Chartered Professional Accountants

THE RETURN TO THE PST

Starting on April 1, 2013,  British Columbia’s 7% provincial sales tax (PST) will be re-implemented.  There has been little information regarding this process until recently when the Provincial Government released some basic details of what this entails.  We have summarized some of the major points below:

GOODS AND SERVICES SUBJECT TO PST

There is little change from the previous PST legislation.  The PST will still be a retail sales tax that will become payable when a taxable good or service is acquired for personal use or business use unless there is an specific exemption mentioned in the legislation.

Some examples of when PST will generally apply is as follows:

  • The purchase or lease of new or used goods
  • Goods brought into BC for use in BC
  • The purchase of most services to goods (examples include: vehicle maintenance, furniture assembly, computer repair)
  • The purchase of telecommunication services (examples include: internet access, non-basic cable, non-residential telephone services, cell phone use, satellite services and fax services)
  • The purchase of legal service

GOODS AND SERVICES EXEMPT FROM PST

All permanent previous PST exemptions will be re-implemented with the new PST including the following:

  • All food for human consumption (for example, basic groceries and prepared food such as restaurant meals)
  • Most services (for example,  personal services such as haircuts, dry cleaning, funeral services)
  • Admissions and memberships
  • Bicycles
  • Books, newspapers and magazines
  • Children’s clothing
  • All permanent PST exemptions for business

Similar to the old Social Service Tax Act, the Provincial Sales Tax Act does not impose tax on things such as:

  • Real property (residential housing or real estate)
  • Admissions and memberships
  • Professional services (other than legal services)
  • Transportation fares (for example, bus, train, ferry, airline)

NEW TAX ON GIFTS OF VEHICLES, BOATS AND AIRCRAFT

The new legislation introduces more comprehensive provisions related to gifts of vehicles, boats and aircraft, including in province gifts, to ensure that these gifts are treated consistently whether the vehicle, boat or aircraft was acquired within BC or outside of BC.

Under the old PST, transfers of vehicles, boats and aircraft were subject to tax only if any money or other consideration was provided.

Under the new Provincial Sales Tax Act gifts of vehicles, boats and aircraft will be subjected to the PST and are treated consistently regardless of whether the vehicle, boat or aircraft was acquired within BC or outside of BC.  The Act will provide an exemption for gifts  from a family member who has previous paid sales taxes on their vehicles, boats and aircraft.

WHAT DOES THIS MEAN FOR BUSINESSES?

In December 2012  letters will be sent out to businesses by the Ministry with information on how to register. Online registration for businesses will commence on January 2, 2013, with the PST implementation effective April 1, 2013.  Business will have to apply for a new PST number.

Starting in October 2012, the ministry implemented various resources to answer any questions about how the PST will apply to your business including the ability to have a one-on-one consultation with a ministry tax specialist.

The tax specialist will provide you with the tax applications specific to your business.  The consultation may be handled in-person or over the telephone depending on your circumstances.  If you do not receive a letter, or are unsure if you need to register, please call 1-877-388-4410 or email CTBTaxQuestions@gov.bc.ca

Further information can be found in the link below:

http://www.hstinbc.ca/moving-forward/faqs/#help

If you have any more questions about the re-implementation of PST in BC, please contact Gregory & Associates, Chartered Accountants.

The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a commentary such as this, a further review should be done. Every effort has been made to ensure the accuracy of the information contained in this commentary. However, because of the nature of the subject, no person or firm involved in the distribution or preparation of this commentary accepts any liability for its contents or use.

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