It’s coming, the new harmonized sales tax (HST) that will combine the current GST and PST into one levy. Starting July 2010, Ontario and British Columbia are introducing the revamped 13% tax and it’s going to have an impact on every business in these provinces.

Although the Ontario and B.C. HST guidelines have yet to be released, there are plenty of articles online that touch on the subject. Check out the National Post's coverage from March 2009 for opinions on how the tax change will affect business, or peruse the Canada Revenue Agency's section on current HST practices.

What can your business do to prepare?

Recently, KPMG released an article outlining some of the key steps businesses, large and small, can take to get ready for the tax change, and for some, the tax increase.

According to the article, there’s good news for companies making GST-taxable sales: “…the change to HST may help make them [companies] more competitive nationally and internationally because they will generally be able to recover most HST they pay through input tax credits, which will remove the unrecoverable PST currently embedded in their costs.”

Conversely, businesses that provide GST-exempt activities won’t be recipients of the same benefit. “…companies in GST-exempt activities will generally not be able to recover the HST they pay. These companies will likely pay additional unrecoverable tax because some items previously not subject to PST will become subject to HST, such as most intangible goods and services.”

An important task all companies should tackle is to determine which resources are needed to make the necessary changes to the upcoming year’s budgets, financial plans, and system and human resources allocations. A review of accounting and IT systems, to establish whether better internal controls for GST/HST purposes are required, is a good place to start.

Learn more about the impact HST will have on business by reading “Ontario and B.C. Technology Companies — Get Ready for Sales Tax Harmonization” by Lesley Tela, Associate Partner, KPMG LLP and Dianne Bomben, Senior Manager, KPMG LLP.