| Benefits of Leasing Before HST Harmonization |
 |
Background
Ontario PST and B.C. PST have announced that their respective provincial sales taxes will be harmonized with the current federal GST effective July 1, 2010. HST rate in BC will be 12% made up of 7% provincial component and 5% federal component. The Ontario HST rate will be 13% comprised of 8% provincial component and 5% federal component.
Who can benefit?
- Businesses considering purchasing equipment (or have committed to purchasing equipment but are waiting for delivery) before July 1, 2010.
- Businesses that need to acquire or upgrade their capital assets but have decided to defer their purchase because of potential tax savings from upcoming implementation of HST.
- Businesses that may have considered a sale and lease-back of their valuable capital assets but have decided not to because of current PST costs (double taxation) associated with sales and lease-back transactions.
Potential tax benefits
- Instead of purchasing the equipment outright, lease the equipment. Once the HST is implemented, the PST on your lease payment will become part of HST which should be fully recoverable as an Input Tax Credit.
- If you need your capital assets today (or upgrade) in order to meet operational requirements but have decided to delay your acquisition, leasing will get you that equipment working for you today while minimizing the purchase tax cost.
- If you have valuable equipment that you currently own and would like to free up some of its value but decided not to because you'll have to pay current PST again, this added cost could be fully recovered by you. Therefore, the additional tax will no longer be an impediment to your sale-leaseback transaction.
Professional Advice
LCC does not provide professional tax advice or opinions. You should always seek the advice of your professional tax advisors.
For more information on this and other ways leasing can improve your cash flow, contact Mike Cole, National Account Manager at 800-530-0225 extension 239 or by email at mcole@liftcapital.ca.
|
|
|
