It’s not as if this topic is something we’re looking forward to, but it will be a reality for Ontario at the end of next month – the HST is coming and it will make a change to the bottom line on your legal fees.
Currently only GST is charged on legal fees. Certain disbursements, such as government fees, do not contain any tax at all and those disbursements will not be changing.
However, July 1, 2010 all legal fees will be subject to the HST effectively increasing your bill by 8%.
As businesses, we are all able to have the HST flow through, much as the GST has in the past and the expectation is that we will not notice the effect of the HST due to this.
However, if your business is contemplating a transaction such as a shareholder agreement, contract or asset transfer, you may wish to consider incurring the bulk of the legal fees before June 30, 2010 in order to reduce the fees which may not be offset by purchases.
Isn’t this a happy thought, right before a holiday long weekend? I suppose that is why Ontario calls it the May 2-4 weekend, you might need a 2-4 to feel better about the HST.
Inga B. Andriessen, Senior Lawyer