As a Quebec company, do you sell or deliver products to Nova Scotia? Then youou’re affected by the lower HST rate starting in April 2025!
On October 23, 2024, the Nova Scotia government announced its intention to reduce the provincial component of the Harmonized Sales Tax (HST) in the province by one percentage point (from 10% to 9%), effective April1, 2025. As of that date, the HST rate will be 14% instead of 15%. It’s a great initiative for residents of the province, but it ‘s a tough one for Quebec businesses operating in Nova Scotia (including online sales). Be ready to review your invoicing tools and accounting system.
This rate change applies to all taxable supplies made in or imported into the province, whether supplies of goods (tangible personal property and intangible personal property) and real property by way of sale or lease; or supplies of services. In order to facilitate the announced rate change and provide further clarification to businesses affected by the rate reduction, the Nova Scotia government has published transitional rules described below.
Transitional rules :
The basic transitional rule for determining the HST rate applicable to a supply is based on when the tax became payable in respect of that supply.
As a general rule, HST will apply at a rate of :
- 15% if payable before April1, 2025;
- 14% if payable from April1, 2025.
In this regard, the HST on a transaction becomes payable on the earlier of :
- Day on which the supplier first issues an invoice for all or part of the consideration;
- Day shown on invoice;
- The day when the supplier would have issued an invoice for all or part of the consideration, had it not been for an unjustified delay;
- Day on which the purchaser is obliged to pay all or part of the consideration to the supplier in accordance with a written agreement.
However, for a sale of real estate, it is the date of transfer of ownership or possession that determines when the tax is payable. Thus, if a transfer of ownership or possession takes place before April1, 2025, the HST rate of 15% applies. As of April1, 2025, the HST rate of 14% will apply to all new transfers of ownership and possession of an immovable.
For self assessments of real estate, the HST rate of 15% will apply to a deemed supply before April1, 2025, and 14% thereafter. For a better understanding of the rules applicable to self assessments in general, we refer you to our article on this subject.
Other special rules include
- Goods or services transferred or imported into the province;
- Taxable benefits;
- The fast accounting method used by a person;
- Financial institutions, pension plans, public sector organizations.
Implications for businesses and other stakeholders
This rate change requires some adjustments on the part of those doing business in the province, including:
- Updating accounting and billing systems to calculate the correct amount of HST to be collected from April1, 2025. E-commerce players should react quickly to this for their online sales;
- GST/HST registrants entitled to claim input tax credits (“ITCs”) or partial GST/HST rebates on their expenses will need to pay particular attention to their claims, depending on the timing of their purchases, especially if HST rates are automatically programmed into their accounting software;
- Teams responsible for invoicing or accounting for expenses should be made aware of the rules applicable following this HST rate reduction.
We invite you to contact us if you have any questions about this rate change, and we’ll be happy to assist you.
An article from our Consumption Taxes team
