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How Does Telecom Expense Management Accommodate Tax Increases

Posted by Caroline Le Brun | May 17, 2016 3:30 PM

You might have heard that some Canadian provinces have recently announced a tax increase. The next upcoming increase in tax is scheduled to happen on July 1st and will affect New Brunswick and Newfoundland. In these two provinces HST (Harmonized Sales Tax) will increase by 2%, specifically from 13% to 15%.

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How will this increase be accommodated in the reports and AP files you get from Cimpl? We’ll get to that question right after we explain what the raise in taxes is all about. For those who don’t know what HST is, it’s a tax found in Canada that applies to certain provinces (New Brunswick, Nova Scotia, Newfoundland and Labrador, Ontario and Prince Edward Island.  These provinces are known as “the participating provinces”). HST is made up of a combination of provincial sales tax (PST) and Goods and Service Tax (GST). The provincial (PST) part of HST is increasing from 8% to 10%.  Since we’ve already spoken about PST and GST, we might as well talk about QST too. If you guessed that QST stands for Quebec Sales Tax then you are correct. This tax is found in Quebec and replaces the PST.  So Quebecers pay QST and GST on the goods and services that they purchase.

Businesses that have a GST/HST registration number or are required to have a GST/HST number are called registrants.  Registrants are eligible to recuperate GST/HST that was paid or owed on purchases and expenses that are pertinent to commercial activities by claiming an input tax credit (ITC).  Business are eligible for an ITC under the condition that their purchases and expenses were for use, consumption or supply in regards to their commercial activities.  Consumers however are not eligible for ITC as the items are not used in a commercial activity.  ITC are subtracted from the total amount of all the collected or to be collected GST/HST during the reporting period.  The net tax can be calculated by subtracting the amount of tax collected on  business taxable supplies and the ITC that are claimed including any adjustments made. This calculation may result in a GST/HST owing or a GST/HST reimbursement.  It is advised that businesses add a column to the purchases and expenses side of their records in order to track the GST/HST that is owed or paid so that it may be used to calculate the ITC for each reporting period. For more information about general eligibility rules on ITC, click here.

(Please note that the following chart has been adjusted to reflect the tax increases for New Brunswick and Newfoundland scheduled for July 1st- indicated by a *)

CURRENT HST, GST AND PST RATES TABLE OF 2016

Canada’s Province

Rate type (HST, GST, PST)

Provincial Rate

Canada Rate

Total

Alberta

GST

0%

5%

5%

British Columbia (BC)

GST + PST

7%

5%

12%

Manitoba

GST + PST

8%

5%

13%

New Brunswick

HST

10%*

5%

15%*

Newfoundland and Labrador

HST

10%*

5%

15%*

Northwest Territories

GST

0%

5%

5%

Nova Scotia

HST

10%

5%

15%

Nunavut

GST

0%

5%

5%

Ontario

HST

8%

5%

13%

Prince Edward Island

HST

9%

5%

14%

Quebec

GST + QST

9.975%

5%

14.975%

Saskatchewan

GST + PST

5%

5%

10%

Yukon

GST

0%

5%

5%

Source: Calculconversion.com

 

So What Does The Tax Increase Mean For Cimpl?

We are already prepared to accommodate the change in Cimpl so that the taxes will be separated in the reports according to our customers’ preferences. Customers who are affected by the tax increase will have the adjustments done to the processes in order to support the new changes on July 1st.

Cimpl is dedicated in providing maximum customer satisfaction by optimizing cost saving and creating new operational efficiencies.  We are leading the revolution in telecom, cloud, and IT expense management. For more information about how Cimpl helps customers save money ($), save time (h) and accurately manage inventory (%), contact Cimpl.

 Oil and Gaz Industry in Canada: Download eReport now!

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Topics: Telecom Expense Management, tem

Written by Caroline Le Brun

As a 16-year marketing veteran, Caroline’s experience extends across multiple industries. Since she joined Cimpl, her successful marketing campaigns have increased the company’s online and community presence, in addition to Cimpl’s footprint and appearances in new or traditional media (such as the Globe and Mail). Caroline is a specialist in communication and social media. She works closely with analysts to keep track of and adapt to the trends and changes in the industry of IT: Technology Expense management, IT cost optimization, Technology trends. Her leadership conducts Cimpl’s marketing team toward ever greater achievements. Caroline is also an exemplary citizen. Outside of work, she is involved in TEMIA, the Dorval Day Camp, and other community organizations. She has a Bachelor’s degree in Commerce from Concordia University and a Master Certificate in Integrated online Strategies from the University of San Francisco Intensive Development program.

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