canadiancontractor
Newfoundland contractor signed contract when HST was 13%. Any advice?
Newfoundland's HST went up to 15% last month
Last week, we ran a post about the (July 1) increase in the HST from 13% to 15% in Newfoundland and Labrador (a 2% increase in the PST portion of the HST). Here is a post from one contractor, Todd Collins, who got caught in the transition period. Contractors, would you “swallow” the extra 2% as Todd seems to be planning? Plus there are “Input Tax Credit” implications on the flow-through of tax paid versus tax collected.
“My issue is with the fact that I have a sizeable project that was mid-stream when the new HST came into effect. The contract was signed based on 13% HST before the provincial budget was announced. It’s not like I could purchase all my material or pay my subcontractors in advance before July 1st. So now I have to find an extra couple thousand dollars in my budget to cover the cost of the extra 2% PST. But I’m pretty confident that that’s about the least of our ill-elected Liberal Government’s concerns. A political party that I did not vote for, might I add. And any new quotes I submit, customers are asking why things are so expensive. I politely suggest they call their local MHA and ask them.”
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In my company we NEVER quote anything with any tax in our price. Every quote includes “plus applicable taxes.” We provide services in several provinces where taxes differ from our home province and we deal with many First Nations where taxes may not be applicable. And while increases or changes in tax amounts seldom occur, they can and will and “plus applicable taxes” covers us.
If the job in question was quoted as a lump sum without the taxes being separately itemized, the customer may have a valid case. If the taxes were shown separately at 13% then a reasonable case can be made the the extra 2% should be paid – because the tax increase was beyond the control of the contractor.