Rules have been developed that will allow for a smooth transition to the Harmonized Sales Tax (HST) system.

As of April 1, 2013, HST will apply to most goods and services that are currently subject to the Goods and Services Tax (GST). General transitional rules for the implementation of the HST have been developed with the intention of avoiding double taxation and non-taxation for consumers and businesses in Prince Edward Island.

The new proposed rules explain the procedures for situations such as:

• whether the GST and the provincial sales tax (PST), or the HST, is to be applied for transactions that begin before April 1, 2013, and are completed after that date;

• what businesses need to do to wind down the PST system; and

• special transitional rules specific to an industry or business.

To ensure the HST is applied in the fairest manner possible for businesses and consumers, the same approach will be used as other provinces that have implemented the HST. For the most part, this means the HST will apply to prepayments made on or after February 1, 2013 for goods or services that will be provided on or after April 1, 2013. Certain businesses and public service bodies may be required to self-assess the Prince Edward Island component of the HST on amounts paid or payable after today and before February 1, 2013, for goods or services provided on or after April 1, 2013.

There are some exceptions that require specific rules, including the following:

• Prepaid funeral services – In most cases, HST will not apply to funeral and cemetery services included in an arrangement entered into before April 1, 2013.

• Transitional PST inventory rebate for residential contracts – A rebate will be available for PST embedded in construction materials purchased before April 1, 2013, that are to be used in residential property renovation contracts on or after April 1, 2013.

• Subscriptions to newspapers, magazines and other periodicals – For the most part, HST will not apply to subscriptions paid before April 1, 2013.

• Passenger transportation services – Generally, the HST will not apply to round-trip journeys that begin before April 1, 2013.

For further information on the HST in Prince Edward Island and to learn more about the general HST transitional rules, view the guide, Implementation of the Harmonized Sales Tax in Prince Edward Island, on our website at: www.peihst.ca/links.

A second guide, Temporary Recapture of Certain Provincial Input Tax Credits, outlines the temporary recapture of input tax credits requirement that will generally apply to large businesses that make taxable sales of over $10 million annually. This document is also available on our website.