doing business in canada - Davies Ward Phillips & Vineberg LLP

GST and ITCs are calculated, reported, and paid or refunded on a regular periodic basis. The reporting period ofa registrant may be monthly, quarterly or annually, depending upon the registrant's revenues and whether theregistrant elects to report on a more frequent basis than is otherwise required.OTHER COMMODITY TAXESBusinesses involved in bringing goods into Canada, or manufacturing and selling goods in Canada, may also beaffected, either directly or indirectly, by certain other taxes and duties imposed in Canada. Most productsimported into Canada are subject to two types of commodity taxes in addition to the GST, namely customsduties and provincial sales tax. Products such as alcohol and tobacco are subject to additional excise duties.PROVINCIAL SALES TAXEvery province, except Alberta, imposes some form of sales tax. In New Brunswick, Nova Scotia andNewfoundland, harmonized sales tax (“HST”) is charged at a single rate of 13% instead of GST and provincialsales tax. HST is levied under the ETA and follows the GST rules described above. Québec levies its own versionof the GST, which is described below. Ontario, Manitoba, Saskatchewan and British Columbia currently imposevarying forms of a retail sales tax (commonly referred to as provincial sales tax or "PST"). Ontario and BritishColumbia are set to harmonize their sales tax system with that of the GST, effective July 1, 2010. The combinedrate of tax will remain at 13% for Ontario and 12% for British Columbia, and the tax will be levied under the ETAas HST. A vendor in the business of selling taxable goods or providing taxable services in any one or more ofthese provinces is generally required to obtain a vendor's permit from each relevant provincial government andto collect and remit PST on taxable sales within that province.Québec has a goods and services tax system which closely parallels the concepts and provisions of the GST(including the requirement to register and collect tax). Québec Sales Tax ("QST") applies at the rate of 7.5% tothe price of goods and services inclusive of GST, making the effective rate 7.875% for a combined rate with GSTof 12.875%. The Québec tax authority is responsible for the collection and administration of both GST and QSTin Québec.QST will increase to 8.5% on January 1, 2011, for a combined rate of 13.925%, and to 9.5% on January 1, 2012,for a total combined rate with GST of 14.975%.OTHER TAXES - PROPERTY TAXES AND FEESLAND TRANSFER TAXESMany provinces impose tax on the transfer of real property (including with respect to certain leaseholdinterests). Ontario transferees of real property are generally liable for land transfer tax at a rate of 1.5% of theconsideration paid. Québec also levies a land transfer tax at similar rates. Certain deferrals and exemptionsmay be available in respect of land transfer tax, particularly in the context of qualifying inter-corporate transfersamongst affiliated corporations. Certain transfers of real property may also be subject to GST (and QST or HSTdepending on the relevant provincial jurisdiction).The City of Montréal levies land transfer take at slightly higher rates than the rest of Québec.The City of Toronto also imposes tax on the transfer of real property located in Toronto at a rate of up to 1.5%,which is in addition to the Ontario land transfer tax described above.MUNICIPAL PROPERTY TAXESReal property owners may also be subject to municipal property taxes and levies, generally based upon theassessed value of the property. The tax rates vary from one jurisdiction to another.Tax Considerations 91