Added: Much of this changed in 2012. Please see this government web page.
Photographers in Ontario and British Columbia (B.C.) know that their new Harmonized Sales Tax (HST) kicks in on July 1. The HST is called the “value-added tax” which sounds like a fast-food combo meal: for just a dollar more, you can up-size your tax to our new value-added tax.
Federal government page for the HST has lots of (confusing) information.
The HST will benefit large businesses and government. Gee, guess who got left out? The consumer. Business will save billions of dollars annually, the government will earn billions more in taxes, and consumers will pay billions more each year. Notice any kind of pattern here?
In theory, businesses will reinvest all their savings by creating zillions of new jobs and consumers will then enjoy new-found prosperity from these new jobs. Of course, this prosperity isn’t exactly around the corner. It’s estimated to be about 10 to 16 years away, if it happens at all.
The place of supply rules change for intangible property. A digital photo that’s delivered by e-mail or FTP to a client is considered intangible property. The new rule is that applicable sales tax will be based on the location of the customer and not the location of the photographer’s business, but there may be exceptions.
The old rule was that a photographer did not have to collect the provincial sales tax (PST) of another province unless that photographer carried on business in that other province, (i.e. had a office in that other province). Although, most provinces did want out-of-province businesses to voluntarily register and collect their PST. Otherwise, the onus was on the customer to declare an out-of-province purchase and then voluntarily pay the appropriate PST, (yeah, right).
The new rule means that if a photographer in Toronto, Ontario, licenses a picture to a B.C. client, the Toronto photographer would charge the B.C. rate of HST. If the client is in Prince Edward Island, the Toronto photographer charges GST only, (huh?)
Now let’s see if we can confuse you. (There are probably exceptions to everything and remember that I’m not an accountant):
• If you’re in an HST province and you sell to another HST province, you charge the customer at their rate of HST.
• If you’re in an HST province and you sell to an non-HST province, you charge only GST.
• If you’re in a non-HST province and you sell to an HST province, you charge the customer at their rate of HST.
• If you’re in a non-HST province and you sell to a non-HST province, you charge only GST.
• If you sell to a client outside of Canada, there’s usually no tax but there may be exceptions.
• If you perform all of the photography services outside of Canada, there’s no taxes.
There are several other possible scenarios other than those mentioned above, such as performing photography services in another province or doing an assignment in multiple provinces. Good luck figuring that out.
Remember that Nova Scotia’s HST rate increases from 13% to 15% on July 1, so send Nova Scotians your sympathy.
A moment of silence for those in Prince Edward Island (P.E.I.). It may be the smallest province but it has the highest sales tax in the country. They pay 10% PST on top of the 5% GST. Like the people living in Quebec, folks in P.E.I. pay tax on a tax.
Please check the date of this article because it contains information that may become out of date. Tax regulations, sales tax rules, copyright laws and privacy laws can change from time to time. Always check with proper government sources for up-to-date information.
