Canada: Ontario HST Transition Rules Announced

The British Columbia and Ontario governments have each released a general description of transition rules for the upcoming replacement of the provincial sales tax in those provinces ("PST") with a sales tax (the "HST") harmonized with the federal GST. The General Transition Rules for the implementation of HST released by each province are nearly parallel. This update will focus on the Ontario rules.

Important Dates

July 1, 2010: As previously announced, the HST will be fully implemented in B.C. and Ontario. Goods or services received after this date will generally be subject to HST and not PST.

May 1, 2010: Suppliers will have to collect any applicable HST on amounts that are paid or payable on or after May 1, 2010 for goods or services delivered or provided on or after July 1, 2010.

October 14, 2009: Certain businesses and public service bodies (see below) may be required to self-assess the provincial component of the HST on amounts paid or payable by them after October 14, 2009 and before May 2010 for goods or services to be received after July 1, 2010.

October 31, 2010: All outstanding PST becomes payable under the transition rules to facilitate the wind-down of the PST regime.

Self-Assessment of HST

Certain persons may be required to self-assess the provincial component of the HST on amounts paid or payable by them after October 14, 2009 and before May 2010 for goods or services to be received after July 1, 2010.

This requirement to self-assess generally applies only to:

  • Non-consumers acquiring the goods or services for consumption or use otherwise than in the course of a commercial activity (that is, persons whose business includes making GST-exempt supplies, such as financial services or health care services).
  • Non-consumers that use the simplified accounting procedures under the GST legislation (such as certain charities, public service bodies, and small businesses).
  • Selected listed financial institutions.
  • Non-consumers acquiring the goods or services for use or consumption in their commercial activities where a restriction on input tax credit availability would apply (for example, certain entertainment expenses are subject to 50 percent input tax credit recapture; also, the 2009 Ontario budget proposed temporary restrictions on large businesses' ability to claim input tax credits on the provincial component of the HST payable on certain supplies, such as energy and telecommunications services).

Persons having to self-assess this tax will be required to account for it in their GST/HST return for the reporting period that includes July 1, 2010, if that return is due before November 2010; or, in any other case, in a special prescribed return due before November 2010.

Rules for Specific Types of Supplies

The General Transition Rules include a description of how the HST will apply to transactions that straddle the July 1, 2010 implementation date (for instance, payment for a supply is made before implementation, but delivery is made afterward) which work in tandem with rules announced for the wind-down of the PST regime. The following summarizes the application of both HST and PST to such transactions.

The general rules described under "Important Dates", above, apply to determine HST payment, collection or self-assessment obligations in respect of the following specific supplies.

Tangible Personal Property

  • PST will generally apply to the taxable sale of goods if possession or ownership of the goods is transferred to the purchaser before July 1, 2010.
  • HST will generally apply to goods if possession and ownership of the goods is transferred to the purchaser on or after July 1, 2010.
  • Notwithstanding the general rules above, goods purchased by consumers will remain subject to PST, regardless of when delivered, if the consideration for the goods is paid before May 1, 2010.
  • The general rules described under "Important Dates", above, apply to determine HST payment, collection or self-assessment obligations in respect of the foregoing supplies.

Services, Memberships and Admissions

  • PST will generally apply to the portion of taxable services performed before July 1, 2010.
  • HST will generally apply to the portion of services performed on or after July 1, 2010. Where a part of the service is performed before July 1, 2010, no HST is payable on that part (even if the consideration is paid after that date). Furthermore, if 90% or more of the service has been performed before July 2010, no HST (only PST) will apply to the service (even if the consideration is paid after July 1, 2010).
  • With the exception of lifetime memberships, for which special rules apply, memberships are treated in the same manner as services under the transition rules. Accordingly, the portion of a membership that is applicable to the period commencing July 1, 2010 and thereafter is subject to HST.
  • Admissions to places of entertainment, seminars or events that take place on or after July 1, 2010, are subject to HST.
  • Notwithstanding the general rules above, taxable services and admissions purchased by consumers will remain subject to PST, regardless of when delivered, if the consideration for the supplies is paid before May 1, 2010.
  • The general rules described under "Important Dates", above, apply to determine HST payment, collection or self-assessment obligations in respect of the foregoing supplies.
  • The General Transition Rules include special rules for funeral and cemetery services, passenger and freight transportation services, and subscriptions to newspapers, magazines and other periodicals.

Leases and Licenses

  • PST will continue to apply to a supply of taxable goods by way of lease, licence or similar arrangement for the part of a lease interval that occurs before July 1, 2010.
  • HST applies to the portion of a lease interval that occurs after July 1, 2010 (with the exception of a lease interval that begins before July 2010 and ends before July 31, 2010, in respect of which PST, but not HST, will apply).
  • The general rules described under "Important Dates", above, apply to determine HST payment, collection or self-assessment obligations in respect of the foregoing supplies.

Real Property Other than Residential Housing

HST will apply to a supply of real property (other than residential housing) by way of sale in Ontario if both ownership and possession of the property are transferred to the purchaser on or after July 1, 2010.

The General Transition Rules do not contain rules pertaining to residential housing. Transition rules for new residential housing are included in the Ontario government's Information Notice No.2, dated June 18, 2009.

Other Specific Transition Rules

The following supplies and circumstances are subject to special transition rules:

  • Supplies by, and inventory of, direct sellers and their independent sales contractors.
  • Continuous supplies made by wire, pipeline, satellite or telecommunications facility.
  • Budget payment arrangements (such as equal billing plans for utilities).
  • Combined supplies (where a portion of a single supply would be subject to HST under the transition rules, but another portion would not be).
  • Progress payments.
  • Goods and services brought into the province.
  • Imported goods and imported taxable supplies.
  • Returns and exchanges of goods.
  • PST paid on construction materials that are held in inventory on June 30, 2010.

Additional Rules Regarding the Wind-Down of PST

The Ontario and B.C. General Transition Rules differ somewhat in the specific details of the winddown of PST. The Ontario rules are described below.

  • On July 1, 2010, the existing PST will generally cease to apply.
  • Final PST returns are required to be filed by July 23, 2010.
  • Any PST collected after June 2010 is required to be accounted for in a supplemental PST return to be filed the following month.
  • All such supplemental PST returns must be filed no later than November 23, 2010, as all uncollected PST becomes payable on October 31, 2010.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.