Tax Insights: Nova Scotia’s HST rate to decrease on April 1, 2025 ─ Transitional rules

Issue 2025-03

In brief

What happened?

On October 23, 2024, Nova Scotia’s government announced its intention to reduce the Harmonized Sales Tax (HST) rate that applies in the province from 15% to 14% (i.e. the provincial portion of the HST will decrease from 10% to 9%), effective April 1, 2025, and a legislative motion was passed on December 10, 2024. The province’s Department of Finance has published a Notice (PDF)Opens in a new window¹ that includes a general explanation of the proposed transitional rules for the upcoming HST rate decrease.

Why is it relevant?

The transitional rules clarify which rate of HST (15% or 14%) would apply on a supply made in Nova Scotia near the April 1, 2025 transitional date.

Actions to consider

While we wait for the federal government to enact 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.

In detail

Transitional rules

The general transitional rule to determine what rate of tax applies is based on when the HST applicable to the transaction becomes payable. HST would apply at a rate of:

• 15%, if it becomes payable before April 1, 2025
• 14%, if it becomes payable after March 31, 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 supplier first issues an invoice
• of the invoice
• the supplier would have issued an invoice, if not for undue delay
• the recipient must pay according to a written agreement

There are certain transactions for which the general rule would not apply. The transitional rules that will apply to these transactions, including supplies of real property, leases of tangible personal property, certain services and intangible personal property, will be implemented by way of regulations made under the ETA. We expect that the Canada Revenue Agency will publish additional guidance and provide examples on the transitional rules in due course.

Impact of the HST rate change

The Nova Scotia HST rate change will affect both suppliers and recipients. It will broadly impact:

• supplies of property and services made in or brought into Nova Scotia
• supplies of real property by way of sale and lease in Nova Scotia
• goods and taxable supplies imported into Nova Scotia
• financial institutions, public sector bodies and pension plans
• taxable benefits
• any streamlined accounting methods used by persons

The takeaway

By taking the following steps, you can manage the transition to the new HST rate in Nova Scotia and avoid any disruptions to your business operations:

• review impact on systems and processes
• update internal systems
• inform stakeholders, including clients and suppliers, about the upcoming HST rate reduction and its implications
• provide training for your finance and accounting teams to ensure they are aware of the new rules and procedures
• monitor legislative updates

Our PwC sales tax specialists can help you determine the appropriate application of the ETA and its regulations to your specific situation and circumstances.

^{1. Notice: Transitional rules for the April 1, 2025 Nova Scotia HST rate decrease (PDF)Opens in a new window}