The HST is a federally administered tax which combines the Goods and Services Tax (GST) and the retail sales tax (RST) of certain provinces into one single sales tax per province.

 

The Ontario HST applies to residents of the province as well as businesses that are registered in Ontario. BMO Guardian Funds are offered by BMO Investments Inc., a company which is registered in Ontario, and so applicable products and services (i.e., the funds) offered by BMO Guardian Funds are subject to HST.  Therefore investors who own BMO Guardian Funds may be impacted by the Ontario HST even though they don’t live in the province.

Any mutual fund company that has clients in Ontario will have to incorporate HST into their Fund NAVs (Net Asset Values). The implementation of the HST will affect all of the larger mutual fund companies who have investors throughout Canada.

BMO Guardian Funds must pay HST on management fees and certain other fees charged to the fund.  Generally, prior to July 1, 2010 only GST was charged on theses fees.  The HST that is ultimately payable by a mutual fund on these fees is generally based on the percentage of the value of holdings by unit holders that reside in the harmonized provinces. The HST liability for a mutual fund is calculated for each series in a fund.

 

For more information on mutual fund fees and expenses please refer to the BMO Guardian Fund Simplified Prospectus.

 

The majority of mutual funds in Canada use a single net asset value (“NAV”) for each fund (or series of a fund) available and each can be purchased by any qualified Canadian investor, regardless of what province the investor lives in. As of July 1, 2010, with the implementation of the HST, changes will have been made in the calculation of this single NAV to reflect the applicable HST rates.