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Foreign Affairs, Trade and Development Canada

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Introduction of the Harmonized Sales Tax (HST) in Ontario

Circular Note No. XDC-0034 of January 20, 2010

The Department of Foreign Affairs and International Trade (Office of Protocol) presents its compliments to Their Excellencies the Heads of Diplomatic Missions and notified Chargés d'affaires, a.i. accredited to Canada, and the Heads of International Organizations and other offices established in Canada, and has the honour to inform them of Ontario's tax system reform, which will take effect on July 1, 2010, and of its impact on the Retail Sales Tax (RST) exemption currently enjoyed by certain accredited foreign officials. Information in regards to the British Columbia tax reform will follow in a separate note.

The Department particularly asks that diplomatic missions transmit the content of this Note to all consular posts established in Ontario.

Introduction of the Harmonized Sales Tax (HST) in Ontario

Effective July 1, 2010, Ontario's Retail Sales Tax (RST) and the federal Goods and Services Tax (GST) will be replaced by a single value added sales tax in Ontario (i.e., the HST). The HST would be administered by the federal government and would have the same tax base and structure as the federal GST, with a few exceptions.

The HST would have a combined rate of 13%. The provincial portion would be 8%, , and the federal portion would be 5%.

Removal of the RST exemption at point of sale and other changes to the rules for foreign representatives

A certain number of foreign representatives and their spouses or common-law partners currently enjoy a RST exemption at point of sale in Ontario upon presentation of their federal identity card. Once the HST comes into effect on July 1, 2010 it is expected that this tax will be payable on all applicable goods and services, as is currently the case for the GST, and that foreign officials will not enjoy tax relief for the Province of Ontario portion of the tax (8%) at the point of sale. However, foreign representatives and members of their families who are currently eligible for the GST rebate program will also be eligible for the HST rebate program.

Between now and July 1, the Department will provide more information on the procedure for obtaining HST tax relief and the transitional RST exemption rules, if necessary.

Reciprocal arrangements

Eligibility for the GST/HST rebates is determined strictly by the Department of Foreign Affairs and International Trade, whose duty is to provide the Canada Revenue Agency (CRA) with the list of diplomatic missions, consular posts, international organizations and other eligible offices, as well as the names of accredited officials and officers and their spouses or common-law partners.

In keeping with its policy approach, the Department would like to reiterate that personal tax exemptions are granted to representatives of foreign states solely on the basis of reciprocal treatment of Canadians at post in the other State.

The Department's Office of Protocol is currently conducting a detailed review of all reciprocal tax arrangements, in particular cases where accredited representatives of countries currently enjoy PST exemption at sale where Canadians abroad do not enjoy comparable personal consumer tax exemptions (either at the point of sale or by reimbursement). It will contact on a case-by-case basis the missions of those foreign states to discuss possible adjustments to reciprocal tax arrangements.

In addition, missions and international organizations and other offices that wish to obtain general information with regard to their eligibility for the GST/HST rebate program and applicable restrictions, and the eligibility of their accredited officials or officials, may do so by contacting the Office of Protocol's Privileges and Immunities Unit at 613-944-1159.

The Department of Foreign Affairs and International Trade (Office of Protocol) avails itself of this opportunity to renew to Their Excellencies the Heads of Diplomatic Missions and notified Chargés d'affaires, a.i. accredited to Canada, and to the Heads of International Organizations and other offices established in Canada, the assurances of its highest consideration.

OTTAWA, January 20, 2010

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Date Modified:
2012-09-28