This story was updated Thursday, July 1, at 5:54pm EST, to reflect that the tax percentage is slightly different in provinces, and that it has been in effect in some provinces prior to July 1.
A new 13 percent tax on event tickets in much of Canada takes effect on tomorrow, July 1, which has Canadian ticket brokers scrambling to make adjustments to their ticket inventory and back office systems.
Called the Harmonized Sales Tax (HST), the levy essentially passes along much of the tax burden from businesses to consumers by charging taxes on goods and services. Many government officials reportedly believe that it could lead to lower prices on various items, however, as businesses charge less for the products they sell because of the savings they will experience. The tax, which has been in effect in different provinces, will effect British Columbia and Ontario, and the percentages are slightly different in some provinces.
In the case of Canadian ticket brokers, however, the tax will likely lead to higher ticket prices because the tax will now be imposed on event tickets for the first time, a move that Canadian brokers believe could place them at a disadvantage to brokers in the U.S. and other regions.
“It’s frustrating,” one Vancouver-based broker told TicketNews, echoing the sentiments of other brokers. Currently, groceries and medications are two of the main items that are exempt from the HST. “It’ll be a big burden on small businesses, which a lot of brokers are, because they’ll need to make adjustments to many of their listings and such.”
Mario Livich, CEO and founder of Vancouver-based ShowTime Tickets, and spokesperson for the Canadian Ticket Brokers Association (CTBA), told TicketNews that the tax will be levied on all Canadian events, no matter where the ticket sale originates from.
“I guess anytime an out-of-country company doesn’t adhere to the same tax laws as a business native to that country they would have certain advantages,” Livich said, adding that Canadian brokers will have to begin to “incorporate a mechanism to add the tax to ticket prices.”
This week, the CTBA, which is a trade organizer similar to the U.S.-based National Association of Ticket Brokers, sent its 20 members a notice warning them of the change:
Dear Fellow Brokers,
We are writing to you on behalf of the Canadian Ticket Brokers Association (CTBA), a trade association representing the vast majority of the largest ticket brokers in Canada, to inform you of the new Tax legislation in Canada.
Effective July 1st, this new 13% Harmonized Sales Tax (HST) must by law be collected and remitted on the Government’s behalf, on all ticket sales for events taking place within Canada.
As such all CTBA members will be legally obligated to add the 13% tax to all sales including those through the various broker boards.
The boards have been made aware that only orders which are paying the tax will be processed.
We look forward to working with the broker community towards a smooth transition and welcome the opportunity to discuss this further with you.
The CTBA Board of Directors