The transition from an HST system to dual GST and PST systems will touch almost every aspect of retailers’ operations including sales, purchases and other general operations. These businesses will have to make and test all the required systems changes to make sure they are ready to collect and remit the right amount of HST or GST and PST during and after the transition period.
In light of the upcoming sales tax changes, your business may benefit by accelerating some specific purchases or putting others on hold until after March 31, 2013. This analysis should be based on each business’ own facts and circumstances, and on any other transitional rules that may be released.
In assessing the impact of the return of the GST and PST on your sales, have you considered:
- Whether the tax status of your goods and services will change?
- How and when you will eliminate the current HST point-of-sale rebates?
- Whether you will have any PST self-assessment requirements?
- How the new tax systems will apply to your credit and debit notes and bad debts?
- How the new dual systems will affect your loyalty programs?
- How you will deal with returned or exchanged goods?
- How the transition to the new systems will affect your other business transactions that will straddle April 1, 2013?
You will also have to address a long list of other items, including:
- The elimination of your current recapture input tax credit requirements
- The additional tax administration of the dual systems (returns, audits, etc.)
- The required changes to various affected systems and the testing of these changes
- An update of your employee expense templates and taxable benefit calculations
- A review of most of your purchasing processes, such as purchase orders and suppliers contracts
- Training for employees in different departments, including customer service, accounts payable and accounts receivable.
KPMG can help you review and determine what the transition from HST to GST and PST means to your business and point out ways to take advantage of its benefits or ease its impact.
For more information, contact your KPMG adviser.