HST will save farmers $30 million annually

By Gary Sliworsky
OMAFRA Rep.

I have been getting a number of calls about the Harmonized Sales Tax. The following is a reprint of an article that was done last fall.
Starting July 1, 2010, Ontario’s Retail Sales Tax (RST) will be converted to a value-added tax structure and combined with the federal Goods and Services Tax (GST) to create a single, federally administered Harmonized Sales Tax (HST).
It is estimated that Ontario farmers will save about $30 million annually under the HST on items that are currently not exempt from the RST. Farmers would continue to pay no tax on the majority of inputs purchased such as feed, seed, fertilizer, farm equipment and machinery, which are currently point of sale tax-exempt.
Under the HST, Ontario’s farmers would no longer pay sales tax on many items such as trucks, light vans and parts, furniture, lawnmowers, computers, freezers and other equipment. This would put Ontario farmers on a more level playing field with farmers in others provinces that have harmonized sales taxes. The HST would follow the same rules and structure as the GST. Farmers who are currently remitting their GST paperwork would continue to do so and continue to receive input tax credits on any applicable purchased farm inputs.
Most farm inputs would continue to be zero rated and would be purchased without paying any tax. Examples: feed, fertilizers, grain bins and dryers, seed, farm equipment and machinery, livestock purchases, pesticides, quota and tractors greater than 60 hp.
Farm inputs that are currently taxed with the RST would be subject to the HST and also be eligible for an offsetting input tax credit. Examples: pick-up trucks used on the farm, computers and office equipment used in the farm’s business.
Farm inputs that are exempt from the RST but not the GST would be subject to the single sales tax, and also be eligible for an input tax credit. Examples: contract work, freight and trucking, veterinary fees and drugs, custom feeding, machinery lease and rental, hand tools, fuel, oil and grease.
HST benefits for Ontario’s farmers.
·On average, farmers would realize about $600 annually in new benefits.
·No identification or Purchase Exemption Certificates are required at the time of purchase.
·No extra paperwork; any input tax credits to be claimed would be part of the existing GST filing.
·Many farms would be eligible for a small business transition credit of up to $1,000.