GST/HST Rate Goes Down January 1
st, 2008Effective January 1st, 2008, the GST rate goes from 6% to 5% and the HST rate from 14% to 13%. The basic rule is that if GST/HST becomes payable on or after January 1st, 2008, then it is the lower rate (i.e. 5% or 13%) that applies, regardless of when the taxable supply of services or goods occurred. GST/HST becomes payable/reportable on the date a payment is made or the date the
invoice was issued, whichever is the earlier date. Remember, however, that there are special timing rules to consider for certified progress payments and holdback payments.Where certification is a condition precedent to payment, as is the case for most construction contracts, a monthly application for payment is
NOT an invoice for GST/HST purposes even if labeled or called an invoice and GST/HST is not triggered until the certified amount is paid or is due to be paid under the contract, whichever occurs first.For the holdback portion of the certified amount, the GST/HST liability is not triggered until the day the holdback amount is paid or the day on which the holdback period expires under the written agreement or applicable legislation, whichever is earlier.
For more information see
paragraphs 77 and 82 of GST/HST Memoranda Series, Section 19.1 Real Property and the GST/