On March 15th the Canada Revenue Agency released a document that explains the HST transition rules as they apply to direct sellers and independent sales contractors. The government continues to fine tune BC HST and Ontario HST to address some of the questions that are arising among residents of these provinces.

Four examples are given within the document to help explain the process:

A direct seller in Ontario issues an invoice dated May 31, 2010, for the sale of an exclusive product to an independent sales contractor. The product is paid for on June 10, 2010, and is delivered to the independent sales contractor on June 15, 2010. On July 1,  2010, the independent sales contractor still has the product in inventory. The independent sales contractor intends to sell it to a purchaser in Ontario. Because the product is delivered before July 2010, the direct seller charges the GST on the suggested retail  price of the product and accounts for the tax in its GST/HST return for the reporting period that includes May 31, 2010. In addition, because the independent sales contractor still has the product in inventory on July 1, 2010, the direct seller must self-assess the 8% provincial part of the HST calculated on the suggested retail price it used to calculate the GST on May 31, 2010. The direct seller accounts for the 8% provincial part of HST in its GST/HST.

and…

An approved distributor in British Columbia sells an exclusive product to an ISC and issues an invoice dated June 25, 2010. The product is delivered to the ISC on June 28, 2010. The ISC delivers the product to a purchaser on July 5, 2010. Feel free to download the HST Transition document from CRA. Because the product is delivered to the ISC before July 2010, the approved distributor charges the GST on the suggested retail price of the product and accounts for the GST in its GST/HST return for the reporting period that includes June 25, 2010. Because the ISC has the product in inventory on July 1, 2010, the approved distributor must self-assess the 7% provincial part of the HST calculated on the suggested retail price of the product it used to calculate the GST on June 25, 2010. The approved distributor accounts for the 7% provincial part of the HST in its GST/HST return for the reporting period that includes July 1, 2010.

Feel free to download this entire HST transition document from CRA.