GST/HST & Point-of-Sale Rebates

Charging HST: What Small Businesses Need to Know

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How Point-of-Sale Rebates Work

When it comes to charging HST, books, children's items and a few other items specific to particular provinces are an exception to the usual HST rules; in Ontario, Nova Scotia, Prince Edward Island (PEI), Newfoundland and Labrador, and New Brunswick, you charge only GST on them; the provincial portion of the HST on Books and other designated items is a Point-of-Sale Rebate.

 

This means that as a seller of books or any of these designated items, you actually charge the full HST on your invoice but then refund (credit) the provincial portion back.

Point-of-Sale GST/HST rebates apply to:

ItemOntarioNova ScotiaNew BrunswickPEINewfoundland/Labrador
BooksYesYesYesYesYes
Children's clothing, footwear, diapersYesYesNoYesNo
Children's car/booster seatsYesNoNoNoNo
Qualifying Heating OilNoYesYesYesYes
Feminine Hygiene ItemsYesYesNoNoNo
Qualifying Food/DrinksYesNoNoNoNo
NewspapersYesNoNoNoNo

Designated items for the point-of-sale rebate (Canada Revenue Agency) provides a list of GST/HST Info Sheets on individual designated items and how the HST applies in different provinces.

Invoicing Point-of-Sale Rebates

The Canada Revenue Agency's GST/HST Info Sheet GI-065: - Point-of-Sale Rebate on Books has an example of what the resulting invoice would look like:

Point of Sale Invoice Example Computation
Price of book $40.00
HST @ 12% $4.80
Subtotal $44.80
Rebate @ 7% $2.80
Total Amount due $42.00

Although as the document points out, this transaction could also be shown on the invoice in two other ways, showing the total HST payable as an amount net of the rebate amount paid or credited; or just by showing the total price of the designated items that includes HST at a net rate of 5%.

Claiming Point-of-Sale Rebates

The rebate amounts need to be entered on your GST/HST return.

As a GST/HST registrant, you have two options for accounting for the rebate amount on your GST/HST return.

1) You can account for the total HST collected or collectible (i.e., 13% for Ontario) on line 103 of the return, and claim an adjustment for the rebate amount paid or credited on line 107.

2) You can show the net amount as the HST collected or collectible (i.e., 5%) on line 103, and not claim an adjustment for the rebate amount paid or credited on line 107.

GST/HST Info Sheet GI-065: Harmonized Sales Tax for Ontario - Point-of-Sale Rebate on Books provides examples of both of these methods.

This same GST/HST Info Sheet also contains details on exactly which books qualify for Point-of-Sale rebates and which don't.

Important Details About Point-of-Sale Rebates

Point-of-Sale Rebates can occur at any point in the distribution chain; publishers, wholesalers, and retailers can all charge and claim them. They also apply to designated items sold over the Internet.

Shipping Goods Out of Province and GST/HST

What happens if you are shipping your book, children's item or other designated item out of province? My piece on Charging HST & PST on Sales in Other Provinces has the details but generally, you charge GST/HST depending on what province (or country) you're shipping the goods to.

So if your business is in Ontario and you're shipping children's items to a customer in Alberta, you would charge only GST.

What If You Don't Get Your Point-of-Sale Rebate?

"If the registrant supplier does not pay or credit the rebate amount at the point of sale, then the recipient of the qualifying books sold in Ontario will be able to file a rebate claim with the CRA using Form GST189, General Application for Rebate of GST/HST (Canada Revenue Agency).

This also applies to children's items and other items designated for point-of-sale rebates.

Small Supplier Exemption

Notice, though, the words "registrant supplier" in the quote. Businesses that are Small Suppliers do not have to register for, collect or remit the GST/HST.

Provinces That Charge Provincial Sales Tax (PST)

Provinces such as British Columbia that charge GST and PST (Provincial Sales Tax) rather than the combined HST provide exemptions from PST on similar items.

See:

BC PST Exemptions

How To Charge and Remit PST in Saskatchewan

How To Charge and Provincial Sales Tax (RST) in Manitoba