GST Deferral or Waiver - Further Relief Need After July 1st?
- Will the Cross Border Supply Chain restart fully on July 1st – Canada’s birthday?
- Will Business (those that had deferred duties/taxes) be in a position to fully pay monies deferred in March, April, May and June?
- We know that Business have had the opportunity to defer payment of duties & taxes. But did deferral have the desired impact?
If a further concession is needed after July 1st wouldn’t a better solution be:
- Outright waiver of GST from July 1 to September 30th for commercial ‘resident’ businesses importing into Canada
Why a ‘waiver’ vs a ‘deferral’?
Many business owners/leaders within the trade community shared this concept of GST waiver instead of deferral. After all, deferral just means ‘to put something off’ and ‘GST at time of import simply an Input Tax Credit’
Let’s think about what the deferral accomplished:
- Non-residents received the same ability to ‘defer taxes’ as Canadians.
- Businesses who deferred were still eligible to claim the Input Tax Credit (essentially claiming a credit for a payment that hadn’t been made)
- In fact, businesses who chose not to defer were actually at a competitive disadvantage
So if the Canadian Government and industry determine relief is needed after July 1st, why not consider a waiver of GST accomplish at time of import for Canadian resident businesses:
- Canadian businesses (& only Canadian businesses) would have GST ‘waived’ at time of importation. They would still be subject to paying full tax at time of sale of finished product or services but they would not be subject to incurring a tax burden while trying to stimulate their business and the Canadian economy
- Businesses would benefit universally stimulating fair competition.
- The ability for failing businesses to double dip on tax programs would be reduced or eliminated. Quite frankly a struggling business shouldn’t be able to ‘double dip’ deferring tax, while claiming an Input Tax Credit.
So, as July 1st, comes upon us, ironically Canada’s Birthday, let’s hope the businesses who chose to defer payment (both resident and non-resident) come to the party with envelopes stuffed with cash.