Hst to pst

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 - Agenda

Disclaimer 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 Harmonization

Introduction 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

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 - Legislation

Legislation 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


Part 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

HST to PST HST to PST

Part 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 - Legislation

Part 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


Part 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

HST to PST - Legislation HST to PST

Tangible 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 Canada
c) Heat
Conveyance purchased in BC for interjurisdictional use
d) Affixed machinery
Multijurisdictional vehicle licensed in BC
e) 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


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


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


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 GST

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


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


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


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


Part 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


Part 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


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


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


Part 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 PST

Part 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 refund
Part 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


Part 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


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


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


Part 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 powers
Part 10 - Appeals Making, participating in assenting to or acquiescing a false or
deceptive return

53 54

9

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


PST 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


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


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


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


PST 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 registration
Note: Additional rules for telecommunication services, passenger vehicle rental
tax, multijurisdictional vehicle tax, clean energy fund tax

65 66

11


Federal Transitional Rules – Real Property Federal Transitional Rules – Real Property
Sale of Real Property – Examples Deemed self-supplies of Real Property
Example 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 of
Example 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


Federal Transitional Rules – Real Property Federal Transitional Rules – Other
Deemed self-supplies of Real Property Supplies of Property (Goods) & Services
Example: 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


Federal Transitional Rules – Other Federal Transitional Rules – Other
Property 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


Property (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


Importations 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


Returns 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


New Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate Act
General 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


Sales 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 PST

Mobile, 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


Rebates - 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


Table 1: B.C. Transition Rebate (General) Disclosure requirements
Degree 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


Agreements 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 Including
Agreements 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

Hst to pst

More Related Content

Viewers also liked

Similar to Hst to pst

More from Craig Elliott

Hst to pst