1. HST on SFU Purchases and Sales 4/26/2015HST 1 Prepared by: Sabina Diaconescu Larry Guthrie Financial Services

2. Tax Components & Rebates 5% CVAT (Canada Value Added Tax) +7% BCVAT (BC Value Added Tax) 12% HST  67% rebate on CVAT for universities  75% rebate on PVAT for universities  Net of HST after rebate 5% - (5% x.67) + 7% - (7% x.75)= 3.40%  Point of Sale Rebates eliminate BCVAT  Zero – Rated and Educational Exempt purchases have no HST  100% input tax credit on HST if for resale  Rebate and ITC’s are HST deducted to only charge net cost to department accounts HST 2 4/26/2015

3. Example of Regular Purchase HST 4/26/2015 3 Regular Purchase AmountCVATBCVAT Total Light Bulbs/Services 100.00 5.00 7.00 112.00 less 67% CVAT Rebate - 3.35 less 75% BCVAT Rebate - 5.25 Net Cost 100.00 1.65 1.75 103.40

4. Point of Sale Rebates on BCVAT (i.e., vendor does not change 7% BCVAT)  Gasoline, diesel fuel, bio-fuel components for motor vehicles, boats and aircraft  Books  Children’s sized clothing and footwear  Children’s car seats and booster seats  Diapers  Feminine hygiene products Note: 5% CVAT applies where applicable HST 4/26/2015 4

5. Example of Purchase With BCVAT Point of Sale Rebate HST 4/26/2015 5 Point of Sale Rebate Amount CVAT BCVAT Total Gasoline 100.00 5.00 - 105.00 less 67% CVAT Rebate - 3.35 less 75% BCVAT Rebate -- Net Cost 100.00 1.65- 101.65

6. GST/HST Exempt Supplies (i.e., No HST is charged) Zero-rated supplies  Prescription drugs  Medical Devices  Basic Groceries  Exports of goods and services  Travel Services  Agriculture and fishing Educational exemptions Common Items:  Credit courses and programs  Supplies by some public bodies  Trade or vocational instructions  Camp fees  Sales at nominal value  Meal plans  Library services  Fundraising  Supplies by charities HST 6 4/26/2015

7. Example of Input Tax Credit (ITC) Commercial Purchase & Sale HST 4/26/2015 7 Sale Price 1,000.00 HST(12%) 120.00 Total charged to outside customer 1,120.00 Cost of goods purchased to sell 900.00 HST(12%) 108.00 CVAT ITC (5%) recovery- 45.00 BCVAT ITC (7%) recovery- 63.00 Net Cost 900.00 Profit 100.00

8. Place of Supply Rules  Place of Supply Rules determines the provincial tax component on buying or selling transactions  B.C. is SFU’s normal place of supply with the notable exception of when there is travel outside of B.C.  Travel expense claims completed through self-service will correctly calculate rebate based on the location of purchase selected.  Imports – GST only taxed at the border, must self assess for BCVAT  Interprovincial tax application HST 4/26/2015 8

9. HST – Place of Supply Rules - determine when to charge tax at 5%, 12%, 13%, 13.5% or 15% Services– tax rate based on recipient of supply address: If no address obtained, then Canadian portion of where work is primarily performed Exceptions for Services where work is done in respect to:  Real Property – based on primary location  Tangible Personal Property – based on place TPP located  Personal services – based on place of performance and if >90% performed in physical presence of individual to whom the service is rendered  Location-specific event – based on location of event  Transportation services: passenger based on where the journey starts, freight based on destination  Custom brokerage – based on place goods released for commercial imports or based on residency of importer for non-commercial imports  Postage & mail delivery – based on place purchased unless price >$5 and item is sent to non- HST province  Litigation, Trustee fees – based on province proceeding held  Computer related services & internet access – based on location of end user  Other – Telecommunication, air navigation, rolling stock HST 4/26/2015 9

10. HST – Property & Services brought into BC for use in BC Requirement to Self-Assess - 7% BCVAT on purchases made from non-participating provinces - 7% BCVAT on outside Canada purchases (ex. US equipment, Livingston, Fedex) - 12% for Intangible Purchases (consulting services, software) No Self – Assess - Purchase made in another HST province or full HST paid on entry to Canada - If the good/service imported is for use exclusively in commercial activity Canada Customs collects duty & tax - 5% federal GST on all imports excluding exempt or zero-rated goods Note * Provincial portion of HST not collected on commercial imports, MUST self-assess provincial portion Note ** Items sent by mail valued at <$20 not taxable HST 4/26/2015 10

11. HST 11 4/26/2015

12. Tax rates - Interprovincial Purchases & Sales HST 4/26/2015 12 GSTProvincialHSTQST Alberta5% British Columbia 12% Effective July 1, 2010 Manitoba5%7% New Brunswick 13% Newfoundland & Labrador 13% Northwest Territories5% Nova Scotia 15% Effective July 1, 2010 Nunavut5% Ontario 13% Effective July 1, 2010 Prince Edward5%10% 10% x(5% x sale price) Quebec 5% 7.5% 13.5% Effective Jan 1, 2011 8.5% x(5% x sale price) Saskatchewan5% Yukon5%

13. Interprovincial transactions Example – Employee travels to a 3 days conference in Ontario and makes a 2 day stop to University of Alberta for a meeting. Upon his return the employee completes an expense claim o $1,130.00 conference fees ($1,000 + $50 CVAT +$80 OVAT) $ 315.00 hotel accommodation in Calgary ($300 + $15 GST) $ 63.00 restaurant meals in Calgary ($60 + $3 GST) o $ 339.00 hotel accommodation in Toronto ($300 + $15 CVAT +$24 OVAT) o $ 101.70 restaurant meals in Toronto ($90+ $4.50 +$7.20 OVAT) $ 22.40 Vancouver airport taxi ($20 + $1CVAT + 1.40 BCVAT) Note the complexity of applying different provincial tax rates The Place of Supply Rules determine which tax (5%, 12%, 13% or 12.5%) apply. The 75% BC Rebate only applies to purchases where BC is the “place of supply” HST 4/26/2015 13

14. HST on Sales SFU is registered for HST purposes If all revenue in cost centre is taxable, the rebate/input tax credit applying to the cost centre should be 100% HST should be charged as a combined 12% rate on the invoice, to showing federal and provincial components is optional Invoices should show the total amount of HST charged or that the amount payable for each taxable item that includes HST at 12% HST 14 4/26/2015

15. Useful websites  http://www.sfu.ca/finance/hst_information/ http://www.sfu.ca/finance/hst_information/  www.gov.bc.ca/hst www.gov.bc.ca/hst  www.fin.gc.ca www.fin.gc.ca  www.fin.gov.bc.ca www.fin.gov.bc.ca  www.gov.bc.ca/rebates_exemptions www.gov.bc.ca/rebates_exemptions SFU CONTACTS: Sabina Diaconescu sdiacone@sfu.ca/778-782-7255sdiacone@sfu.ca/778-782-7255 Debbie Castagner castagne@sfu.ca/778-782-6899 HST 15 4/26/2015