SB Partners


Manufacturing is responsible for the bulk of Ontario’s R&D investment and production technology innovation. It’s an industry subject to unprecedented levels of change and volatility, and is facing challenges such as global competition, fluctuating fuel costs, an aging workforce, a skills shortage and changing consumer preferences.

For distributors, issues such as rising customer expectations, changing supply chains, and streamlining of operations need to be addressed.

Each day brings new critical issues that demand immediate strategic response. SB Partners’ team of professionals will work with you to put in place the controls you need to stay ahead of the risks. Manufacturing and distribution companies need the help of informed professional advisors to plan for future profitability and growth in light of today’s challenges. We have the experience and insight to provide results-oriented solutions. We are uniquely qualified to help businesses reach their business goals.

With our extensive knowledge of manufacturing-related industries and experience, SB Partners can take you to the next evolution of your business.

Harmonized Sales Tax in Ontario

On July 1, 2010 the Ontario Retail Sales Tax (RST) will be combined with the federal Goods and Service Tax (GST) to create a federally administered Harmonized sales tax (HST). The HST would have a combined rate of 13% of which 8% would be the provincial portion and 5% would be the federal portion. The HST, except for some exceptions, would generally use the same rules and tax base as the GST.

What does this mean to manufacturers?

  • Under HST, manufactures will pay more tax on their purchases, but will be able to recover the full HST by claiming input tax credits on their GST/HST returns.
  • The removal of the RST will lower the costs and improve the competitiveness of Ontario Manufacturers.
  • Systems businesses now used to comply with the GST will need to be modified to handle the HST. Modifications will include accounts receivable and billing systems and well as accounts payable.
  • HST is to be collected in the same manner as the GST.
  • For manufacturers selling outside Canada, the determination of place of supply and existing zero-rated rules will play an important factor to ensure compliance on when to collect the additional 8%.
  • The HST will mirror the GST system with some differences. During the first eight years of the tax, business with taxable sales in excess of $10 million, will need to modify their systems to deal with the restrictions in claiming input tax credits for certain categories of expenditures, including energy, other than for producing goods for sale, telecommunications, food, beverage and entertainment and road vehicles weighing under 3,000kg.
  • Manufacturers outside Ontario may also have to modify their systems to apply HST on sale to Ontario customers.
  • Manufacturers also need to plan and modify their systems to deal with the removal of RST from prices.
  • With the removal of the RST, businesses will no longer be entitled to use RST purchase certificates exemptions to make qualifying expenditures, such as raw materials and productions equipment, free of RST. Businesses will have to pay the HST but will generally be entitled to claim an input tax credit for such HST. This change may affect cash flow, especially for businesses that are primarily in the export business.
  • Consider postponing certain major purchases until after the implementation of HST. This may result in a tax savings.

Next Steps

Talk to our Manufacturing and Distribution Practice Group:

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HST is here on July 1st - Be prepared with our free guide
What our Clients Say

Joanne Pellegrino, Accountant, Izumi Outdoors Inc.

"In the three years that Ive been dealing with SB Partners I have always found them to be courteous, thorough and professional. Their work on our annual statements and tax returns is exceptional and their expertise makes my job a whole lot easier."