On July 1st the HST (Harmonized Sales Tax) will take effect. It will have an impact on the cost of legal representation for clients of all Ottawa Business Lawyers, Ottawa Personal Injury Lawyers and Ottawa Estate Lawyers. However the impact of the HST will not be uniform for all clients and all claims. Most clients of Business lawyers, Ottawa and Ontario based, will see no real change to the cost of legal representation.
On the other hand, Personal Injury lawyers’ Ottawa and Ontario clients generally will be saddled with a new expense. This gives rise to concerns about access to justice for those who are already vulnerable to being deprived the ability to assert their rights owing to the costs associated with pursuing compensation and rights claims.
The lawyers at Connolly, Nichols, Allan and Snelling L.L.P. are concerned with how HST will affect clients. In particular, we remain committed to finding creative solutions to ensure clients are able to use counsel to assert their rights where necessary.
Whereas HST issues may are complicated and subject to individual fact specific situations, the following principles are of general application:
- The HST will apply to legal services billed after July 1, 2010;
- Those clients with an HST number will generally be able to deduct the HST paid from the HST they collect, in which case the tax will amount to a flow through in many circumstances;
- For those clients who cannot deduct the HST paid against HST collected, the HST will still be tax deductable if the legal services rendered are themselves tax deductable;
- In the case of cost awards made in legal proceedings, HST will be claimed in the same manner as GST has been claimed, thus lessening the impact of the added expense to successful litigants.
As with any new tax require it will take time and analysis before the full impact of the HST will be realized. Regardless, the lawyers at Connolly, Nichols, Allan and Snelling L.L.P. are committed to minimizing the impact of the HST on our clients.