FINANCIAL
SERVICES
DIVISION
MEMORANDUM
To: Deans, Department Heads and Administrative Assistants
From: Tracey McHardy, Taxation Manager
Date: December 10, 2007
Subject: GST - Rate Reduction to 5% (effective January 1, 2008)
Effective January 1, 2008, the GST rate is reduced to 5%.
Revenue Sales to External Clients:
Units on campus that provide GST-taxable goods and services to external clients
must ensure that invoices issued subsequent to December 31, 2007 reflect the
new 5% GST rate. One exception is where there has been an undue delay in
issuing the invoice. GST may apply at 6% on an invoice issued after December
31, 2007 where the invoice would have been issued prior to December 31, 2007
had it not been for the undue delay.
Conference and other fees paid or invoiced prior to January 1, 2008 attract GST
at 6% even if the event is to be held after December 31, 2007
For price adjustments and other credit adjustments, the applicable GST rate on
the credit is the same rate as the applicable GST rate on the initial charge. For
example, where a customer returns a product subsequent to December 31, 2007
and it relates to a purchase invoiced or paid prior to this date, the GST rate on
the credit will be 6%.
There has been no change to the types of goods and services subject to GST.
For discussion on the application of GST to specific goods and services, refer to
the, Taxation Memorandum on Sales to External Clients and Internal Units, dated
July 6, 2004, on Financial Service Division's website at:
http://www.usask.ca/fsd/fsd_info_bulletins/index.htm.
GST Paid on Purchases:
In general, the transitional rules for purchases are as follows:
1. For invoices dated before January 1, 2008 - 6% will apply.
2. For invoices dated after December 31, 2007 - 5% will apply, unless
payment was made prior to this date, there was an undue delay in the
issuance of the invoice, or where the contract stipulates payment is due
on an earlier date. In the latter cases, 6% will apply.
3. GST applies at 5% on goods imported (or released from Custom controls)
on or after January 1, 2008.
4. For imported services, GST is self-assessed at 6% where the earlier of
either the date of payment or the due date is prior to January 1, 2008.
5. For price adjustments and other credit adjustments, the applicable GST
rate on the credit is the same rate as the applicable GST rate on the initial
charge. For example, where a volume discount is provided subsequent to
December 31, 2007 and it relates to purchases invoiced prior to this date,
the GST rate on the credit will be 6%.
6. There are exceptions to the general rules above, some of these
exceptions are noted below:
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•
•
6% will apply on holdbacks if the earlier of either the day the
holdback is paid or the day the holdback expires is prior to
January 1, 2008; otherwise the holdback is subject to GST at
5%.
Where the work is substantially completed prior to January 1,
2008, GST will apply at 6%.
Another exception applies where a consultant’s certificate must
be issued before the contractor is entitled to payment. CRA
does not view the contractors' application for the consultants'
certificate to be an 'invoice' and therefore, in this case, the
contract must be reviewed to determine when the progress
payment is due. For example, if the contract stipulates that
payment is due 20 days after the consultant issued the
certificate and the certificate is issued on or before December
11th, GST will apply at 6%; if it is issued after December 11th,
GST will apply at 5%. However, where the contractor issues
an invoice to the university for payment (after the consultant
certifies payment), this exception will not apply. [refer to CRA's
publication GST memorandum series 19-1 http://www.craarc.gc.ca/E/pub/gm/19-1/README.html (paragraphs 72 - 80)].
Provisions have been put into place to ensure no benefit can be realized by
amending contracts entered into on or before October 30, 2007 (e.g., where
payment has been delayed that was otherwise payable prior to January 1, 2008 GST will apply at 6% where the primary reason for the change was to benefit
from the GST rate reduction).
The university will continue to recover GST paid at the rate of 67%. Accordingly,
the new net GST cost will be 1.65% (down from 1.98%).
For further details and exceptions, refer to CRA’s question and answer document
at: http://www.cra-arc.gc.ca/E/pub/gi/notice226/.
If you require further information, please do not hesitate to contact me.
Ms. T. McHardy, CA
Taxation Manager