Part 3 of 3
by L. Kenway BComm CPB
This chat on reimplementing PST (Provincial Sales Tax) consists of overviews of the government announcements, accounting newsletter recommendations and newspaper opinions leading up to the return of PST in BC on April 1, 2013.
Are you wondering if accounting and bookkeeping services will attract PST? Click here to find out.
I have arranged the announcements about provincial sales tax by newest to oldest date of the original posting on this site. I also "bring forward" related news posts on a particular topic so you can quickly get a background on the subject.
Don't be afraid to open the actual government announcements and read them. For the most part, they have done a great job in keeping them "user-friendly" so it doesn't read like gobbly goop that only a tax lawyer could ever begin to understand!
Don't be afraid to open the actual government announcements and read them. For the most part, they have done a great job in keeping them "user-friendly" so it doesn't read like gobbly goop that only a tax lawyer could ever begin to understand!
You will find a short chat on the differences between GST/HST and PST towards the end of the page. It helps YOU as a business owner and/or bookkeeper to understand the differences between the two types of sales taxes.
It's August 16, 2012. With the reimplementation of PST quickly approaching, registration information will be made available in December 2012.
Businesses received a letter with instructions on how to register. Also, in September 2012, businesses received a letter advising them of the free consultation services of an online tax specialist to assist them during the transition.
Online registration began on January 2, 2013. The online service is called "eTaxBC". New businesses can use One Stop BC. Existing businesses (those with a BN) use the e-services. Companies use their BN as part of the registration.
Your old PST number is no longer valid so everyone needs to register and/or re-register. The new numbers assigned are 11 characters; something like this: PST-1234-5678.
Generally, when the PST was reimplemented on April 1, 2013, all the old permanent PST exemptions returned. This means there is NO PST collected on prepared foods such as restaurant meals; personal services such as hair cuts; memberships; books, newspapers and magazines; children's clothing and bicycles. Most professional services such as bookkeeping and accounting fees are also be exempt; as are transportation fares and real property.
PST applies to legal services, telecommunication services, most services to goods purchased, goods brought into BC, and the purchase or lease of new or used goods.
If you are interested in keeping up to date with everything regarding reimplementing PST in BC, follow this site or visit the BC Government's dedicated website on the topic -- pstinbc.ca .
Back on September 10, 2012, Ernst & Young released an excellent Tax Alert titled BC's transition from HST back to GST+PST: update (see 2012 Issue No. 40). As it contained an alert, I am sharing parts of the notice.
Look for your letter this month informing you about the Tax Specialist Assistance service. The subject heading in the letter will say "Re: Consultations with Provincial Sales Tax Specialists".
The update recommends "that businesses use the service if it is clear that the business is not required to register for BC PST purposes or that a particular product or service is clearly not subject to PST, as using the service will provide the business with a binding decision from the Ministry on these matters. If it is not clear, E&Y recommends you obtain independent advice first as any advice received through the service is binding.
Written and oral rulings received under the old SSTA cannot be relied upon and will no longer be binding. E&Y "strongly suggest that any businesses that had previously obtained rulings with respect to application of PST to their business operations under the old SST regime should re-apply for new rulings that can be relied on on a go-forward basis".
In the section of the update on Tax reviews - not audits, the update discusses that on-site reviews of your books and records may be requested between April 1, 2013 and March 31, 2014. "You will be advised of the errors but the Ministry will not issue an assessment. If such errors are corrected voluntarily on a prospective basis, Ministry officials have indicated that the prior-period errors will not be open to future audit assessments."
Audits for compliance return April 1, 2014. All ongoing audits under the old SSTA are expected to be completed before the reimplementation of PST, likely by the end of October.
Footnote: Reimpelmenting PST questions should be directed to the PST toll-free number is 1-877-388-4440 ... or the PST email address is CTBTaxQuestions at gov.bc.ca. To request a consultation with a tax specialist, complete the online request form at sbr.gov.bc.ca> ctb> ask_a_tax_specialist.htm. Questions about the process should be emailed to PST.OutreachProject at gov.bc.ca. Please see the alert above before using this contact information.
November 18, 2014
A new bulletin was real eased that explains how PST applies to buying and selling a business. You can find it at www.sbr.gov.bc.ca/documents_library/bulletins/pst_005.pdf
June 9, 2013
Two interesting news articles on PST and a "made-in-BC" HST input tax credit.
Don't understand what the articles are talking about? You will find a short chat on the differences between GST/HST and PST towards the end of the page.
It helps YOU as a business owner and/or bookkeeper to understand the differences between the two types of sales taxes.
June 3, 2013
Two useful BC PST guides were finally released Friday; Guide to Completing the PST Return and Guide to Completing the MRDT Return.
Take note that step 3 of the PST Guide explains how to report and pay self assessed PST for business use purchases where PST was not charged but should have been.
March 3, 2013
The BC Ministry of Finance is offering another round of the free webinar to assist BC businesses with reimplementing PST.
The additional sessions scheduled for 10:30 am to 11:30 am PT on Tuesdays and 1:30 pm to 2:30 pm on Thursdays on the following days:
The webinars are interactive and there is a question and answer period. More sessions will be added based upon demand. New dates will be published as they are scheduled.
December 7, 2012
The BC Ministry of Finance is offering the free webinar again to assist BC businesses with reimplementing PST.
Apparently earlier webinars filled up quickly, so don't wait to sign up for these additional sessions scheduled for:
Tuesday, Dec. 11, 2012, from 10:30 a.m. to 11:30 a.m.
Tuesday, Dec. 11, 2012, from 1:30 p.m. to 2:30 p.m.
Thursday, Dec. 13, 2012, from 10:30 a.m. to 11:30 a.m.
Thursday, Dec. 13, 2012, from 1:30 p.m. to 2:30 p.m.
Tuesday, Dec. 18, 2012, from 10:30 a.m. to 11:30 a.m.
The webinars are interactive and there is a question and answer period.
November 23, 2012
The BC government is holding a free webinar to assist BC businesses with reimplementing PST.
Topics covered will be:
You have two choices - Tuesday November 27 at 1:30 pm or Thursday Nov 29 at 9:30 am.
Source: BC Information Bulletin 2012FIN0052-001835 dated Nov 22, 2012
March 1, 2013
The government announced Friday, "The legislation and regulations to re-implement the PST on April 1, 2013 are now complete, giving businesses all the information they need to successfully transition to the PST."
Deloitte has a good article summarizing the main categories of exemptions in the Regulations. Read more ...
February 14, 2013
Reimplementing PST requires passing of the new act which includes transitional provisions and final amendments which have been previously published. Yesterday, the BC government tabled Bill 2 - Provincial Sales Tax Transitional Provisions and Amendments Act, 2013.
The draft act released in January is no longer available.
January 9, 2013
The BC Government released the draft of the PST Act. The Act will be introduced to the legislature in February 2013.
Click here for your draft copy of the act. It is in pdf format so downloads as soon as you click on their link. You will find it under the Legislation section towards the bottom of the page.
March 2, 2012
PST Legislation is Introduced in BC
Bill 54 - 2012 Provincial Sales Tax Act was introduced on May 14 to re-introduce BC residents to PST on April 1, 2013. The bill modernizes the administration of the tax allowing online registration and remittance and coordinating the due dates with GST. It also allows you to register using your federal business number.
The government will start accepting online registrations for PST in January of 2013.
Ernst & Young have an excellent summary of all the proposed changes involved with reimplementing PST at ey.com> Services> Tax>Tax Alerts> BC Tables PST Legislation No. 26 May 15, 2012.
February 18, 2013
Notice 2013-002, PST on Vehicles, is a new notice that provides information on how PST applies to vehicles (other than multijurisdictional vehicles registered under the International Registration Plan). It covers:
The notice explains that "there will be exemptions from PST in certain situations including, but not limited to, vehicles:
If the vendor is a PST registrant, the vendor collects the sales tax; otherwise the tax is paid when the vehicle is registered or "the last day of the month following the month in which you purchased or received the vehicle" - whichever is earliest.
Notice 2013-003, Real Property Contractors, is a new notice that provides an overview of how the PST applies to goods purchased, brought, sent or received in BC by real property contractors and used to improve real property. It includes various definitions as well as:
Source: BC Consumer Taxes
January 17, 2013
Along with the likelihood of higher income taxes returning to BC residents as HST transitions back to PST and GST, the HST quarterly credit will return to the annual BC sales tax credit, previously at $75/year for person, $150 for a couple.
The BC HST credit was combined with the federal GST credit for a maximum $230 per person per year ($57.50/quarter). The credit was tied to income and reduced as thresholds were met.
This is a loss to low income individuals and families.
You can find more on both credits at www2.gov.bc.ca under taxes and rebates.
January 2, 2013
PST registration began today. You can register in person, by mail, by fax or online.
If you want to register in person, go to any ServiceBC office.
September 30, 2012 (Updated October 1, 2012)
The BC Government's website has released the PST rates that will go into effect on April 1, 2013 when reimplementing PST. You will also find a general description of what it will be applied to.
Click here for the PST rate table.
The news release stated that "businesses that provide taxable goods, software or services will generally be required to be registered and to charge and collect the PST on their sales and leases"
Bookkeeping and accounting services, as mentioned in an earlier post, will once again be exempt from PST. Legal services will continue to attract PST just like they did under the old PST tax regime (Social Service Tax Act).
Online registration begins January 2, 2013. (Registration is now open.) Under the new system, you'll be able to pay online through most banks.
Get more detailed information in Bulletin PST 001 about the registration rules and requirements, some of which are subject to legislative and regulatory approval.
December 21, 2012
The BC Ministry of Finance released three PST notices yesterday.
PST Notice 2012-022 Accommodation sets the tax rate at 8%. It is no longer the separate tax known as the provincial hotel room tax ... but is incorporated into the PST.
The notice defines which types of accommodation attracts the tax ... pretty much all short term accommodation offerings.
The exemptions as stated in the notice are:
The up to 2% MRDT levied on behalf of municipalities, regional districts and eligible entities, such as non-profit tourism associations, to raise revenue for local tourism marketing, programs and projects will continue after April 1, 2013 and will also be incorporated into the PST. The program will continue unchanged, other than the due date for remitting the tax will change to correspond to the due date for remitting PST.
Accommodation providers must charge and collect this tax where applicable. The exemptions are the same as listed above in notice 022.
Sales of accommodation will be subject to the 5% GST. The 8% PST and the MRDT imposed under the PST Act will NOT be included in the purchase price for determining the amount of GST payable.
The MRDT return will be separate from the PST return. You will be required to file a separate return for each community if you operate in more than one community.
The MRDT return and remittances are due at the same time as PST and GST/HST returns ... the last day of the month following the reporting period.
Software is subject to 7% PST and is defined as a software program that is delivered or accessed by any means. Examples of software include source code, executable code, operating system software, application software, “apps” and gaming software.
Electronic device is defined as a device by which a person may use software. It does not matter whether the software is downloaded to the electronic device or accessed remotely by the electronic device. Examples of electronic devices include desktop computers, gaming devices and mobile devices, such as smart phones, tablets and laptop computers.
Software does not include eBooks or live webinars. These are discussed in PST Notice 018 on telecommunications.
Where a seller of software is located outside of BC or the software is purchased for multijurisdictional use, purchasers may be required to self-assess tax.
December 19, 2012
The BC Ministry of Finance issued two notices to the Tobacco Industry; one for retailers and one for wholesalers.
Notice 2012-019, Notice to Tobacco Retail Dealers AND Notice 2012-021, Notice to Tobacco Wholesale Dealers discuss inventory reporting requirements for dealers who hold a Tobacco Retail Authorization (TRA) certificate or a Tobacco Wholesale Dealer (TWD) permit.
Dealers will be "required to take an inventory of the unsold tobacco products you hold in BC immediately after midnight on March 31, 2013. You must then report your inventory to the ministry and remit the difference between the security you paid when you purchased the tobacco and the tax you will be required to collect on the tobacco you sell on or after April 1, 2013. Blackstock tobacco should not be included in the inventory.
With the re-implementation of the PST, the provincial portion of the HST on tobacco products will be eliminated. To offset this reduction, tobacco tax rates will increase to generally keep the overall tax on tobacco constant. The specific amount of the increase will be announced at a later date.
FYI - Notice 2012-20 does not exist ... oops!
December 18, 2012
GI-132 info sheet explains the written information that a vendor (including a builder or an agent of the builder) must provide to a purchaser of new housing, or an interest in such housing, in B.C. where:
December 13, 2013
Notice 2012-018 Telecommunication Services was released today. You also want to refer to Notice 2012-010 Transitional Rules for the Reimplementation of PST for purchase of telecommunication services that straddle April 1, 2013.
Telecommunication services are defined as:
Generally,Telecommunication Services will be subject to 7% PST. Billing address of cell phones determines where the service is situated. For example, if the billing address is in BC, the service is considered to be situated in BC. PST applies to the purchase price which includes:
Reimplementing PST pertaining to telecommunication services previously exempt will apply as follows:
See the notice for more information.
December 12, 2013
Notice 2012-017 Restaurant Industry was released yesterday. You also want to refer to Notice 2012-009 Notice to Liquor Vendors.
The restaurant industry will be subject to 10% PST for sales of liquor of:
You will pay PST on taxable goods and services for use in your business.
Foods for human consumption are PST exempt and include non-alcoholic beverages, snack foods, meals, prepared foods including any disposable or non-reusable materials as part of a customer's food purchase, liquor incorporated into food for resale such as cooking wines.
See the notice for more information.
November 29, 2012
Download this handy reference listing of everyday items and services. It compares items before HST, during HST and after HST broken down by categories:
This reimplementing PST list is a keeper!!!
Notice 2012-016 Related Services was released today.
Related services will be subject to 7% PST. It is defined as services provided to tangible personal property (goods), such as:
The general rule is if a good is taxable when purchased, services provided to that item are also taxable.
Related services do NOT include:
Related service exemptions are:
See the notice for more information.
November 16, 2012
Ministry of Finance issued reimplementing PST Notice 2012-015, Notice to Propane Purchasers and Sellers.
It explains how propane will be taxed under the Motor Fuel Tax Act. Items discussed are:
November 16, 2012
Reimplementing PST has transitional rules for BC home builders that went into effect on April 1, 2012.
The CRA revised GST/HST Notice 276, Elimination of the HST in British Columbia in 2013 – Transitional Rules for Real Property Including New Housing to reflect regulations made under the New Housing Transition Tax and Rebate Act (British Columbia) and the Excise Tax Act.
For convenience of reference, all new and revised questions and answers are identified as such. They didn't put the reference in red print though so if you want to quickly find the new or revised information, I suggest you pull up the page and do a search on the words "new" or "revised".
This notice covers the new disclosure requirements in detail. Additional obligations and requirements for builders and their agents were introduced. Penalties for failing to comply are steep, so it is important to review these new / revised regulations.
If you don't like slogging through CRA publications, KPMG has an excellent TaxNewsFlash summarizing the disclosure obligations and requirements. To locate the article, type in KPMG's search box "BC Home Builders" and you should get the November 15, 2012 article on Transitioning Back To GST/PST.
October 10, 2012
CRA released GST/HST NOTICE 276, Elimination of the HST in British Columbia in 2013 – Transitional Rules for Real Property Including New Housing yesterday.
This publication provides questions and answers that reflect the tax changes set out in the New Housing Transition Tax and Rebate Act.
It is located under Forms and publications> Document type> 14. GST/HST Notices> Notice276.
Information and links to all CRA notices pertaining to BC's transition back to PST + GST can be located at About CRA> Changes to Harmonized Sales Tax (HST).
November 6, 2012
Ministry of Finance issued PST Notice 2012-014, Legal Services.
It provides a general overview of the application of the PST to purchases of legal services. Items discussed are:
November 1, 2012
Ministry of Finance issued PST Notice 2012-013, Tangible Personal Property (Goods) Brought Into British Columbia.
It provides a general overview of the application of the PST to purchases of goods, other than leased goods. Items discussed for reimplementing PST are:
Tangible personal property is defined as personal property that you can see, weigh, measure, feel or touch, or that is in any other way perceptible to the senses—generally, all goods. Tangible personal property also includes natural or manufactured gas, heat, electricity and affixed machinery, but does not include real property. Real property is land and any items permanently attached to land (buildings and structures).
October 30, 2012
Ministry of Finance issued two new bulletins today. Some of the rules and requirements described in these notices about reimplementing PST are subject to legislative and regulatory approval.
Notice 2012-011, Purchases of Tangible Personal Property (Goods) in British Columbia gives an overview on the following items:
Notice 2012-012, Leases of Tangible Personal Property (Goods) discusses:
October 22, 2012
Bulletin PST 002 explains the rules and requirements coming into effect with the reimplementation of PST on April 1, 2013. Some of the rules and requirements are subject to legislative and regulatory approval.
You can find the bulletin at sbr.gov.bc.ca> Finance> Revenue> Consumer Tax> What's New Section 2012> Bulletin PST 002
October 17, 2012
Ernst & Young's latest TaxAlert publication provides key highlights regarding the October 15th release of the transitional rules for reimplementing of BC PST. It lays out the rules in ordinary English.
At the end of the newsletter, they also provide 4 planning opportunities.
One of the points the newsletters explains that PST can be reduced in the short-term by prepaying for goods and services prior to April 1, 2013 ... however they warn that there is a difference between deposits and pre-payment.
You can find the downloadable newsletter at ey.com> Services> Tax> Tax Alert -Canada latest tax issues (on the right (not left) hand side navigation bar)> No 43 October 17, 2012
August 23, 2012
Deloitte's release an update titled BC PST implementation timeline: Update and planning opportunities on August 20, 2012.
It is worth a read as it has "6 planning opportunities that should be considered and executed right now in order to generate tax savings".
You can find the downloadable article at deloitte.com> global> Canada> services> tax> tax publications> BC PST implementation timeline: Update and planning opportunities.
October 15, 2012
Consumer Taxes of BC released Notice 2012-010 General Transitional Rules for Reimplementing PST today. This is what the news release said:
"This notice provides a general overview of the PST and general descriptions of transitional rules for reimplementing PST, other than transitional rules related to housing. The transitional rules describe how and when PST will apply to transactions that straddle April 1, 2013. These rules should be read in conjunction with the transitional rules for the elimination of the HST in BC released by the federal government. The rules outlined in this notice are subject to the approval of the legislature."
With the exception of new housing there will not be a transitional period as there was when HST was introduced. It is a simple cutoff date of April 1, 2013. New housing transitional rules went into effect on April 1, 2012.
The notice is located on the provincial website sbr.gov.bc.ca> Finance> Revenue> Consumer Taxes> What's New>Notice 2012-010.
The Ministry of Finance also released Information Bulletin 2012FIN0044-001561 -- New tools help BC businesses prepare for PST return.
October 14, 2012
While catching up on my reading about reimplementing PST in BC next year, I came across a report published by The School of Public Policy, University of Calgary. Their SPP Research Paper ...Volume 5 Issue 28 September 2012 was titled "2012 Annual Global Tax Competiveness Ranking – A Canadian Good News Story" by Cuanjie Chen and Jack Mintz.
Here is the summary:
"Since 2000, Canada has been remarkably successful in building a more competitive corporate tax system, principally by lowering tax rates and broadening the tax base. Canada’s marginal effective tax rate (METR) is now the lowest, and hence the most tax-competitive among the G-7, the 20th most tax-competitive in the 34-member OECD, and 57th among the 90 countries surveyed in this paper. The result has been greater investment and improved economic growth despite recessionary pressures. In particular, provincial sales tax harmonization with the GST has heightened Ontario’s competitiveness and promises to do the same for PEI, the latest convert to the cause. However, progress has not been uniform. Some provincial governments have lost focus by raising rates or introducing tax preferences that narrow the base, inevitably harming business efficiency. British Columbia’s decision to replace the new Harmonized Sales Tax with the old retail sales tax will cost it dearly, especially when it comes to public spending. [my emphasis] On the other hand, corporate tax rate reductions of more than 30 percent (since 2000) have, contrary to the critics’ cries, failed to make an appreciable dent in tax revenues thanks to multinationals’ habit of shifting profits to Canada to take advantage of lower rates. This paper, in providing a candid snapshot of Canadian taxation measured against 89 other nations, serves as an invaluable foundation for understanding how far this country has come, and what its next steps should be."
You can read the entire report on The School of Public Policy's website (policyschool.ucalgary.ca) under Research&Publications> 2012> 2012 Annual Global Tax Competiveness Ranking – A Canadian Good News Story.
October 5, 2012
The BC Government announced the permanent exemptions from the previous PST will be re-implemented. The regulations to establish these exemptions are being finalized.
PST exemptions include:
See PST Notices 011, 012, and 013 for a more detailed list of exemptions.
Most exemptions will occur at point of sale. PST registrants making a purchase of goods for resale will be required to provide their PST registration number to receive the exemption from PST at the time of purchase.
If they are a wholesaler or a vendor who has not yet received a PST registration number, they must provide an exemption certificate to receive the exemption from PST at the time of purchase, or pay PST and apply for a refund.
October 6, 2012
The Vancouver Sun had an article written by Kevin J. Clarke stating the reasons why the municipalities and regional governments need to include industry and manufacturing as part of their growth strategies to remain competitive as we transition towards reimplementing PST in this province.
October 3, 2012
As most British Columbians are aware, BC will be reimplementing PST on April 1, 2013. As we get closer to the date of returning to PST, more PST Notices will be released.
The latest notice is Ministry of Finance PST Notice 2012-009. It provides information to help liquor vendors understand when and how to register with the Ministry of Finance to collect and remit PST.
Some of the rules and requirements described in this notice are subject to legislative and regulatory approval.
If you sell liquor at a beer and wine or liquor store, restaurant, bar, pub, hotel or similar establishment, you are required to register for PST.
Liquor will be taxed at 10%.
Some examples of tax exempt items are juices, cocktail mixes and non-alcoholic drinks, beer & wine making supplies that are considered food for humans and refundable deposits, containers included with your sale at no charge such as shopping bags.
Update: You may also want to look at PST Notice 17 for the Restaurant Industry.
September 20, 2012 - Updated December 23, 2015
The Province had an excellent article by Laura Jones. She was a member of the Expert Panel on B.C.'s Tax Competitiveness and executive VP of CFIB.
The article, Businesses need break on new PST, explained the panel's recommendations however it is no longer available online.
September 19, 2012
There was a good article in the Vancouver Sun yesterday titled "Panel calls for PST relief for businesses in B.C.". It outled the findings from the Expert Panel on B.C.'s Business Tax Competitiveness.
The higher costs that businesses will bear in reimplementing PST in BC will get passed onto consumers. It is likely that businesses that have a choice on where to invest will likely look elsewhere.
To reduce the likelihood of that occurring, the Panel is recommending an investment tax credit claimable over two years to level the playing field with other provinces. They are recommending a half percent rise to corporate tax rates with the idea it is better to tax profits than investments.
The Panel is also recommending widening the PST tax base by charging PST on phone and cable services, school supplies, and snack food; increasing tobacco taxes.
The idea of a Business Transfer Tax was introduced but is expected to not be embraced given it is an election year.
You can find the government's Information Bulletion 2012FIN0042-001368 summarizing the panel's interim recommendations at www2.news.gov.bc.ca> Ministry of Finance> News
The final report can be found on the BC government website. Search for "Report of the Expert Panel on BC's Business Tax Competitiveness" published August 31, 2012.
Perhaps this would be a good time to read The Tax System Explained in Beer.
J. Rhys Kesselman has an excellent analysis of reimplenting PST in his two part series in "Opinion: A prescription for what ails B. C.'s economy". After reading his prescription all I can say is, "I want HST to stay!". Part one in the series was titled "Grim diagnosis for B.C. revenues" and is not longer available online.
Septemeber 7, 2012
CRA GST/HST technical publications regarding proposed enhancements to new housing rebates and residential rental property rebates in B.C. are available online. See GI-128 and GI-129 respectively.
GI-130 Stated Price Net of the Enhanced British Columbia New Housing Rules was also released.
You can access these publications at cra-arc.gc.ca> Forms and publications> GST/HSTinfo sheets.
June 22, 2012
The government introduced legislation on May 14, 2012, to meet government's commitment to reimplementing PST on April 1, 2013. The Provincial Sales Tax Act received Royal Assent on May 31, 2012. More information was initially reported on leg.bc.ca website at 39th 4th/3rd_read/gov54-3.
June 7, 2012
You may want to take a peek at Deloitte's May 31, 2012 article (12-4) examining the impact BC's transitional rules for residential properties will have on (a) builders including self-supply, (b) owner built homes and (c) home buyers of primary residences and recreational properties.
I find the site difficult to move around in. So the easiest way to find the article is to type "BC PST" in the search box and look for the article titled Transitional rules for residential properties: Return to BC PST or you can hunt around Deloitte.com> Indirect tax> Indirect tax (GST, HST, PST or VAT). (Editor's note - May, 2017 - This article is no longer available on the website.)
In February, Deloitte released an article outlining the transitional rules surrounding reimplementing PST.
March 20, 2012
CRA release Notice 272 today, Harmonized Sales Tax – Proposed Enhancements to the British Columbia New Housing Rebates and New Residential Rental Property Rebates.
February 27, 2012
CRA release Notice 270 today, Elimination of the HST in British Columbia in 2013 - Questions and Answers. There are three parts to the notice:
You can find the release under Forms and Publications> Publications listed by publication number> N.
February 17, 2012
The Department of Finance, along with the B.C. government, released "the proposed transitional rules [that] specify how and when the BC component of the HST would cease to apply to transactions that straddle that date".
April 1, 2013 is the "that date" ... the date B.C. returns back to the old archaic system of double taxation and tax cascading. Is it a coincidence it is the same day as April Fool's Day?
Here is the link to the transitional rules announced so far:
BC Government's announcement can be found here:
KPMG's NewsFlash is also excellent:
For background information on reimplementing PST in BC, see the August 22, 2011 postings below.
March 2, 2012
HST Notice #13 - Grant for Purchasers of New Residential Housing Used as a Secondary or Recreational Residence was released today by the B.C. government.
February 27, 2012
PwC (PricewaterhouseCoopers) released two Canadian tax update memos last week:
Eliminating the HST in British Columbia - Canada's Department of Finance proposes transitional rules (PWC Memo No:2012-06).
Returning to B.C.'s Provincial Sales Tax - Transitional rules for new housing (PWC Memo No: 2012-05).
They can be found on their website at www.pwc.com/ca/en> publications> tax memos.
Februrary 24, 2012
The provincial government released more details on new home purchases and returning to PST on their website www.pstinbc.ca .
See pstinbc.ca>Buying goods> Buying a Home> New Home Purchases for a user friendly explanation with excellent diagrams.
February 17, 2012
April Fool's Day, April 1, 2013, is the date set for BC to return to PST. Transitional rules on our way to reimplementing PST have been introduced effective April 1, 2012.
Deloitte's has a good summary of the initial transitional rules announced by CRA in their February 20, 2012 Canada Indirect Tax News. The article is titled Return to BC PST: Transitional rules for residential properties.
"In general, HST will continue to apply to goods and services which are paid for or invoiced prior to April 1, 2013. GST (and PST, if applicable) will apply to goods or services invoiced after March 31, 2013.
HST will apply to lease payments that become due before April 1, 2013. GST (and PST, if applicable) will apply to lease payments that become due after March 31, 2013.
The HST will continue to apply to sales of real property where ownership or possession transfers prior to April 1, 2013. Where both ownership and possession transfer after March 31, 2013, only the GST will apply. The same timeline applies to deemed self-supplies of real property, for situations where a builder must self-assess tax.
The BC component of the HST will not apply to goods or services acquired outside of BC for use in the province after March 31, 2013, nor will it apply to goods or services imported prior to March 31, 2013 where payment is due after March 31, 2013.
It should be noted that the general transitional rules for the re-implementation of BC PST (when PST will start to apply to goods and services) have not yet been announced."Read more here
September 1, 2011
On August 26, 2011, the Department of Finance Canada released the proposed transitional rules to reimplement PST in BC. They can be located at fin.gc.ca> Publications & reports> Transitional Rules Relating to the Elimination of the HST in BC .
Ernst & Young has an excellent write-up on "what we know at this time" and "what to be concerned about" with regards to how BC will reimplement PST.
At the conclusion of the article, the following comment was made:
"It is widely agreed by economists, tax policy experts and tax professionals that reverting back to the PST + GST system is a significant step backwards for BC. It will negatively impact both job creation and economic growth not only in BC, but in the rest of Canada as well.
It is also widely recognized that going back to PST + GST as opposed to keeping the pure HST value-added tax system will give pure GST/HST provinces like Ontario and Alberta a significant competitive tax advantage over BC as a place to invest and do business. This is particularly true with respect to the film and television and high- tech industries.
However, because this is the path that has been chosen by BC voters, all businesses in and outside BC that sell to customers in the province need to prepare for the reintroduction of the PST. All affected businesses should start thinking about how this policy change will affect their operations, systems, customers, budgets, staff, etc. and start the process of converting to operating once again in a GST and PST jurisdiction."
Read their excellent article at www.ey.com> Publication> Tax Alert - Canada 2011 Issue No. 31 30 August 2011> Turning back the clock: BC to extinguish HST and reinstate provincial sales tax.
August 22, 2012
The votes are in and counted. BC voted against the HST in the recent referendum. Results were released today.
In about 18 months ... businesses need time to change their systems back, federal and BC governments need time to create transition rules, and BC government needs time to hire PST staff back ... BC will revert back to 5% GST and 7% PST.
The BC HST credit is now an annual credit of $230 per family member for individuals with incomes up to $20,000 and families with incomes up to $25,000. The credit is phased out by 4 per cent of income above the thresholds. I expect it will revert back to a $75 sales tax credit when you file your income tax return.
I need time to process this. I hope this vote does not result in income tax increases ... but how else will we pay back $1.6 billion back to the federal government?
I expect that companies will make plans to move to Alberta or Ontario where they can recoup their entire sales tax amount ... something they won't be able to do here. Our ability to compete on the international market will also be handicapped.
If a business has to choose where they are going to invest capital infrastructure ... BC will now fall way down the list. In my mind, the jobs follow the capital investment.
This is how I see it. Capital investment brings jobs. Jobs allow people discretionary income. Discretionary income creates spending. Spending creates profits. Profits creates better paying jobs.
When the cycle reverses, jobs are the first thing to disappear. I heard people were perturbed because it cost more to eat in a restaurant. If jobs are reduced, the discretionary income to eat in restaurants is the first thing to go.
With the HST killed, BC will now revert back to the archaic system of double taxation and tax cascading. Wow. I need time to process this.
As BC transitions back to reimplementing PST, I thought a discussion on the two different taxation methods would be helpful.
Even after the referendum in August 2011, there is still a lot of discussion and opinions on whether HST is a good or bad tax ... whether people are for or against ... or people who want to maintain the status quo.
Here are just a few facts I've found when you compare provincial sales taxes to harmonized sales taxes.
Consumer and Business Spending
One difference between the taxes ... GST/HST taxes consumer spending because it is a multi stage tax which prevents double taxation and tax cascading ... while PST/RST taxes consumer and business spending because it is a single stage tax which creates double taxation and tax cascading.
Double taxation occurs when a business purchases goods and services that have PST/RST ... and then they charge and collect PST/RST when they sell the good or service .. effectively taxing the product twice ... and taxing a tax.
Tax cascading is where the business owner will raise the price of a product or service to cover the cost of the PST/RST ... so the VAT becomes embedded in the sales price.
Another difference between the taxes ... GST/HST taxes all types of properties and services the same way and do not influence or favor one industry over another ... PST/RST taxes properties and services differently which discriminates between industries and sectors.
An example of this in B.C. are professional services. Legal services have to charge PST, accounting services do not charge PST. HST levels the playing field ... all professional services will charge HST. As we reimplement PST, the taxation for professional services reverts back to pre-HST days.
International competitiveness and the two tax types ... GST/HST removes tax from capital purchases and export sales leading to higher productivity and greater competitiveness ... PST/RST increase the domestic selling price due to tax cascading reducing export competitiveness.
I understand this to mean that GST/HST increases productivity and sales which creates jobs which increases or maintains our standard of living while PST/RST puts us at a disadvantage in international markets ... and on domestic markets if one province has GST/HST and another PST/RST.
This means that when Ontario opted for HST, B.C. was left with no option but to embrace HST if they did not want businesses (and jobs) to move to Ontario where double taxation and tax cascading were going to disappear under HST.
With BC reimplementing PST, we will be at a disadvantage in attracting and keeping capital investments in BC unless some changes are made.
The points made are from my notes on Mr. Robertson's paper Sales Tax Harmonization: The Facts & Nothing But The Facts. His paper was presented in September 2005 at the CICA Commodity Tax Symposium ... and can be found at fasken.com under Publications. Set their publication search box to 2005> Taxation> Other Resources.
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