpost.com/opinion/columnists/story.html?id=3acd4a79-9152-4c18-bf71-8dc58326ab52
Transitional Tax Rules in Ontario
http://news.ontario.ca/rev/en/2009/10/ontario-releases-hst-transitional-rules.html
Ontario Ministry of Revenue: tax change
http://www.rev.gov.on.ca/en/taxchange/index.html
HST Information for Psychologists