Hst to pst

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Hst to pst

  1. 1. HST to PST HST to PST HST to PST March 2013 March, 2013 Presented by: Tom Baybutt, C.A. Presented by: tombaybutt@van.mackay.ca Tom Baybutt, C.A., Director, Income & Commodity Taxation 604-697-5292 Direct Line: 604-697-5292 Email: tombaybutt@van.mackay.ca MacKay LLP General Office: 604-687-4511 2 HST to PST HST to PST - AgendaDisclaimer Agenda This presentation deals with complex matters and may not apply to 1. Introduction particular facts and circumstances. As well the presentation material and the references contained therein reflect laws and 2. A word about Harmonization practices which are subject to change. For these reasons the presentation material should not be relied upon as a substitute for 3. HST PST Comparison specialized advice in connection with any particular matter. matter 4. PST Legislation L i l ti Although the presentation material has been carefully prepared, 5. PST general transitional rules neither MacKay LLP nor any of the persons involved in the 6. Federal transitional rules – Real property preparation or presentation of the material accepts any legal responsibility for its contents or for any consequences arising from 7. Federal Transitional rules – Other its use. 8. New Housing Transition Tax and Rebate Act 3 4 HST to PST - Introduction HST to PST – A Word About HarmonizationIntroduction A Word About Harmonization Govt promised new PST similar to old SST Still here Provincial Sales Tax Act enacted May 31,2012 Applies to supplies made in Ont, NS, NL, NB & PST legislation amended on Feb 28/13 PEI. Quebec harmonized QST may also apply Regulations released on M 1/13 R l ti l d Mar Application dependent on recipient of supply and Registration process now open place of supply PST effective April 1, 2013 Still need to be aware of place of supply rules Transitional rules are available 5 6 1
  2. 2. HST to PST - Comparison HST to PST - Legislation Legislation Framework GST/HST PST Contains 14 Parts: Multi-stage tax Final stage tax (consumer) Part 1 – Interpretation Applies to most property & Applies to most goods. Real services including real property property and most services not Part 2 – When Tax Payable taxable Part 3 – Taxes in Relation to Tangible Personal Refund of tax on all business Tax relief limited to goods for inputs used to make taxable resale or incorporated into Property supplies (ITC’s) goods for resale Part 4 – Taxes in Relation to Software Efficient tax; avoids tax Business incurs tax burden Part 5 – Taxes in Relation to Services cascading which is reflected in prices Part 6 – Exemptions Part 7 – Refunds Part 8 – Registration and Tax Collections 7 8 HST to PST - Legislation HST to PST - LegislationLegislation Framework Part 1 – Interpretation Contains 14 Parts: Division 1 – Definitions and Interpretation Part 9 – Administration and Enforcement Many old definitions gone many new introduced Part 10 – Appeals Some new definitions – “affixed machinery”, Part 11 – Recovery of Amounts Owing “associated corporation”, “direct seller”, “electronic device”, “improvement to real property”, Part 12 – General “manufactured building”, “manufactured mobile Part 13 – Offences and Penalties home”, “manufactured modular home”, “portable Part 14 - Regulations building”, “portable floating building”, “small seller” Some expanded definitions – “fair market value”, “sale”, “tangible personal property”, “telecommunication service”, “use” 9 10 HST to PST - Legislation HST to PST - LegislationPart 1 – Interpretation Part 1 – Interpretation Division 2 – Purchase Price and Lease Price (new) Division 2 – Purchase Price and Lease Price (new) Purchase price of tangible personal property (TPP) Original purchase price of related service Original purchase price of TPP Original purchase price of accommodation Purchase price of TPP related to affixed machinery and Original purchase price of legal services improvements to real property Original purchase price of telecommunication service Lease price of TPP Reduced purchase price or lease price Original lease price of TPP Purchase price or lease price if coupon accepted Purchase price of software Purchase price if trade-in allowed on purchase of TPP Original purchase price of software Depreciated purchase price of TPP Purchase price of promotional material acquired or received by Purchase price if bundled purchase promotional distribution Valuation by director Purchase price of taxable service 11 12 2
  3. 3. HST to PST HST to PSTPart 1 – Interpretation Part 1 – Interpretation Division 2 – Purchase Price and Lease Price (new) Division 2 – Purchase Price and Lease Price (new) Generally the total value of consideration that seller accepts Trade-in – Taxable value reduced at time of purchase (no Discounts subsequent adjustment) • On invoice discount reduces taxable value • Applies only to trade-in of goods for goods (TPP) • Conditional discount offered at time of sale – taxable consideration • TPP traded must be tax-paid (PST, SST or HST) reduced if purchaser meets conditions – purchaser may request refund Promotional material provided to promote purchase of TPP, • e.g. Vendor offers 2% discount if paid in 10 days. Purchaser complies. software, services or real property at no charge or at price Purchaser may claim refund of 2% of PST charged on original price below cost Third-party coupons other than motor vehicles • PST will not apply • Treated like cash – no reduction in taxable value • Distributor required to pay PST on purchase price of materials net of any Retailer coupons – value for PST reduced PST already paid Manufacturer discount on motor vehicles – value for PST Gift certificates – no tax when issued – does not reduce reduced (not for GST) taxable value when presented as partial or full payment Deposits – generally not consideration unless a pre-payment. 13 14 HST to PST HST to PST - LegislationPart 1 – Interpretation Part 2 – When Tax is Payable Division 2 – Purchase Price and Lease Price (new) Generally payable on the earlier of: Bundled Transactions – PST rules Day consideration is paid and, Transactions where taxable components bundled with non- taxable components for a single price Day consideration becomes due Deemed price of taxable component equal to fmv of the taxable component If tax payable but tax not collected by vendor Entire price is taxable if the fmv of the taxable component is then purchaser required to file a return and pay greater than 90% of the value of the single price and the price is tax on last day of month in which tax should less than $500, or if the non-taxable component is not ordinarily available for sale separate from the taxable component have been charged. Entire price exempt if fmv of taxable component is $50 or less and 10% or less of fmv of bundled sale Tax on vehicles paid on date of registration If tax collected by dealer ICBC requires certification thereof (regulations) 15 16 HST to PST - Legislation HST to PST - LegislationPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP Division 1 – Rates of Tax Division 1 – Rates of Tax TPP generally taxed at 7% Manufactured modular home – 7% of 55% of price Liquor – 10% Portable building – 7% of 45% of price (proposed) Passenger vehicles Note: Price less than $55,000 – 7% o Rates for above 3 items does not include free-standing $55,000 but less than $56,000 – 8% appliances, furniture and draperies sold with manufactured $56,000 but less than $57,000 – 9% building; $57,000+ - 10% o Repair parts purchased for a manufactured building; or o Related services provided in respect of a manufactured Other vehicles, boats or aircraft 7% (12% if no GST) building Manufactured mobile home – 7% of 50% of price 17 18 3
  4. 4. HST to PST - Legislation HST to PSTPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPPTangible Personal Property (TPP) Definition: Division 2 - Purchases of TPP (Section 37)a) Personal property that can be seen, weighed, measured, felt Purchaser liable to pay tax at 7% or touched, or that is in any other way perceptible to the senses, and includes natural or manufactured gas Does not apply to the following if taxed under another Section:b) Electricity TPP brought into BC from outside Canadac) Heat Conveyance purchased in BC for interjurisdictional used) Affixed machinery Multijurisdictional vehicle licensed in BCe) An improvement to real property or part of an improvement Purchase of exclusive product by independent sales to real property that is removed from the site at which it is contractor affixed or installed, while it is removed from the site Purchase of a reusable container 19 20 HST to PST HST to PSTPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP Division 2 - Purchases of TPP (Section 37) Division 3 – Leases of TPP Registered vendor must collect tax unless purchase Leases taxable (except interjurisdictional for resale and purchaser provides either: conveyance and multijurisdictional vehicle) if: Their registration number, or Lessee enters into lease in BC Declaration in a form acceptable to Director of PST TPP located in BC when lease entered into Purchaser of multijurisdictional vehicle immediately Lessee takes possession of TPP in BC licensed in BC must also comply with above to avoid paying PST to registered vendor (dealer) Lessee receives delivery in BC Contractor acquiring TPP that will become affixed TPP is a vehicle registered for use in BC, or machinery or improvements to real property must Lessee leases under prescribed circumstances also comply with above to avoid PST (more later) (regulations) 21 22 HST to PST HST to PSTPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP Division 3 – Leases of TPP Division 3 – Leases of TPP Tax on vehicle leased outside BC for more than 28 Tax payable on payout due to breach of lease days but registered in BC is based on fmv on date Passenger vehicle leases of more than 8 hrs or less registered. than 29 days additional tax of $1.50 per day Tax rate 7% if not passenger vehicle otherwise passenger (revenue for BC Transportation Financing Authority vehicle rates apply (7% to 10% based on fmv). Exemption for sale and lease-back transactions TPP used in and outside BC during rental period provided tax previously paid (PST or HST) and not Tax applies if: refunded. Lessee brings TPP into BC o Refund of some tax available for leased property o Lessee is BC resident or uses TPP in BC in course of lessee’s business whether or not business carried on in BC used outside BC Tax levied based on proration formula (inside/outside BC) Refund available for vehicle leased outside BC and removed/registered outside BC 23 24 4
  5. 5. HST to PST HST to PSTPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP Division 4 & 5 TPP Brought into BC Division 4 & 5 TPP Brought into BC Tax applies when: Tax applies when: BC resident brings, sends or receives in BC TPP for own A resident taxpayer brings, sends, receives into BC a use or use of another person at their expense vehicle for own use or use of another person at their A person brings sends receives into BC TPP for use of a brings, sends, expense and vehicle is registered for use in BC BC resident or another person at BC resident’s expense A non-resident who owns or leases real property in BC A person brings, sends, receives into BC TPP for use in sends or receives into BC TPP to be used primarily in BC course of persons business whether or not carried on in BC during year following entry of TPP for non-resident’s own A person brings TPP into BC for temporary use (special use or use of another person at non-resident’s expense rules apply) Exemptions: Resident taxpayer brings, sends, receives in BC non- Permanent exemptions and exemptions specific to commercial TPP from outside Canada for own use or use of businesses will apply (exemptions contained in Act) another person at resident taxpayer’s expense 25 26 HST to PST HST to GSTPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP Division 4 & 5 TPP Brought into BC Division 8 – Affixed Machinery and Exemptions Improvements to Real Property Household TPP brought into BC as part of move to BC. Goods Contractor exempt from tax if: solely for personal use and use for at least 30 days prior to Contractor purchases TPP in BC or brings into BC to fulfill move and brought to BC within 6 months or residency in BC contract to supply and affix or install affixed machinery or TPP received as gift out of province as part of inheritance improvements to real property TPP other than vehicles, boats and aircraft received as gift out Under terms of Contract TPP used such that it ceases to of province from a BC resident or non-resident who has paid a be personal property at common law provincial sales tax on the TPP. Contract specifically states that customer liable for tax and Division 6 – Conveyances used Interjurisdictionally sets out purchase price of TPP that is subject to tax, and Contract must be in writing Division 7 – Multijurisdictional Vehicle 27 28 HST to PST HST to PSTPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP Division 8 – Affixed Machinery and Improvements Division 8 – Affixed Machinery and to Real Property Improvements to Real Property Contractor also exempt if contract with Govt of Contractor must self-assess if tax not paid on Canada, person exempt from PST or person who purchase of TPP but does not meet exemption qualifies under section 87 of the Indian Act Must Act. requirements meet same conditions as above except statement of liability for tax and purchase price of TPP PST may be required to be paid on affixed machinery and improvements to real property if the Above exemption re: Govt of Canada ceases to apply TPP is incorporated into a new residential property if Canada agrees to pay BC tax subject to New Housing Transition Tax Refund available if contractor paid tax on TPP from outside Canada but meets above exemption criteria - customer then pays tax if applicable 29 30 5
  6. 6. HST to PST HST to PSTPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP Division 9 – Change in Use Division 10 – TPP Acquired by Small Seller Registrant must self-assess tax on TPP purchased Small seller means a person who for resale (exempt) and subsequently uses TPP Is located in BC Purchaser must pay tax if TPP purchased for y Sells TPP, software or provides taxable service in BC exempt purpose but subsequently used for non- Does not sell, in ordinary course of business, vehicles, exempt purpose aircraft, boats or other prescribed eligible TPP Does not sell liquor except under special occasion licence Purchaser must pay tax on TPP if time restriction on Does not regularly make retail sales of TPP, software or exempt purchase not maintained (regulations) taxable services from established commercial premises Generally be aware that a change of use of TPP to Does not maintain established business premise in BC which tax did not apply may result in payment of tax Gross revenue from taxable sales $10,000 or less within (not all change of use provisions covered here) 12 month prior and estimated 12 months after year 31 32 HST to PST HST to PSTPart 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP Division 10 – TPP Acquired by Small Seller Division 11 – Energy Products Small seller means a person who Additional tax of 0.4% to raise revenue for Is not one of the following: Innovative Clean Energy Fund o A lessor Energy Products defined as o An independent sales contractor (involves direct sales) o A contractor involved with affixed machinery and improvements to Natural gas (except for stationary internal combustion engine) real property Fuel oil other then kerosene used for heating, cooling or o A vendor in relation to accomodation raising steam Is not registered for PST and is not required to be Propane in vaporized form delivered by a public utility, by registered pipe and to place where propane will be used Small seller must pay tax on taxable purchases Other prescribed TPP No tax paid on purchases from small seller Caps at $100,000 tax paid by purchaser 33 34 HST to PST HST to PSTPart 3 – Taxes in Relation to TPP Part 4 – Taxes in Relation to Software Division 12 – Other Taxes in Relation to TPP Tax on purchase or use of software applies where software is for use with an electronic device ordinarily situated in BC (includes Liquor sold under special occasion licence cloud computing) Tax on acquisition of exclusive product by Tax applies to resident or non-resident of BC independent sales contractor (direct sales) ( ) Tax on business use on devices in and outside BC based on pro- • Direct seller collects and remits tax based on suggested ration. BC usage determined by regulation retail price Exemptions Tax on gift of vehicle, boat or aircraft given in BC Purchased for purpose of incorporating into other software for resale or TPP for resale Tax on reusable containers Acquired for purpose of re-licensing copies for resale Tax on leased property occasionally supplied with Acquired for purpose of incorporating into prototype for operator prescribed purpose Tax on subsequent purchase or lease after refund Don’t forget to self-assess – common audit target 35 36 6
  7. 7. HST to PST HST to PSTPart 5 – Taxes in Relation to Services Part 5 – Taxes in Relation to Services Division 1 – Services related to purchase Division 2 – Related services in relation to TPP Tax applies within 180 days of purchase (before or after) where service to install, assemble, modify or incorporate into other TPP Purchase of related service provided in BC is Exempt if original purchase was exempt taxable Division 2 – Related services in relation to TPP Related service performed outside BC on TPP from BC and returned to BC is taxable Related service means any service provided to TPP or to install TPP but does not include Exemption for TPP taken out of BC for use out of Services to install TPP that will become affixed machinery or BC. Services performed during that time are exempt improvement to real property on installation Exemption for purchase of related service if Service provided to employer in course of employment Service to manufacture TPP that is fundamentally different from purchase made for purpose of only selling related TPP from which it was manufactured service to other persons Service provided to software 37 38 HST to PST HST to PSTPart 5 – Taxes in Relation to Services Part 5 – Taxes in Relation to Services Division 3 – Accommodation Division 4 – Legal Services Accommodation means lodging in a hotel, motel, resort, Taxable when provided in BC to purchaser who resides or boarding house, rooming house or bed & breakfast carries on business in BC facility, other than lodging excluded by regulation Taxable when provided to BC resident by non-BC lawyer but service relates to BC matter Accommodation i t A d ti is taxable at 8% bl t Taxable where non-resident acquires legal services outside Additional tax in designated accommodation area – BC and services relate to maximum tax of 2%. Refund available if reservation Real property or TPP and other property situated in BC made before becoming designated accommodation area A court or other proceeding in BC Tax on accommodation purchased for resale (exempt) Services related to incorporating or continuing a corporation or and subsequently used by purchaser society in BC Any other prescribed matters Legal aid exempt 39 40 HST to PST HST to PSTPart 5 – Taxes in Relation to Services Part 5 – Taxes in Relation to Services Division 4 – Legal Services Division 5 – Telecommunication Services Legal services provided outside of BC to person who ordinarily resides or carries on business in BC subject to PST if services Telecommunication services taxable at 7% relate to: Complex rules for tax on dedicated Items above applicable to non-residents telecommunication service. Legal advice related to a BC enactment (current, former or proposed) Division 6 – Taxable Service Acquired by Small Interpretation of any enactment if it relates to Seller o A physical or legal presence in BC o Any activity or transaction in BC Exemptions for certain services not applicable to o The contemplation of a presence, activity or transaction in BC small seller o A contract or covenant related to physical or legal presence, activity or transaction in BC Purchasers of taxable service from small seller Beware! – may be requirement to self-assess or pay tax exempt from tax except accommodation 41 42 7
  8. 8. HST to PST HST to PSTPart 6 – Exemptions (Permanent) Part 6 – Exemptions General General All food for human consumption including restaurant meals Remembrance Day poppies and wreaths Non-motorized bicycles and non-motorized tricycles where the Natural cut evergreens sold as Christmas trees diameter of each wheel is at least 350 mm Energy products (electricity, natural gas, etc.) purchased for Children sized Children-sized clothing and footwear use in a residential dwelling g Adult-sized clothing and footwear purchased for children under Fuel taxed or exempt from tax under the Motor Fuel Tax Act the age of 15 years Specific to Business Used clothing and footwear under $100 Goods purchased for resale or for lease Books, newspapers and periodicals Goods incorporated into goods for resale Medications (prescription and specific over-the-counter) Eligible machinery and equipment used in manufacturing, Vitamins logging, mining, mineral exploration and oil and gas production Specified school supplies Specified goods purchased by qualifying farmers for farm use 43 44 HST to PSTPart 6 – Exemptions Part 7 – Refunds Specific to Business Collector can refund tax under following circumstances Specified goods purchased for use by qualifying fishers or Customer provides required exemption documentation within aquaculturists for use in their trade 180 days of date tax was paid Specified manufactured machinery and equipment that is part Customer was not required to pay tax (documentation not of a penstock system for a hydroelectric p p y y power p plant required) can refund within 180 days of date tax p q ) y paid Goods shipped directly by the seller out of BC Refund or credit of purchase price or lease price – must be within 4 years from purchase or lease – tax credit and refundPart 7 – Refunds credit must be made at same time Deals with refunds of tax where applicable by collector Refund for credit given on return of motor vehicles returned and Director (includes refunds for bad debts) within one year Collector obtains refund from Government by making adjustment in tax return Part 7 – Refunds 45 46 HST to PST HST to PSTPart 8 – Registration and Tax Collection Part 8 – Registration and Tax Collection Registering to collect PST Registering to collect PST Registration started on January 2, 2013 Businesses required to register if you regularly do Businesses required to register if your regularly do any of the following in BC any of the following in BC y g Lease or rent taxable goods (eg motor vehicles, tools & equipment, aircraft, art work, etc.) i i f k ) Sell taxable goods (TPP), for example: o Alcoholic beverages, Provide related services such as o Motor vehicles, automotive parts and supplies, o Repair or maintain taxable TPP such as autos, knives, watches, TVs, office equipment, appliances, etc. o Boats o Apply protective treatments to taxable goods such as fabric o Building materials protection, rust proofing or paint o Household or office furniture o Set up, install or dismantle taxable goods such as temporary display o General merchandise (flowers, clothing, cosmetics, appliances, etc.) counters, trade fair booths, appliances, etc. o Restore taxable goods such as furniture, etc. 47 48 8
  9. 9. HST to PST HST to PSTPart 8 – Registration and Tax Collection Part 8 – Registration and Tax Collection Registering to collect PST Registering to collect PST Businesses required to register if you regularly do any Real Property Contractors of the following in BC Required to register if you are a contractor Provide four or more units of accommodation o Who enters into contracts to improve real property and o Your contracts specifically require your customers to pay PST on material Provide legal services and equipment supplied and that remains attached or affixed to the real Provide telecommunication services, including internet property after the improvement access, non-basic cable, digital and electronic media content, Businesses located in Canada but outside BC facsimile services, etc. Required to register if they regularly do all of the following Provide software o Sell taxable goods or software to customers in BC Act as liquidator, receiver, receiver-manager or trustee and o Accept purchaser orders from customers in BC (telephone, mail, e-mail or internet) dispose of assets as part of your business o Deliver taxable goods or software to location in BC (including electronic Sell exclusive products as a direct seller to an independent delivery sales contractor (who is not required to register) o Actively solicit sales of taxable goods or software in BC 49 50 HST to PST HST to PSTPart 8 – Registration and Tax Collection Part 8 – Registration and Tax Collection Businesses not required to register Reporting and remitting PST Not required to register if you do not make taxable Return due no later than last day of month following sales of goods or software, taxable leases and do reporting period not provide taxable services Reporting periods monthly, quarterly, semi-annual Registration or annual. Filing frequencies as follows: $3,000 or less tax – Quarterly, semi-annual or annual Registration available online, in person or by fax or $3,001 to $6,000 tax – Quarterly or semi-annual mail $6,001 to $12,000 tax – Monthly or quarterly Application form available online (form FIN 418) More than $12,000 tax – Monthly Online filing required for businesses with $1.5 million plus sales per year 51 52 HST to PST HST to PSTPart 9 – Administration and Enforcement Part 11 – Recovery of Amount Owing Division 1 – Inspections and audits Deals with powers of Director to collect tax owing Division 2 – Assessments Part 12 – General Includes arbitrary assessments Deals with designation of Director, delegation of Division 3 – Penalties and Interest Director s Director’s powers, confidentiality and service of notices Provides for wilfull negligence penalty of 25% of tax Part 13 – Offences and Penalties Division 4 – Board Member’s Liability Offence committed in following circumstances Prohibited use of registration number Provides for due diligence defence Thwarting inspection and audit powersPart 10 - Appeals Making, participating in assenting to or acquiescing a false or deceptive return 53 54 9
  10. 10. HST to PST Part 13 – Offences and Penalties Part 13 – Offences and Penalties Offence committed in following circumstances Penalties for above offences Destroying, altering, mutilating, hiding or other disposing of a A fine of not more than $10,000 or imprisonment for record to evade payment of tax not more than 2 years or both and Making, participating in, assenting to or acquiescing in making of false or deceptive entry in a record relating to tax p y g An additional fine equal to the amount of tax not Omitting, participating in, assenting to or acquiescing in the collected, remitted or paid or equal to amount omission of a material particular in a required record received as refund in excess of amount due Wilfully or fraudulently claiming, participating in, assenting to or acquiescing in claiming false exemption Part 14 – Regulations Wilfully, in any manner, failing to comply with Act or regs Regulations are not actually contained in the Act but Wilfully evading or attempting to evade compliance with Act or rather authority is given to The Lieutenant Governor payment or remittance of taxes required in Council who is also authorized to delegate Conspiring with anyone to do anything described above 55 56 HST to PST HST to PSTPST General Transitional Rules PST General Transitional Rules General Rule Leases of Goods PST will apply to consideration in respect of purchase of goods that becomes due on or after April 1, 2013 and is not paid before April 1, 2013 PST will apply to consideration that becomes due Exception – If all or any portion of consideration not paid or become due on or after April 1, 2013 and is not paid before April on or before last day of month immediately following first month in which 1, 2013 For purchase of goods, the ownership or possession is transferred to goods purchaser or PST will apply to leased goods brought or sent into For purchase of goods under approval, consignment, sale-and-return basis, BC on or after April 1, 2013 the purchaser acquires ownership or makes goods available to any other person except seller For leased goods brought into BC PST will apply to PST payable last day of month immediately following first month in which the portion of consideration in relation to the use of ownership/possession transferred to purchaser or makes available to the goods in BC during a rental period that ends on another person except seller or after Apr 1/13 that becomes due on or after Apr If above date before Apr 1 – no PST, if on or after Apr 1 - PST 1/13 and is not paid before Apr 1/13 57 58 HST to PST HST to PST PST General Transitional Rules PST General Transitional Rules Goods Brought into BC Goods used in Improvements to Real Property For goods purchased in BC or brought, sent or received From within Canada into BC by person for purpose of improving own real PST will apply to consideration that becomes due on/after property previous transitional rules apply Apr 1/13 and is not paid before Apr 1/13 (subject to exception to general rule noted above) Contractors who supply and affix or install affixed install, machinery or improvements to real property From outside Canada PST will apply to consideration that becomes due on or PST will apply if the goods are brought, sent or delivered after Apr 1/13 and is not paid before Apr 1/13 (applies to into BC or accounted for under relevant provision of goods purchased or brought into BC from within Canada) Customs Act on or after April 1, 2013 subject to exception for general rule Goods brought into BC from outside Canada – PST will apply if received through a postal agent or Customs accounted for on/after Apr 1 59 60 10
  11. 11. HST to PST HST to PSTPST General Transitional Rules PST General Transitional Rules Goods used in Improvements to Real Property Goods used in Improvements to Real Property Goods incorporated on/after Apr 1/13 into property subject to Contractors who supply and affix or install, affixed New Housing Transition Tax or property that would be if machinery or improvements to real property ownership or possession transferred before Apr 1/15 will be If PST not otherwise payable on the goods PST will apply if subject to PST where PST or BC portion of HST has not been goods used such that goods cease to be personal property paid or has been paid and is eligible for an ITC id h b id d i li ibl f at common law on/after Apr 1/13 by a contractor for Transitional rules for above situation purpose of fulfilling contract under which the contractor is For goods purchased or delivered into BC from within Canada PST required to supply and affix or install affixed machinery or general rule applies improvements to real property (self-assessment of PST on For goods into BC from outside Canada PST will apply if date delivered or materials acquired pre-Apr 1 but used as improvement to accounted for under Customs Act is on or after Apr 1/13 real property post-Apr 1). If PST not otherwise paid PST will apply if goods incorporated on/after Apr 1/13 (self-assessment) Summary – goods acquired pre-Apr 1 – used in improvement to real property after Apr 1 – Self-assess PST Mobile homes – PST if affixed to land on/after Apr 1/13 61 62 HST to PST HST to PSTPST General Transitional Rules PST General Transitional Rules Software Related Services PST if consideration for purchase of software becomes due PST applies to consideration that becomes due on/after Apr 1/13 and not paid before Apr 1/13 on/after Apr 1/13 and is not paid before Apr 1/13 If software is for use in BC and outside BC PST will apply to consideration that becomes due on/after Apr 1/13 on Where goods taken out of BC for purpose of having proportion of consideration pertaining to use in BC related service provided and goods are PST will apply to use of software on or after Apr 1/13 if subsequently brought back to BC after service acquired for use on, or with, an electronic device ordinarily provided then PST will apply if goods re-enter BC located outside BC and, on or after Apr 1/13 is subsequently on or after Apr 1/13 used on electronic device ordinarily situated in BC 63 64 HST to PST HST to PSTPST General Transitional Rules Federal Transitional Rules – Real Property Accommodation Sale of Real Property PST on consideration that becomes due on/after Apr Tax payable on earlier of day on which ownership 1/13 and not paid before Apr 1/13 transfers and day on which possession transferred Legal Fees HST if date March 31st or earlier PST on consideration that becomes due on/after Apr GST if date April 1st or later 1/13 and not paid before Apr 1/13 Exception for residential unit in condo complex which Retainer not considered consideration for supply until has not been, at time of possession, transferred or been applied to an invoice (treated as deposit) registered as a condominium PST will not apply to services taxable under former SST Tax payable earliest of date transferred or 60 days (mostly applicable to contingency fee arrangements following date of registrationNote: Additional rules for telecommunication services, passenger vehicle rental tax, multijurisdictional vehicle tax, clean energy fund tax 65 66 11
  12. 12. HST to PST HST to PSTFederal Transitional Rules – Real Property Federal Transitional Rules – Real PropertySale of Real Property – Examples Deemed self-supplies of Real PropertyExample 1: On December 15, 2011, a builder entered into a written agreement of purchase and sale for a newly constructed single detached house. Builder may be deemed to have made and Possession and ownership will be transferred to the purchaser on April 15, received a taxable supply of real property, eg: 2013. The purchaser would not be required to pay HST on the purchase of the Constructs or substantially reno’s a residential reno s house. However, the purchaser would be required to pay GST. complex and rents or occupies as place ofExample 2: On January 15, 2012, a builder entered into a written agreement of residence purchase and sale for a residential condominium unit. The purchaser will take possession of the condominium unit on March 15, 2013. Registration Required to self-assess GST/HST on fmv of the condominium complex will not occur until after December 2013 at which time the ownership of the unit will be transferred to the purchaser. HST if deemed supply before April 1, 2013 The purchaser would not be required to pay HST on the purchase of the GST if deemed supply after March 31, 2013 condominium unit. However, the purchaser would be required to pay GST 67 68 HST to PST HST to PSTFederal Transitional Rules – Real Property Federal Transitional Rules – OtherDeemed self-supplies of Real Property Supplies of Property (Goods) & ServicesExample: On January 1, 2012, a purchaser entered into a written Generally based on when tax becomes payable agreement for the purchase and sale of a newly constructed single- detached house together with a lease of land under the same Tax payable on earlier of date consideration paid or agreement with a builder. The construction of the house will be g consideration becomes due substantially completed by the builder on March 1, Consideration deemed due earliest of when: 2013. Possession and ownership of the house will be transferred on March 15, 2013. An invoice is issued The builder would be required to self-assess HST on the fair market Date an invoice would have been issued but for undue value of the new house (including the land portion) on March 15, delay 2013. Date stipulated under written agreement for the supply 69 70 HST to PST HST to PSTFederal Transitional Rules – Other Federal Transitional Rules – OtherProperty and Services – Examples Property and Services – Examples (Cont.)Example 1: On April 22, 2013, a person receives an invoice for seasonal yard Example 3: In September 2012, a person signs a 36-month lease for a maintenance services performed in March and April 2013 on a property in new truck at a dealership in Nanaimo. Under the lease agreement, Victoria. The invoice is dated April 14, 2013 and is issued that same day. payments become due on the 15th day of each month. HST would not apply because tax becomes payable after March 31, 2013. HST would apply to lease payments that become due before April 11, Tax becomes payable on April 14, 2013 because the consideration becomes due on that day. 2013. GST only would apply to lease payments that become due after March 31, 2013.Example 2: On March 21, 2013, a person orders custom-made blinds over the Internet. The blinds are expected to be delivered to a residence in Kamloops on April 25, 2013. Payment is made immediately at the time of ordering. Note: The rules are reasonably simple compared to HST HST would apply because tax becomes payable before April 1, 2013. Tax implementation. Simply based on when consideration is becomes payable on March 21, 2013 because the consideration is paid on that day. deemed to be due 71 72 12
  13. 13. HST to PST HST to PSTFederal Transitional Rules – Other Federal Transitional Rules – OtherProperty (Goods) and Services brought into BC Property (Goods) and Services brought into BC BC component of HST will not apply to: Tangible personal property TPP, mobile homes not Example: ABC Flooring Co orders a shipment of hardwood affixed to land, and floating homes brought into BC flooring from an Ontario supplier on March 20, 2013 with after Mar/13 terms FOB destination. The supplier arranges for the TPP brought into BC before Apr/13 by a carrier delivery of the flooring into BC on March 31, 2103. The where TPP delivered to consignee after Mar/13 flooring is delivered to ABC on Arpil 2, 2013. Services or intangible personal property for use in GST only would apply because deliver does not occur BC where consideration due or payable after prior to April 1, 2013 Mar/13 73 74 HST to PST HST to PSTFederal Transitional Rules – Other Federal Transitional Rules – OtherImportations Refunds and rebates Imported commercial goods Refunds/rebates of BC component of HST GST only if imported after March 31/13 – CBSA remain in place until existing time limits to claim collects expire HST before April/13 Certain limitations where event giving rise to Imported taxable supplies of services and intangible personal property relief occurs after Mar/13 Based on date consideration is paid or becomes e.g. no rebate on BC component if property/goods due removed from BC after Mar/13 If prior to Apr/13 – HST, if post Mar/13 - GST 75 76 HST to PST HST to PSTFederal Transitional Rules – Other Federal Transitional Rules – OtherReturns and Exchanges Taxable benefits, passenger vehicles & aircraft and employee/partner rebates Applies where purchase pre-Apr/13 return post- Mar/13 Expenses p 2012 2013 2014 If refund given refund of HST okay provided Auto operating expense 5% 3.5% 3% credit/debit note issued Other taxable expenses 11% 5.75% 4% If exchange (no refund) then no HST refund ITC – aircraft/passenger vehicles 12% 6.75% 5% Employee/partner rebates 12% 6.75% 5% 77 78 13
  14. 14. HST to PST HST to PSTNew Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate ActGeneral Application of Transition Tax Transition tax will not apply where No HST on real property sales where ownership The sale of the interest or complex was previously subject to the BC transition tax and possession transfer on or after April 1, 2013 Construction or substantial renovation of the housing 2% t transition t on certain sales of new or iti tax t i l f was substantially completed before July 1, 2010 and an substantially reno’d housing where: application for a PST transitional new housing rebate was not filed before Feb 17/12 HST does not apply to sale (GST applies) Builder sells a mobile home where sale does not include Construction 10%+ completed as of Apr 1/13 a supply of land as part of sale Ownership or deemed sale occurs before Arp 1/15 79 80 HST to PST HST to PSTNew Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate ActSales of New Housing Self-Supply of New Housing Tax applies to total consideration for sale Applies where builder required to self-supply (e.g. converts to rental use) Payable by purchaser when GST is Applies h A li where self-supply d t after Apr 1/13 lf l date ft A payable and construction more than 10% complete as of Collected by builder and remitted to CRA Apr 1/13 Where home less than 90% completed Builder required to pay Transition Tax on FMV builder may be entitled to BC Transition Transition tax payable on day of self-supply Rebate (below) 81 82 HST to PST HST to PSTNew Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate ActMobile, Floating and Owner-built Homes Owner-built Homes Transition tax will generally not apply to sales for personal use No issues – owner pays HST on inputs Sale of mobile home (without land) post Apr 1/13 subject ( ) j pre-Apr/13 and pays PST post-Apr/13 to GST and PST (even if contract pre-Apr/13 – tax applicable on possession date) Transition will apply to sale of mobile home with land where purchased and affixed pre Apr/13 but possession post Apr/13 (GST applies) 83 84 14
  15. 15. HST to PST HST to PSTNew Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate ActRebates - General Application Rebates - Builder Certification Requirements Builder certifies that PST paid on substantially all (90%+) Applies to new or substantially reno’d materials incorporated on/after Apr 1/13 homes that are subject to Transition Tax Must keep receipts for audit purposes Available to builders Double Straddling Transactions Applies where written purchase/sale agreement Calculated on total consideration and % of on/before Nov 18/09 completion as at Apr 1/13 Also applies where construction began pre-Jul/10 and Self-assessments calculated on fmv and possession post- Mar/13 % of completion as at Apr 1/13 85 86 HST to PST HST to PSTNew Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate ActTable 1: B.C. Transition Rebate (General) Disclosure requirementsDegree of completion Apr 1/13 Rebate as % of consideration or fmv Agreements on/before Feb 17/12 Disclosure required if BC Transition Tax applies Less than 10% pp Not applicable Applies to new or substantially reno’d housing reno d 10% < and < 25% 1.5% CRA disclosure required at stmt of adj date 25% < and < 50% 1.0% Consideration as established for GST purposes 50% < and < 75% 0.5% 75% < and < 90% 0.2% “Base Consideration” – grandparented new housing 90% + 0.0% only Amount of BC Transition Tax charged Degree of completion as of Apr 1/13 and Jul/10 if +0 87 88 HST to PST HST to PSTNew Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate ActAgreements on/before Feb 17/12 (Cont.) Agreements after Feb 17/12 CRA disclosure required at stmt of adj date (Cont.) Best source for detailed instruction regarding Partially/fully constructed pre Jul/10 – amt of PST disclosure requirements is contained in CRA Transitional New Housing Rebate claimed if any g y GST/HST Notice No. 276 dated November 2012 Amount of BC Transition Rebate to which builder – Elimination of the HST in BC in 2013 – entitled Transitional Rules for Real Property IncludingAgreements after Feb 17/12 and before Apr/15 New Housing On signing agreement See page 28 – Builder information requirements Contract price must be inclusive of BC Transition Tax End of Presentation 89 90 15

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