Transcript

Host: Welcome to the segment called Providing point-of-sale rebates, part of the CRA’s GST/HST Information for a New Small Business video.

With me is John Kelly.

Welcome John.

Subject matter expert: Thank you Kathleen.

Host: What can you tell us about providing point-of-sale rebates?

Subject matter expert: The Governments of the provinces participating in the HST provide point-of-sale rebates on the provincial part of the HST payable on certain qualifying items.

When a point-of-sale rebate on the provincial portion of the HST is provided, vendors collect only the 5% federal part of the HST payable on the sale of these items.

Host: What kinds of goods are covered?

Subject matter expert: The specific items vary between the participating provinces.

Many provinces currently offer point-of-sale rebates on the provincial part of the HST for the sale of most books, and certain items for children.

For a complete list of what qualifies in your province, go to the CRA webpage on provincial point-of-sale rebate on qualifying items. The link is included in the Related links for this segment.

Host: Who is eligible for the rebate?

Subject matter expert: Generally, if a customer buys a qualifying item in a participating province that provides a provincial point-of-sale rebate for the qualifying item, the registrant supplier will credit the customer with the rebate of the provincial part of the HST due at the time of the purchase.

This means that the customer usually will not pay the provincial part of the HST when the customer buys a qualifying item in a participating province that provides a provincial point-of-sale rebate.

The point-of-sale rebate would not only apply to sales of qualifying items at retail establishments, but would also be available on sales of qualifying items made in a participating province at any point in the distribution chain.

The point-of-sale rebate would also apply to sales of qualifying items made in a participating province over the Internet.

Host: How does the rebate appear on invoices?

Subject matter expert: You have a choice of three ways to show a rebate on an invoice: you can show the total amount of HST payable, or the total HST rate, with the rebate amount paid or credited shown separately; you can show the total HST payable as an amount net of the rebate amount paid or credited; or you can show the total price of the qualifying items, which includes HST at a net rate of 5%.

Host: Ok, for example, let’s say I bought some qualifying books in Ontario. How would that look on the invoice?

Subject matter expert: Right, so let’s say a customer bought qualifying books valued at $40 in Ontario, where the HST rate is 13%.

The invoice can show the full 13% HST as $5.20. Then a second line item giving a rebate for the 8% provincial portion, as $3.20.

Alternatively, the invoice would show the supplier charging the net 5%, federal part of the HST, as $2.00. There is no other adjustment.

Or, the invoice would show the supplier charging $42.00, inclusive of the 5% federal part of the HST.

Host: Now can we review how that would appear on the return?

Subject matter expert: Certainly. A registrant supplier who pays or credits a rebate at the point-of-sale has two options to account for that amount on their GST/HST return:

Option 1:

The supplier can show the net amount as the HST collected or collectible on line 103, and not claim an adjustment for the rebate paid or credited; or

Option 2:

The supplier can account for the total HST collected or collectible on line 103 of the return, and claim an adjustment for the rebate paid or credited on line 107.

For example, let’s say you are the supplier and assuming the only sale for this period is $40 for the qualifying books, you can enter $5.20 on line 103 as GST/HST collected. Then you can enter $3.20, representing the 8% provincial part of the HST as an adjustment on line 107. The effect on your net tax is $2.00.

Alternatively, you can simply enter $2.00, representing the 5% federal part of the HST on line 103. You would then make no further adjustment related to that transaction.

Host: What’s a good resource for point-of-sale rebates?

Subject matter expert: More information is available in the publication, RC4022, General Information for GST/HST Registrants. The link is included in the Related links for this segment.

Host: Thank you John.

This concludes the segment called Providing point-of-sale rebates, part of the CRA’s GST/HST Information for A New Small Business video.

Thank you for watching.