Taxable or Non-Taxable? People don’t really know what’s exactly going on with the Harmonized Sales Tax. Here is a table to see what is taxable.

Source: “Harmonized Sales Tax in Canada British Columbia Edition” prepared by BC’s CGAs.

Please read it carefully. If you still have second thoughts regarding HST, please contact Acton Accounting and Bookkeeping.

On the other side, a report in The Vancouver Sun has illustrated that “Recession is now history in BC” according to an increase of good business news.  KPMG announced that “the host of the 2010 Winter games now offers the best business tax climate of 41 countries measured around the world.”

According to various surveys and reports there is evidence of an increase in business and a slight improvement in the economy however, this is insignificant news to the majority of households across BC who are finding it difficult to make ends meet.

Just one year ago, the Canadian Dollar was at its lowest exchange rate with US dollar since July 2005. This month, the Loonie reached the par and is expected to stay there within the next little while.

From January to March 2010, a dollar CAD was blocked at around 0.95 US dollar, when strong economic data and expectations for higher domestic interest rates were supporting the Loonie. CAD rose to parity for the first time since July 2008 earlier this month, on April 6th, and finally closed above parity about a week later on April 14th.

Why is the Canadian currency raising such a wave of popularity?

Like I said above, Canadian economic data are stronger then expected. In fact, Canada is now seen as the leader of economic grows this year (over other G7 countries). Such good results allow us to believe in expecting an early raise of the general interest rates by the Bank of Canada, while United States is still trying to recover from the economic downturn.

How will it affect Canadian investors’ behavior?

With a strongest national currency, the purchasing power of Canadians increases, making the foreign products relatively less expensive in CAD. Also, Canadians will have lots of opportunities on the foreign markets, in particular in real estate. Canadian companies can invest abroad, by means of taking stakes in foreign companies.

As of April 24^th the CAD/USD exchange rate was below par, but the expected trend is in favor of the Loonie beginning next week.

On April 6^th a massive campaign to take down the Harmonized Sales Tax  (HST) in British Colombia  was headed by former premier Bill Vander Zalm called “Fight HST” . This campaign exists to fight against Premier Gordon Campbell in order to impose a public referendum on the HST. If Vander Zalm and his army of volunteers thrive, this movement will enter in history as the citizen’s first successful initiative to force BC to hold a referendum.

We all know this won’t be easy: the volunteers have to collect 10% of registered voters in each of the 85 provincial ridings for the petition within the next 90 days. In other words, they need 300,000 signatures to push back the tax reform.

What exactly is wrong with HST?

It is obvious that the reform will have a significant impact on consumers who will pay much more taxes on products and services (which are usually free from PST).

For the same reason, HST will hurt small businesses. Businesses who, in the future, sell services outside the province within Canada will become tax collectors for the consumers’ region. This can either boost the national economy or slow it down; Business relationships between 2 provinces will have to be well-balanced if we don’t want the provinces to depend upon each other and if we want to boost Canada’s economy.

Pro-HST

The original plan was to harmonize taxes in order to attract more investments within Canada and to be able to create a significant number of jobs in the country.

According to the BC government, there are some benefits for customers:

-  Some products will stay exempt from PST, such as gasoline, children clothing, books, diapers, and other products which are currently exempt from GST will stay out the reform.

- New home buyers purchasing a house worth more than $525,000 will receive a rebate estimated at $26,000. However, the purchase of used homes will be HST exempt.

- Families with an income of less than $25,000 will receive a special HST credit.

- HST is not supposed   to improve consumers’ costs for electricity or natural gas.

Rural industries will realize that it is important to save. This allows them to invest back in local job opportunities and encourage investments in BC.

Finally, if you are a Canadian taxpayer you will be saving money thanks to the HST, because of the reduced administrative costs incurred by the PST.

Overall, we’re not here to tell you what you need to think about HST. You already know from daily newspapers that the HST is a major concern these days. If you don’t know what to think yet, you can check out the opposing sides’ websites http://fighthst.com/ and http://www.gov.bc.ca/hst/.

In my opinion, the HST is more a question of politics rather than economics.

HST by Aranda Adams

Knowing that, you can easily guess that leaders are counting on a great economic recovery with a slow interest rates increase; any unexpected drop in GDP or fast interest rates increase would dig the general deficit by billion of dollars.

But still, the impact on most people appears to be very little. For further information, follow that link ‘CBC-Budget-Highlights’or contact us directly here.

Planning forces the entrepreneur to adopt the following things that are essential for success:

1. Setting Sales Goals and Benchmarks for the upcoming year.
2. Taking a realistic inventory on your company’s current resources.
3. Anticipating for future events.

In essence, you must budget for what is to come in the roads ahead. In the language of accounting, budgeting involves projecting what revenues and expense figures your business will face in the upcoming year.

Having the foresight to budget for future events will allow businesses to be flexible and will allow management to seize potential opportunities and tackle challenges. In today’s fast moving economy, the ability to be flexible and be adaptive is a must.

Download our Budget-Forecasting Form here.