HST Preparation

As of July 1, 2010, Harmonized Sales Tax(HST) replaces GST and PST in the provinces
of Ontario and British Columbia. The province of Nova Scotia will also increase
HST rates from 13% to 15%. How will this affect www.natvd.com?

Being in British Columbia we will have the pleasure of being subject to the new HST (Harmonized Sales Tax). Our products, vitamins, will now be subject to the new HST. Currently, vitamins and supplements are only subject to GST (Goods & Services Tax) and not the PST (Provincial Sales Tax). It is unfortunate that some of our customers will have to pay more and it will remain to be seen what affect this will have on our mail order business.

We have had staff attend HST preparation seminars and we will have staff to adjust the tax codes at midnight local time on our website.

Notes:

If orders are received but not shipped by July 1st then they will be subject to HST.

Returns or exchanges received from orders prior to HST will not be subject to HST (if there is a differential) until after a specified time from the government.

HST/GST rate will be charged depending on the province where the goods will be shipped to.

The proponents of the new HST claim that the HST will benefit companies. I did a quick test to see if this would be true. One of the 'benefits' would be for businesses to claim the new HST (GST + PST) as a Input Tax Credits (ITC). Our companies total PST paid in 2009 was about $2000. Therefore the benefit will be $2000 ITC that were not previously available. Our sales worldwide were in the 2-3 million dollar range. Many customer will expect the savings to be passed on to them but with such a small benefit how can we pass the savings on in a meaningful manner?

Another concern for me will be the impact on cash flow. Having to wait for HST refund cheques means more cash will be tied up. I guess this will help some people unfortunately it doesn't look like it will be us.