PEI HST rate to increase on October 1

On October 1, 2016, the Harmonized Sales Tax (HST) in Prince Edward Island will increase by one percent to 15 percent.

The increase was announced in the annual budget speech in May. Provincial Finance Minister Allen Roach said an increase in revenue is necessary for the province to maintain its core services and that an increase in the HST is the best option.

“The one-percentage-point HST increase will add $11 million in revenue in 2016-17 and another $22 million in 2017-18 that will go directly to core investments including health and wellness, education, supporting our most vulnerable populations, and helping grow employment and our economy,” said a statement from the PEI Department of Finance.

Ahead of the HST increase, the government has released General Transitional Rules for PEI HST Rate Increase when determining the appropriate rate to charge on transactions, in part:

Under the transitional rules, suppliers would generally be required to charge the HST at the rate of 15 percent on any consideration that becomes due without having been paid, or is paid without having become due, on or after October 1, 2016 for taxable supplies of property or services.

Under the Excise Tax Act (ETA), the consideration, or a part thereof, for a taxable supply generally becomes due on the earliest of:

• the day the supplier first issues an invoice in respect of the supply for that consideration or part thereof;
• the date of that invoice;
• the day the supplier would have, but for an undue delay, issued an invoice in respect of the supply for that consideration or part thereof; and
• the day the recipient of the supply is required to pay that consideration or part thereof to the supplier pursuant to a written agreement.

Special transitional rules would apply in respect of certain real property transactions.

More on the transitional rules can be found online. (PDF)