Newfoundland contractor dilemma: What to do about ‘transition rules’ around HST increase
"We NEVER quotes anything with any tax in our price," says one contractor. This eases the transition when HST increases, as it recently did in Newfoundland.
Last week, a Newfoundland contractor lamented that he felt he was stuck in a bind. He had signed a contract with a client before the province raised its HST from 13% to 15%. He didn’t feel he could put 15% on his invoices, because he had purchased some of his materials at 13%, etc. He didn’t want to offend the customer. We asked for advice.
We got this reply from contractor Dave Currie…
“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.”