Wednesday, August 5, 2009

Understanding Ontario's Harmonized Sales Tax

Single sales tax Information Notice 2, June 18, 2009- From Ontario Government Site - Go to Gov Site to View Entire Article...

The 2009 Ontario Budget proposed a comprehensive package of tax changes. Central to this proposed tax package is a single, value-added sales tax, which, subject to legislative approval, would come into effect on July 1, 2010. This bulletin provides details of further proposed measures that would build on the comprehensive tax package and help taxpayers and businesses transition to the single sales tax. The measures proposed today would help Ontarians buying new homes and support a strong housing industry.

Enhanced New Housing Rebate

The province is proposing an enhancement to the new housing rebate that was announced in the 2009 Ontario Budget[1].

The new housing rebate would be enhanced so that new homes purchased as primary residences across all price ranges would qualify for a rebate of up to $24,000, while continuing to ensure that, on average, new homes priced up to $400,000 would not be subject to additional tax compared to the retail sales tax (RST) currently embedded in the price of new homes.

The effect of the enhanced rebate would be to apply the provincial portion of the single sales tax at a rate of two per cent on the first $400,000 of the purchase price of a new home and at a rate of eight per cent on the portion above $400,000. The rebate would be calculated as 75 per cent of the provincial portion of the single sales tax payable on the purchase of a new home, up to a maximum rebate of $24,000.

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