After treading through the internet recently looking for information related to HST and how Technology companies can prepare, I stumbled upon a descriptive article from KPMG. Prepared by Lesley Tela and Dianne Bomben below is an excerpt from that article summarizing some relevant points from the detailed piece.
Technology Companies need to begin planning their HST implementation strategies. As part of these strategies, these companies should review, among other items, their accounting and IT systems to determine whether better internal controls for GST/HST purposes are required.
An important aspect of any HST implementation strategy will be to review the HST “place of supply” rules to determine whether the company’s sales will attract B.C., Ontario or Atlantic provinces HST, GST or GST and PST/Quebec Sales Tax (QST), and whether the company has the proper systems to make this determination, and collect and report such taxes correctly.
In addition, due to the broader HST tax base, most sales, including sales of intangible goods and services, will be taxed at 13 percent in Ontario or 12 percent in B.C. Many intangible goods and services in Ontario and B.C. are currently not subject to PST. As such, the cost of an error in determining the proper place of supply of some sales could increase by as much as the HST provincial component (8 percent or 7 percent) of the sale price in some cases.
Testing systems before July 1, 2010 will be an important step in most HST implementation strategies to help prevent costly errors.
Once all the HST transitional rules are released, they will also play an important part of most HST implementation strategies because companies will have to determine which taxes will apply to sales straddling July 1, 2010. Different transitional rules will likely apply to prepayments and to sales of different types of goods, services and real property. For example, the HST transitional rules may differ for sales of tangible goods and for sales of services.
Other aspects of an HST implementation strategy may include:
- A review of the financial and cash flow implications of HST implementation in the 2010 financial plans
- Determining the IT resources needed to change the systems to accommodate the new taxes
- Conducting an impact analysis on, among other functions, sales and purchasing systems,proposal processes and existing agreements.
About LedgersOnline: All our staff are trained and experienced in working with Technology Companies, using numerous accounting software packages including QuickBooks and Simply Accounting.
Reliable accounting services for your business