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IMPACT OF HST ON 2011/12 BUDGETING PROCESS

IMPACT OF HST ON 2011/12 BUDGETING PROCESS.

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IMPACT OF HST ON 2011/12 BUDGETING PROCESS

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  1. IMPACT OF HST ON 2011/12 BUDGETING PROCESS

  2. For the purposes of HST, goods and services are rated as either taxable, exempt or zero rated. In general, those items previously subject to GST are now subject to HST. BCIT can claim a rebate for a portion of the HST paid. The rebates are as follows: CAVT (Canada Added Value Tax - formerly GST) - 67% BCVAT (BC Value Added Tax - formerly PST) - 75% After applying these rebates, the net tax payable is: [5% - (5% x .67)] + [7% - (7% x.75)] = 3.40%

  3. An invoice subject only to GST for $105 ($100 + $5 GST) would be recorded as an expense of $101.65 An invoice subject to both PST and GST for $112 ($100 + $5 GST + $7 PST) would be recorded as an expense of $108.65

  4. WITH HST An invoice for a $112 ($100 + $12 HST) would be recorded as an expense of $103.40

  5. Examples of purchases previously exempt from PST: • Items purchased for resale • Consulting fees • Consumable items expended during the delivery of educational programs • Photocopy and printing materials purchased by or on behalf of students • Conference registration • Course registration for non-credit courses • Newspapers and magazines • Domestic air travel originating in BC • Medical and health related equipment and supplies • Safety equipment and protective clothing

  6. Examples: Account 6101 – Classroom and lab supplies: generally assumed to have previously been subject to GST only (expenditures relate to the delivery of educational programs were PST exempt) Formula to calculate the HST impact: (Budget $ x 1.017) - Budget $ = cost pressure resulting from HST Example: ($10,000 x 1.017) - $10,000 = $170 HST cost pressure Account 6105 – Office supplies: generally assumed to have previously been subject to both GST and PST Formula to calculate the HST impact: (Budget $ x 0.952) – Budget $ = cost savings resulting from HST Example: ($15,000 x 0.952) - $15,000 = - $720 HST cost savings Account 6103 – MFD Click rates: generally assumed to be a mix of both GST only (student related) and GST and PST – to calculate the HST impact, estimate the percentage of budget that was PST exempt Formula: ((Budget $ x % PST exempt x 1.017) + (Budget $ x % NOT PST exempt x 0.952) – Budget $ Example: (($50,000 x 60% x 1.017) + ($50,000 x 40% x 0.952)) - $50,000 = - $450 HST cost savings

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