HST hike to apply to some 'transitional' purchases made before July start date

The Harmonized Sales Tax increase may not come into effect for two months, but you'll pay tax on some things bought before then if you don't pay in full before July 1.

In the latest provincial budget, Finance Minister Cathy Bennett announced the provincial HST would be going from 13 per cent to 15 per cent as of July 1, despite campaign promises made by Premier Dwight Ball during the fall election that there would be no hike.

On Tuesday government laid out rules for transactions that straddle the periods before and after the new tax kicks in.

The transitional rules require businesses and contractors to charge the 15 per cent HST on contracts and services that start before July 1, if they're not paid for before then.

Real estate

The transitional rules apply to various business sectors, but perhaps the most immediate impact will be on real estate purchases.

Under the new rules, any purchase in May or June would have 15 per cent HST applied if both ownership and possession of the property are transferred to the purchaser on or after July 1.

For example, if a land developer agrees to sell a commercial property to a business in May, but ownership of the space isn't transferred to the business until August, then the business owner would have to pay the full 15 per cent HST on the purchase of the property.

The transitional rules also apply to vehicle leases, intangible personal property and other contracts and services that straddle the period before and after the July 1 HST hike comes into effect.

Full details of the rules can be found on the Government of Newfoundland's website.