Canada: HST rate increase cancellation, Newfoundland and Labrador

Canada: HST rate increase cancellation

Newfoundland and Labrador's incoming government publicly stated it intends to cancel the province's harmonized sales tax (HST) increase. Currently, it is unclear whether the scheduled HTS rate increase to 15% (from 13%) can be cancelled prior to 1 January 2016, pursuant to a federal-provincial agreement.

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It is reported that the Canadian federal government is willing to accommodate the cancellation of the HST rate increase. However, there has not yet been a federal or provincial news release that officially confirms the cancellation of rate increase as of 1 January 2016.

Transitional rules

The previous provincial government announced its intent to increase the rate of HST effective 2016 in its budget tabled in April 2015. In July, the government released general descriptions of the transitional rules related to the HST rate increase, some of which applied immediately to certain industries such as the new housing industry. 

KPMG observation

Businesses need to be on the watch for guidance or a release, to determine if or when the HST rate increase will be officially cancelled, the effects on any transitional rules, and any system and process changes to be readjusted.

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