For our travel agency customers in BC and Ontario, the HST (combined GST and PST) will become a reality from July 1, 2010, which will affect the tax on commission (for travel services
that are not zero-rated). Unfortunately, this will mean that agents will now need to be ‘tax specialists’ as well as ‘travel specialists’ when booking and pricing travel. While there is some information available online, it is very confusing. The following are some external sites we found that we thought you might find useful in trying to decifer how/whether to apply the HST on commission for passenger travel services, or on service fees (please note – the information provided in these external sites are for your reference only. We have not validated it. You should also check with your accountant/tax advisor on the application of the HST).
- http://travelindustrytoday.com/web/index.php?option=com_k2&view=item&id=10451:open-forum-on-hst-acta-fills-in-the-blanks&Itemid=14
- http://www.artacanada.ca/hst
- http://www.rev.gov.on.ca/en/taxchange/
- http://hst.blog.gov.bc.ca/
At the time of writing this, the Canada Revenue Agency (CRA) has not yet updated their guide on GST/HST for the Travel Industry, which was last updated in 2008 and does not refer to HST introduced in BC and Ontario. We will keep monitoring try to add more resources to this blog to help you, as they become available.
Getting your Merang TravelOffice System HST Ready:
In order to ensure that your account on the Merang invoicing and accounting system is ready, on July 1, 2010, please remember to change the default rate in your profile so that the system will calculate the tax on commission accurately for any bookings done on or after July 1st, 2010. To change the default rate, simply do the following on July 1, 2010:
For Back-Office Module users:
1. Login to the Back-Office module.
2. Click on “Manage Profiles” from the left-side menu. Then, click on “Tax and Currency Profile”.
3. Under the ‘Tax on Commission Earned’ section, change the Tax Title to HST and the Tax Rate to 13% (for Ontario) or 12% (for BC). Do the same under the ‘Outside Agents: Tax on Commission Paid’ section, if applicable.
4. Click on the “Modify Profile” button to save the changes.
For Invoicing Module only users:
1. From the invoicing module, click on “Settings and Profiles” from the left-side menu.
2. Then, click on “Tax and Currency Profile”.
3. Under the ‘Tax on Commission Earned’ section, change the Tax Title to HST and the Tax Rate to 13% (for Ontario) or 12% (for BC). Do the same under the ‘Outside Agents: Tax on Commission Paid’ section, if applicable.
4. Click on the “Modify Profile” button to save the changes.
That’s it. The next time you add a new product to an invoice, the default rate will show under the ‘Customer Fare’ of the product window in the invoice. You can always change this rate (to either 0% or 5%, or leave the default rate) depending on the nature of the product being sold directly under the ‘Customer Fare’ tab in the product window of the invoice. Whatever rate you enter will be used to calculate the tax on commission for this product/invoice.