By Gary Sliworsky, Ag rep, Emo
The 2009 Ontario budget included a comprehensive tax package that would, when enacted, provide tax cuts for individuals, families, and businesses to strengthen the foundation for job creation and future economic growth.
Starting July 1, 2010, Ontario’s Retail Sales Tax (RST) would 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 Ontario farmers will save about $30 million annually under the HST on items that currently are 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 currently are point of sale tax-exempt.
Under the HST, Ontario’s farmers no longer would 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 those in others provinces that have harmonized sales taxes.
The HST would follow the same rules and structure as the GST. Farmers who currently are 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 (e.g., feed, fertilizers, grain bins and dryers, seed, farm equipment and machinery, livestock purchases, pesticides, quota, and tractors greater than 60 h.p.)
Farm inputs that currently are taxed with the RST would be subject to the HST and also be eligible for an offsetting input tax credit.
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 include 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); and
•many farms would be eligible for a small business transition credit of up to $1,000.
Dates to remember
•Nov. 7–Rainy River Federation of Agriculture annual meeting, Barwick Hall (cocktails at 6 p.m., dinner at 7 p.m.)