At first, the planned harmonization seemed only to affect businesses operating in the three harmonized Atlantic provinces, but it is now clear that any business is affected if it makes supplies to recipients in these provinces or acquires goods and services from vendors there. The place of supply rules are the crux of the HST and determine whether HST must be collected on any given transaction. HST must be collected on most taxable supplies into participating provinces even if a supplier has no presence there, a notable departure from longstanding PST practice. The rules for goods are fairly straightforward. Goods are considered to be sold where they are delivered or made available.
Special rules apply to rentals and leases.
Unfortunately, the rules for services are not as straightforward. Most services supplied interprovincially are used by commercial businesses entitled to input tax credits, and thus the purpose of these extremely complicated rules is unclear. Special rules apply if less than 90 percent of the service is performed in one or more participating provinces. If 10 percent or more of the service is performed in each of two or more provinces, the service is deemed supplied in the province where the supplier has a permanent establishment that the person principally involved in negotiating the agreement for supply of service ordinarily works from or reports to. A special override applies if the permanent establishment of the service supplier is in one province and 90 percent or more of the service is provided in other provinces.