IMPACT OF HST ON 2011/12 BUDGETING
PROCESS
For the purposes of HST, goods and services are rated as either taxable,
exempt or zero rated. In general, those items previously subject to GST are
now subject to HST. BCIT can claim a rebate for a portion of the HST paid.
The rebates are as follows:
CAVT (Canada Added Value Tax - formerly GST) - 67%
BCVAT (BC Value Added Tax - formerly PST) - 75%
After applying these rebates, the net tax payable is:
[5% - (5% x .67)] + [7% - (7% x.75)] = 3.40%
CALCULATING THE NET IMPACT OF HST
Previous Tax Calculations:
- GST only
5% Rebate
5% Cost
=
=
3.35%
1.65%
67%
33%
An invoice subject only to GST for $105 ($100 + $5 GST) would be recorded as an expense of $101.65
- GST and PST 5% Rebate
=
3.35%
67%
5% Cost
=
7% Cost
=
Total net cost
1.65%
7.00%
8.65%
33%
100%
An invoice subject to both PST and GST for $112 ($100 + $5 GST + $7 PST) would be recorded as an
expense of $108.65
WITH HST
Current Tax Calculations:
HST Provincial 7% Rebate
HST Federal
5% Rebate
=
=
5.25%
3.35%
8.60%
75%
67%
HST Provincial 7% Cost
HST Federal
5% Cost
=
=
1.75%
1.65%
3.40%
25%
33%
An invoice for a $112 ($100 + $12 HST) would be recorded as an expense of $103.40
Expense with net
FY2011 budget formerly subject to calculation (HST impact) HST
GST & PST
x 0.952
GST only
x 1.017
tax exempt
x 1.034
Enter value here
Expense with net
FY2011 budget formerly subject to calculation (HST impact) HST
1,000.00
GST & PST
x 0.952
951.68
1,000.00
GST only
x 1.017
1,017.22
1,000.00
tax exempt
x 1.034
1,034.00
Enter value here
Examples of purchases previously exempt from PST:
•Items purchased for resale
•Consulting fees
•Consumable items expended during the delivery of educational programs
•Photocopy and printing materials purchased by or on behalf of students
•Conference registration
•Course registration for non-credit courses
•Newspapers and magazines
•Domestic air travel originating in BC
•Medical and health related equipment and supplies
•Safety equipment and protective clothing
Examples:
Account 6101 – Classroom and lab supplies: generally assumed to have previously been subject to GST
only (expenditures relate to the delivery of educational programs were PST exempt)
Formula to calculate the HST impact: (Budget $ x 1.017) - Budget $ = cost pressure resulting from HST
Example: ($10,000 x 1.017) - $10,000 = $170 HST cost pressure
Account 6105 – Office supplies: generally assumed to have previously been subject to both GST and PST
Formula to calculate the HST impact: (Budget $ x 0.952) – Budget $ = cost savings resulting from HST
Example: ($15,000 x 0.952) - $15,000 = - $720 HST cost savings
Account 6103 – MFD Click rates: generally assumed to be a mix of both GST only (student related) and
GST and PST – to calculate the HST impact, estimate the percentage of budget that was PST exempt
Formula: ((Budget $ x % PST exempt x 1.017) + (Budget $ x % NOT PST exempt x 0.952) – Budget $
Example: (($50,000 x 60% x 1.017) + ($50,000 x 40% x 0.952)) - $50,000 = - $450 HST cost savings