What You Should Know About the New Tax Rates & Rules



On July 1, 2010, both British Columbia and Ontario moved from the Goods & Services Tax (GST) to the Harmonized Sales Tax (HST) of 12% and 13%, respectively. Nova Scotia also increased its current HST rate from 13% to 15%. In addition to the rate change, there are two sets of new rules in place around how the taxes are applied.

The “Place of Supply” rules apply to all provinces and territories. These rules outline under which province or territory’s tax rate your licence fees should be applied, based on the location of the music usage, be it at an event, place of business or transmission.

The “Transitional” rules apply only to customers that, based on the “Place of Supply” rules, will be charged the applicable tax rates in British Columbia, Nova Scotia or Ontario. Going forward from May 1, 2010, the tax rate applied to your licence fees will be based on the time period for which your licence applies, or licensing period. For a licensing period that spans July 1, 2010, the tax rate applied will be pro-rated based on the amount of time the licence is applicable both before and after July 1, 2010. The only exception to this rule will be for a licensing period that begins prior to July 1, 2010, and is completed prior to July 31, 2010, where the pre-July 1, 2010, tax rate will apply.

For provinces and territories that are not experiencing a change in their tax rate, the tax rate applied to your licence fees will continue to be based on the date on which the invoice was generated by SOCAN.

There are also some rules associated with adjustments to your current or historical SOCAN invoices which were in effect starting May 1, 2010.

•  An increase in the licence fee will result in the difference between the adjusted and original licence fee being taxed at the rate for the applicable province on the date the adjusted invoice is generated by SOCAN.
•   A decrease in the licence fee will result in the difference between the adjusted and original licence fee being taxed based on the Last In – First Out (LIFO) method, which implies that the tax rate applied on your most recent invoice will be used first.

For more detailed information on the new tax rates and rules, how they will affect your licence fees and other Frequently Asked Questions (FAQs), please visit our HST summary.