“There’s a little more to the switch from the PST/GST to the HST than we first thought,” Geoff Wilkinson told Canadian AutoWorld. Wilkinson is the executive director of the Ontario Auto Dealer Association. “It’s not just 8+5=13.”
Wilkinson explained that there is a variety of transition rules that will complicate things for dealers.
The first sign of the tangle showed up on a recent OADA webinar designed to give dealers an overview of the situation.
Since the session raised many questions – with more coming – the association has scheduled a mammoth two hour web presentation Friday June 4. There will be a management accountant and a lawyer experienced in tax and accounting on hand to look at the HST at work in a car dealership.
Wilkinson said that dealership secretary-treasurers will walk away from the session with a better understanding of the HST and a sheet detailing what attracts HST and what doesn’t.
He went on to say the transition to the HST will continue well after July 1. In fact, it will take 10 years because of something called “recaptured input tax credits.”
He said dealers will learn more about those at the webinar.
In the short term, dealers will have to grapple with the problem of business customers who may want to buy a vehicle before the 1st and take advantage of the HST vehicle tax credits.
“The government says they will be able to purchase the vehicle, but pick it up after July 1,” Wilkinson said. “But business people won’t want to buy it now and pick it up later.”
One suggestion is that the commercial customer leases the vehicle with an option to purchase after July 1.
But Wilkinson warns dealers to be cautious: “Dealers will have to tell their customers to check with their accountants to see what the tax consequences of that move will be.”
Despite the headaches that go with the transition, in the long run, he says the HST will be good for business and the consumer.
The OADA webinar will be held on Friday, June 4 from 9 a.m. to 11 a.m. An archived presentation goes on sale afterwards. For more information, contact Janet Carr at email@example.com.