GST/HST Info Sheet GI-108
September 2010

This info sheet explains how the rate increase of the provincial part of the Nova Scotia harmonized sales tax (HST) applies to supplies of personal property that straddle the date the rate increase comes into effect.

Background information on the Nova Scotia HST rate increase

The Government of Nova Scotia announced an increase of the rate of the provincial part of the HST from 8% to 10% effective July 1, 2010. As a result, the combined HST rate increased from 13% to 15%, of which 5% represents the federal part and 10% the provincial part. Amendments to implement the rate increase have been published in the Nova Scotia HST Regulations, 2010.

Before determining whether HST at 13% or 15% applies to supplies of personal property during the period that includes July 1, 2010, suppliers must first determine if the property is supplied in Nova Scotia. For information, refer to GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax - Place of supply rules for determining whether a supply is made in a province .

For purposes of this info sheet, "Nova Scotia" includes the Nova Scotia offshore area.

In the examples in this info sheet, all supplies are taxable and made in Nova Scotia, and all suppliers are GST/HST registrants. "Taxable" means subject to the HST.

Meaning of significant terms used in this info sheet

"Goods" means tangible personal property.

"Intangible personal property" includes contractual rights, intellectual property (e.g., inventions, patents, trade secrets, trademarks, trade names, copyrights, or industrial designs), rights to acquire a membership, and rights in relation to goods that are not in the possession of a person.

"Personal property" means goods and intangible personal property.

Sales of personal property

The following rules apply to:

• goods supplied by way of sale, including subscriptions to periodical publications such as newspapers and magazines;
• intangible personal property supplied by way of sale; and
• intangible personal property supplied by way of lease, licence or similar arrangement where the payments do not vary with the amount of use or profits from the property. This could be the case where, for example, a lump-sum payment is made to an author for all rights associated with a book written by the author.

To determine whether the HST at 13% or 15% applies to supplies of personal property during the period that includes July 1, 2010, suppliers must consider:

• when an amount for the personal property becomes due; and
• whether an amount for the personal property is paid without having become due.

The Appendix to this info sheet contains information on when an amount becomes due and whether an amount is paid without having become due.

When an amount becomes due or is paid before July 2010

The HST at 13% applies to the sale of personal property when an amount for the sale becomes due or is paid without having become due before July 2010.

Suppliers account for the tax in their GST/HST returns according to the normal rules. The purchaser, if a registrant, would be able to claim any eligible input tax credit (ITC) according to the normal rules.

When an amount becomes due or is paid on or after July 1, 2010

HST at 15% applies to the sale of personal property when an amount for the sale becomes due or is paid without having become due on or after July 1, 2010.

Suppliers account for the tax in their GST/HST returns according to the normal rules. The purchaser, if a registrant, would be able to claim any eligible ITC according to the normal rules.

Combination of goods, property and/or services

The following rule applies to any combination of personal property, real property and/or services supplied together as a single supply where one of the items is a good that would not be subject to HST at 15% if it were supplied separately.

In this case, the good is considered to have been sold separately from the other items but only for the purposes of determining whether HST at 13% or 15% applies during the period that includes July 1, 2010.

For information on applying the 2010 Nova Scotia HST rate increase to services during the period that includes July 1, 2010, refer to GST/HST Info Sheet GI-109, Applying the 2010 Nova Scotia HST Rate Increase - Services.

Leases and licences of personal property

The following rules apply to personal property supplied by way of lease, licence or similar arrangement, the consideration for which is rent, royalties or similar payments. However, they do not apply to leases and licences of intangible personal property where the payments do not vary with the amount of use or profits from the property. The rules described under the heading "Sales of personal property" will apply instead.

To determine whether HST at 13% or 15% applies to leases of personal property during the period that includes July 1, 2010, suppliers must consider:

• the lease interval;
• when an amount for that lease interval becomes due; and
• whether an amount for that lease interval is paid without having become due.

A "lease interval" is the period of time to which a periodic payment is attributable under a lease.

When a lease interval begins before July 2010 and ends before July 31, 2010

When a lease interval begins before July 2010 and ends before July 31, 2010, the 13% HST applies to any amount that becomes due or is paid without having become due for that lease interval.

Suppliers account for the tax in their GST/HST returns according to the normal rules. The purchaser, if a registrant, would be able to claim any eligible ITC according to the normal rules.

When a lease interval begins before July 2010 and ends on or after July 31, 2010

The following rules apply when a lease interval begins before July 2010 and ends on or after July 31, 2010:

• HST at 13% applies to any amount that becomes due or is paid without having become due on or before April 6, 2010.
• HST at 13% applies to any amount that becomes due or is paid without having become due after April 6, 2010 and before May 2010. Certain purchasers have to self-assess the 2 percentage point increase in the provincial part of the HST. For more details on self-assessing, see the information under the heading "Self-assessing the 2 percentage point increase in the provincial part of the Nova Scotia HST".
• When an amount becomes due or is paid without having become due on or after May 1, 2010:
• HST at 13% applies to any amount that relates to the portion of the lease interval that occurs before July 2010; and
• HST at 15% applies to any amount that relates to the portion of the lease interval that occurs on or after July 1, 2010.

Suppliers account for the tax in their GST/HST returns according to the normal rules. The purchaser, if a registrant, would be able to claim any eligible ITC according to the normal rules.

When a lease interval begins on or after July 1, 2010

The following rules apply when a lease interval begins on or after July 1, 2010:

• HST at 13% applies to any amount that becomes due or is paid without having become due on or before April 6, 2010.
• HST at 13% applies to any amount that becomes due or is paid without having become due after April 6, 2010 and before May 2010. Certain purchasers have to self-assess the 2 percentage point increase in the provincial part of the HST. For more details on self-assessing, see the information under the heading "Self-assessing the 2 percentage point increase in the provincial part of the Nova Scotia HST".
• HST at 15% applies to any amount that becomes due or is paid without having become due on or after May 1, 2010.

Suppliers account for the tax in their GST/HST returns according to the normal rules. The purchaser, if a registrant, would be able to claim any eligible ITC according to the normal rules.

Self-assessing the 2 percentage point increase in the provincial part of the Nova Scotia HST

Certain purchasers that are non-consumers have to self-assess the 2 percentage point increase in the provincial part of the HST on leases of personal property when an amount becomes due or is paid without having become due after April 6, 2010 and before May 2010, and the lease interval

• begins before July 2010 and ends on or after July 31, 2010; or
• begins on or after July 1 2010.

This self-assessment rule applies to a person that is a sole proprietor, a business, an organization, a public service body, or any other entity.

A non-consumer must self-assess the 2 percentage point increase in the provincial part of the HST if the non-consumer:

• does not purchase the supply for consumption, use or supply exclusively (90% or more) in its commercial activity;
• is using a simplified accounting method to calculate its net tax;
• is purchasing a supply that is subject to an ITC recapture;
• is a charity that uses the net tax calculation method for charities; or
• is a registrant that is a selected listed financial institution.

The non-consumer accounts for the 2 percentage point increase in the provincial part of the HST:

• if a registrant, on line 405 of its GST/HST return for the reporting period in which the amount became payable; or
• in any other case, by completing Form GST489, Return for Self-Assessment for the Provincial Part of Harmonized Sales Tax (HST) and paying that amount on or before the last day of the month following the calendar month in which the amount became payable.

Appendix - When an amount becomes due or is paid without having become due

The following rules explain when an amount becomes due and when an amount is paid without having become due. These rules apply to supplies of services, tangible personal property, and intangible personal property.

Amount becomes due

Generally, an amount for a supply becomes due on the earliest of the following days:

• the date of an invoice for that amount for the supply;
• the day the supplier first issues that invoice for the amount;
• if there is an undue delay in issuing that invoice, the day the supplier would have issued the invoice; and
• the day the client is required to pay that amount under a written agreement (other than a written agreement for the supply of property by way of lease, licence or similar arrangement).

An amount for a supply of property made by way of lease, licence or similar arrangement under a written agreement becomes due on the day the client is required to pay that amount under the written agreement.
For information on what is a written agreement for GST/HST purposes, refer to GST Memorandum 300-6-4, Agreements in Writing.

Amount is paid without having become due

An amount is paid without having become due when a client pays an amount for a supply:

• before the date of an invoice or before a supplier issues, or would have issued, the invoice;
• before the client is required to pay the amount under a written agreement (other than a written agreement for the supply of property by way of lease, licence or similar arrangement) and no invoice has been issued; or
• before the client is required to pay the amount under a written agreement for the supply of property by way of lease, licence or similar arrangement.

More than one invoice or payment

Sometimes, more than one amount becomes due or is paid without having become due. This could happen when, for example, a supplier issues more than one invoice or when the client is required to make more than one payment under a written agreement. In this case, for each amount, the supplier must determine whether HST at 13% or 15% applies to that amount based on the applicable transitional rules for the Nova Scotia HST rate increase.