GST reduction impacts McMaster

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BY Business Management Services

June 5, 2006

As most people are aware, the GST rate is being decreased by one per cent, from 7% to 6%, effective July 1, 2006. Purchasing, Financial Services and University Technology Services have established a small project team to ensure the University's main financial systems will be ready. The team will also provide information and assist people with understanding how this change affects their transactions.

Each department is responsible for updating their own systems to accommodate the rate change; however, if additional assistance is required the project team will be available.

Special rules have been announced to facilitate the transition to the lower rate, particularly for determining the GST rate applicable to transactions straddling the effective date of the change:

  • The general transitional rule will be that GST at a rate of 7% applies if the transaction is paid or has an invoice date before July 1.
  • When the transaction is paid or has an invoice date after July 1, 2006, the new rate of 6% will apply.

    There are a few specific exceptions and we will work with you to deal with these cases individually.

    Departmental processes or systems that may need updating could include:

  • Monthly invoices or registration forms that include GST
  • Standard monthly journal entries
  • Tax tables or rates set in point of sale systems used by retail operations

    Please note there will be a period of transition as invoices and supporting information for payment often lag behind the date of an item becoming payable or being paid. Expense reimbursements, will be paid the total due, and the change in GST % will not affect the amount paid to employees.

    The current GST rebate (67 %) for public service bodies will remain unchanged.

    Further information, with some examples and FAQs will soon be posted at www.mcmaster.ca/bms. If you have specific questions please contact GST@mcmaster.ca.