GST/HST Rate Reduction in 2008
Note: This final version of the notice supersedes the versions dated November 2007, November 9, 2007 and November 13, 2007.
December 18, 2007 Ottawa The GST rate will be reduced by one percentage point from 6% to 5%, effective January 1, 2008. To facilitate the transition to the lower rate, transitional rules for determining the GST rates applicable to transactions that straddle the January 1, 2008 implementation date have been enacted.
This notice provides a detailed set of questions and answers that reflect the legislative amendments to the Excise Tax Ac to implement this rate reduction. These amendments are now law and are included in Bill C-28, which received Royal Assent on December 14, 2007.
For purposes of simplicity and consistency, the CRA is following the same approach used in implementing the previous rate reduction.
Effective January 1, 2008, the rate of the GST and the federal component of the HST will be reduced from 6% to 5%. The provincial component of the HST will remain at 8%. This means that the rate of HST will be reduced from 14% to 13%. Please note that the HST applies only to purchases made in or imported into New Brunswick, Nova Scotia, and Newfoundland and Labrador (the participating provinces) [Footnote 1] and the GST applies to supplies made in the rest of Canada.
For most purchases, the rate of tax will be determined by the date the GST/HST becomes payable or is paid. If GST/HST became payable or was paid in 2007, the old GST rate of 6%, or HST rate of 14%, applies. Otherwise, the reduced GST rate of 5%, or HST rate of 13%, applies if the tax became payable on or after January 1, 2008, or was paid on or after January 1, 2008 without having become payable before that day.
The following detailed set of questions and answers is provided to assist businesses and consumers in understanding how the reduction in these rates will apply. For more information on the GST/HST rate reduction, they can call 1-866-959-7797. This toll-free hotline service is available from 8:15 a.m. to 8:00 p.m. (local time), Monday to Friday. They can also refer to the following GST/HST Info Sheets:
Available at
http://www.cra-arc.gc.ca/E/pub/gi/notice226/notice226-e.html