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When does the HST become effective? Will all businesses start charging HST right away, and will it replace the 5% GST with a straight 13% tax for all services?

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It looks like the HST will be in effect in Ontario on July 1st, 2010.

As to whether it will replace GST with HST for all services, it looks like some sectors may get special treatment: Ontario may exempt mutual funds from HST (National Post). But it doesn't look final yet.

However, I would suggest that most service-based businesses in Ontario need to prepare to start charging 13% HST instead of 5% GST. It will be the law.

On the "goods" side of the new harmonized tax, it looks like certain goods will still be exempt from the provincial portion. Here's a quote from the Ontario Budget 2009 News Release:

"Books, diapers, children's clothing and footwear, children's car seats and car booster seats, and feminine hygiene products would be exempt from the provincial portion of the single sales tax."

Here's some additional information on the introduction of the HST, from the province: General Transitional Rules for Ontario HST.

And finally, another interesting article from the Ottawa Business Journal: Preparing For Ontario Sales Tax Harmonization – It's Not Too Early

UPDATE:

I just received an insert from Canada Revenue Agency included with my quarterly GST statement. Titled "Harmonization of the Sales Tax in Ontario and British Columbia", it contains a section titled "What this means for you" (as in, you the business owner). Here's an excerpt:

[...]

  • All Ontario and B.C. registrants would need to update their accounting and point-of-sale systems to accomodate the change in rate and new point-of-sale rebates for the implementation date of July 1, 2010.

  • The harmonization of the sales tax in Ontario and B.C. may affect the filing requirements of registrants outside of these two provinces.

  • Registrants will report their HST according to their current GST filing frequency.

  • As a result of the harmonization, there will be changes to the rebates for housing and public service bodies.

More information will be released as it becomes available. Visit the CRA web site often, at www.cra.gc.ca/harmonization, for the most up-to-date information on the harmonization of the sales tax and how it may affect you. [...]

Last, I found some very detailed information on the HST here: NOTICE247 - Harmonized Sales Tax for Ontario and British Columbia - Questions and Answers on General Transitional Rules for Personal Property and Services. Chances are anything you want to know is in there.

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    As to the question "Why do we even have HST?": In a nutshell: The Ontario provincial government requires more tax revenue to prevent deeper deficits, and HST is one of the ways to increase tax revenues while - in theory - also simplifying the tax system by eliminating PST/RST. HST is a controversial change, that's for sure.
    – Chris W. Rea
    Commented Apr 30, 2010 at 12:49
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In general you must charge HST on and after July 1, 2010.

However, in the case of delivered sales, you must charge HST if the transfer of goods will happen on or after July 1,2010.

Example:

A person comes into my hypothetical store on June 29, 2010 and buys a couch. They opt to have it delivered by my truck on July 2, 2010. I should charge HST on this purchase, not GST/PST.

References:

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