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Once the new harmonized sales tax becomes effective next year, building professionals can recover HST paid on costs such as building materials.

Finance Minister Dwight Duncan announced Ontario will 'harmonize' its provincial sales tax (PST) with the goods and services tax (GST), effective July 2010. After 18 years of provincially maintaining the five per cent federal GST separately from the eight per cent PST, there will be a single 13 per cent harmonized sales tax (HST). Newfoundland, Nova Scotia, and New Brunswick have been using this newer tax system since 1997.

Brian Wurts, a senior manager with PricewaterhouseCoopers Canada, indicates the move should save costs for the non-residential design/construction sector.

"Such businesses will be able to recover the new tax paid on their purchases, whereas the present eight per cent PST paid on taxable purchases, such as building materials and non-custom software, is unrecoverable and becomes a cost," he told Construction Canada Online. "Although they will have to charge 13 per cent on their charges to customers, in lieu of five per cent currently, this will generally be recoverable to their customers and therefore not a cost to them."

For real estate sales, the impact of tax harmonization depends on the type of property and purchaser. Sales of non-residential properties will be taxable, but buyers can generally claim input tax credits. Purchasers of residential spaces, however, cannot claim these credits.