Archive for November 2009

“The bigger the house, the bigger the headache.”

November 25, 2009

 

 “The bigger the house, the bigger the headache.”

Smaller homes tend to not only be more affordable but more energy efficient.

Indeed, many people are looking for a simpler life and a small home equates to that.

The economy has got people thinking this way.

“People are getting stressed out and overwhelmed, and the economy’s just part of that,” Johnson says. “The bigger the house, the bigger the headache.”

“‘Not so big’ has almost become chic. Conspicuous consumption is no longer cool,”

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THE NEW HST –TAX

November 20, 2009

Realtors are getting ready in Ontario and BC for the new harmonized sales tax.  HST.  The changes will take affect July 1, 2010, but Realtors are preparing now. 

The new HST tax will affect Agreements for New Home sales closing on or after July 10, 2010.

Realtors will need to take into account the application of HST to their services performed on or after July 1, 2010.

Background  – This new tax was announced in the Government’s 2009 budget that is intended to harmonize 8 % provincial sales tax PST with the 5 % federal Goods and Services Tax GST.  This will create 13 percent HST on most GST taxable goods and services provided in Ontario.

The HSTs will generally apply to the same tax base as the GST, with some exceptions.

How will this new tax affect Realtors? ®  The sales tax treatment of GST registered REALTORS® services will change.

GST registered REALTORS® will be automatically registered for the HST. Rather than REALTORS® commissions being subject to GST at the rate of 5 percent, REALTORS® commissions for services in Ontario will generally be subject to HST at the rates of 13%.

In Ontario,  HST will be paid on most of realtors costs, such as office leases, office supplies, and equipment such as computers and software. Some of these costs, such as the lease of office space, were previously only subject to GST.

As mentioned, HST will generally apply to the same tax base as the current HST. Also, GST registered REALTORS® will be automatically registered for the HST. As a result, REALTORS® will apply HST to the fees for their services that are currently subject to GST.

As of this date Ontario has not published the technical rules explaining how a GST/HST registrant is to determine if a good or service is supplied in or outside Ontario or BC. However, based on the rules that were implemented for sales tax harmonization in Quebec and BC, we can make some reasonable assumptions about how the place of supply of REALTORS® services will be determined for Ontario and BC HST purposes.

The technical realities will be carried out by Realtors all over Ontario.  These realities cover certain rules governing the transitional periods involved with implementing this tax. 

The following areas will be affected by the new tax – Tax clauses in real estate listing agreements, co-operating broker/agent agreements and other sales and/or purchase agreements, sales and receivable systems, purchasing and payable systems, expense reports, quick method GST/HST calculations.