On 18th February 2025, Nova Scotia’s Finance Minister presented the 2025 - 2026 Budget in which he introduced the proposal to reduce the Harmonized Sales Tax (HST) rate in the province from 15% to 14% effective April 1, 2025. The province’s Department of Finance has published a Notice that includes a general explanation of the transitional rules for the proposed rate cut.
Actions to consider
While the above proposal becomes final only once the federal government enacts the HST rate reduction by amending the relevant Excise Tax Act (ETA) regulations, it is time to begin reviewing how this upcoming HST rate decrease will potentially affect your accounting, invoicing and accounts payable processes and systems, including (but not limited to) long‑term projects and upcoming real estate transactions.
The general transitional rule to determine which rate of tax applies is based upon the time at which the HST applicable to the transaction becomes payable.
- 15 per cent HST applies if the tax becomes payable before April 1, 2025.
- 14 per cent HST applies if the tax becomes payable on or after April 1, 2025.
The HST on a supply's consideration is payable on the earlier of when it is paid or becomes due. Generally, consideration for a taxable supply is due on the earliest of the date:
- The date the supplier issues an invoice.
- The invoice date.
- The date the supplier would have issued an invoice, if not for undue delay.
- The date payment is required under a written agreement.
Supplies of real property by way of sale will have the following specific transitional rule:
- 15 per cent HST applies if eitherownership or possession transfers to the buyer before April 1, 2025.
- 14 per cent HST applies if both ownership and possession transfer on or after April 1, 2025.
For deemed taxable supplies of real property:
- 15 per cent HST applies if the supply is deemed to have been made before April 1, 2025.
- 14 per cent HST applied if the supply is deemed to have been made on or after April 1, 2025.
Certain other transactions will also be exempt from the general rule. Specific transitional rules will also apply to these transactions, including leases of tangible personal property, certain services and intangible personal property.
The Nova Scotia HST rate change will also have an impact on the importation of goods and services into the province.
Businesses should assess the impact on their systems and processes, notify accounting teams, and update internal systems to ensure a smooth transition.
Please contact us if you have any questions.