News Release Archive

The Nova Scotia Department of Finance says businesses and
consumers should be careful about the tax implications for
memberships and other services that go beyond March 31, 1997.

The technical paper on the Harmonized Sales Tax (HST) released
jointly by the Government of Canada and the three participating
provinces on Oct. 23, 1996 sets out the rules for long term
service arrangements.

Prior to Feb. 1, 1997, people may renew annual memberships and
enter into service arrangements without having to pay the
Harmonized Sales Tax. The rules require payment for such services
or memberships on or before Jan. 31, 1997 in order to remain
under the old tax rules. After January 31, memberships and other
annual service contracts will have to include the HST on that
portion of the contract or membership that goes beyond March 31,

For example, a health club may sell annual memberships until the
end of January, free of HST. Memberships and service arrangements
must be paid or be due (i.e. actually paid or invoiced with
payment due) before the February 1, 1997 deadline.

The rules for sales of services to businesses and institutions
(ie. anyone not a consumer) are slightly different as there may
be a requirement for the purchaser of the service to self-assess.
The technical paper sets out detailed rules in these situations.

In any case, for payments received after Jan. 31, 1997 or for
invoices not paid, and coming due after Jan. 31, 1997, the
membership or service contract is pro-rated. For the period Jan.
1 to March 31, 1997, the old rules apply and only the GST is
charged. For the part of the membership or service contract that
goes beyond March 31, the HST applies at 15 per cent, not the GST
at seven per cent.

The rules for magazine and newspaper subscriptions are slightly
different. In those cases, people have until March 31, 1997 to
renew their subscriptions or to start one without having to pay
the HST. Subscriptions must be paid before the April 1 deadline,
not just renewed or due.

The rules in all cases were designed to give consumers and
business some time to become informed about how the rules for HST
work, before implementation.

In many cases it may be to a consumer's advantage to pre-pay
memberships and services, but consumers should be certain they
want to use the service or membership for the full year, and be 
comfortable pre-paying that far in advance.

There are some cases however, where the consumer is not better
off. For instance, cable tv contracts are often pre-paid, but the
tax on cable tv and other telecommunications services including
internet connections goes down on April 1, 1997. In this case a
pre-payment means the consumer may be paying more than a customer
who remits monthly.

More information on the transition rules as they apply to the HST
is available from Revenue Canada at 1-800-959-8286.


Contact: Bruce Cameron  902-424-8787

trp                        Jan. 14, 1997 - 12:45 p.m.