Tax Rate Updates: When any tax changes are required, the Realty Management System update automatically revises the default tax rates in your Edit Tax Info option (E.1.2).

Default Taxable Settings: Please ensure that the Taxable fields for your Trade Classifications (I.3.2), and your Fees (E.1.3), are set to Default to use the default rate. This will tell the system to use the default tax rate setup in E.1.2, rather than an overridden rate. You should only have your Taxable field set to ‘Yes’ if you want to specify a tax rate to be different than the default (For example: Trades that are tax exempt or out of province properties).

HST Report (F.9): When running your GST/HST report (F.9), the system will not allow you to select a period that straddles two rates. You need to run your report up until 06/30/10, and then generate another report starting 07/01/10, if your reporting period includes the transition date.

Updates: In version 10.03.03, the GST/HST rate for July 1st has been updated for B.C. and Ontario clients. After updating, information entered (trades, A/P, agent expenses, etc.), and dated on or after July 1, 2010, will be calculated at the new tax rate. On July 1st, the name of your existing GST tax will automatically change to HST.

Canada Revenue Agency (CRA) has indicated that HST should be applied to any closings that happen on or after July 1, 2010, unless the agent can prove that 90% or more of the service was provided before that date. **The onus is on the agent to justify that calculation**

In version 10.04.01, the Tax Rate field on the Key Info screen has become editable so that any tax overrides can be entered on individual trades. Please remember for CRA auditing purposes, you must be able to justify the tax rate if requested. We recommend that you keep any documentation in regards to that calculation in the trade files, and/or scan the document and attach it to the trade using the Docs button (top right hand corner in 2.1).

Please review any Recurring Journal Entries (F.1.2), or Recurring A/P entries (5.3), prior to July 1st, to edit any tax amounts you may have manually allocated.

In regards to trades with sub-trades, since there is only one tax rate applicable to each trade, we recommend that you use the QuickAdd feature and then select the Copy Existing Trade button to setup a second trade for closings dated on or after July 1st, 2010. If the prior sub-trades are already closed, and you add closings after July 1st, the system will calculate all the postings correctly, however if you need to unfinalize any of the prior closings, when you re-finalize the tax will be calculated based on the Close Date on the Key Info screen which will be the latest sub-trade closing date. Therefore this is just a recommendation, not a requirement for sub-trades.

We will communicate any further changes announced by CRA via our newsletter and/or release notes as the information is released to us.

Provincial Transitional Rules:

Per the HST section in our last newsletter, we have received an “interpretation” from CRA regarding Agent Commission Transitional in regards to pro-rating taxes based on the documentation that exists at this time. We have been advised not to re-calculate taxes on trades automatically; however we will give you the ability to specify a Tax Rate override.

Nova Scotia:

The Harmonized Sales Tax (HST) combines the federal Goods and Services Tax (GST) of 5 per cent and Nova Scotia’s value-added tax. As of July 1, 2010 the provincial value-added tax will increase from 8 per cent to 10 percent. In RMS version 10.04.01, the Rate table for HST has been updated to reflect this change.