On October 23, 2024, the Nova Scotia government announced plans to reduce its Harmonized Sales Tax (HST) rate from 15 per cent to 14 per cent, reflecting a reduction in the provincial component from 10 per cent to nine per cent, effective April 1, 2025, with a legislative motion that was passed on December 10, 2024.
Transitional Rules
Organizations that do not carry on business in Nova Scotia are still required to collect GST/HST at the appropriate rate for taxable supplies made anywhere in Canada.
To address transactions that straddle the April 1, 2025 implementation date the province released a new notice, “Transitional Rules for the April 1, 2025 Nova Scotia HST Rate Decrease,” on December 20, 2024, that outlines the transitional rules in respect of the rate change. Transitional rules are necessary to determine whether the existing 15 per cent HST rate or the new 14 per cent HST rate will apply to such transactions.
The general transitional rule to determine which rate of tax applies is based upon the time at which the HST applicable to the transaction becomes payable.
- 15 per cent HST applies if the tax becomes payable before April 1, 2025.
- 14 per cent HST applies if the tax becomes payable on or after April 1, 2025.
The HST on a supply's consideration is payable on the earlier of when it is paid or becomes due. Generally, consideration for a taxable supply is due on the earliest of the date:
- The date the supplier issues an invoice.
- The invoice date.
- The date the supplier would have issued an invoice, if not for undue delay.
- The date payment is required under a written agreement.
Supplies of real property by way of sale will have the following specific transitional rule:
- 15 per cent HST applies if either ownership or possession transfers to the buyer before April 1, 2025.
- 14 per cent HST applies if both ownership and possession transfer on or after April 1, 2025.
For deemed taxable supplies of real property:
- 15 per cent HST applies if the supply is deemed to have been made before April 1, 2025.
- 14 per cent HST applied if the supply is deemed to have been made on or after April 1, 2025.
Certain other transactions will also be exempt from the general rule. Specific transitional rules will also apply to these transactions, including leases of tangible personal property, certain services and intangible personal property.
The Nova Scotia HST rate change will also have an impact on the importation of goods and services into the province, the calculation of certain taxable benefits, and streamlined accounting methods used by certain businesses and public service bodies.
Businesses should assess the impact on their systems and processes, notify accounting teams, and update internal systems to ensure a smooth transition and avoid any disruptions come April 1, 2025.
For more information on how this rate change may impact your organization, visit Nova Scotia Finance or contact Crowe Soberman's Indirect Tax partner Frederic Pansieri.
This article has been prepared for the general information of our clients. Please note that this publication should not be considered a substitute for personalized advice related to your situation.
