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Advice, Tax, Uncategorized

B.C. Transition Back to PST

Effective April 1, 2013, B.C. will be returning to the PST regime.

The PST rates will include:

  • 7% for taxable goods and services
  • 10% for liquor
  • 8%-10% on accommodation
  • 12% for private sales of vehicles, boats or aircraft
  • Rates varying from 8%-10% for motor vehicles where the purchase/lease value is $55,000 or more

Registering for PST

Businesses that sell taxable goods or services and carry on business in B.C. in the ordinary course of the business will be required to register before selling taxable goods or services in B.C.

Businesses located in Canada, but outside B.C. will be required to register when selling taxable goods or software into B.C., when certain conditions are met.

A qualifying small seller is generally not required to register and collect PST on its taxable sales. The threshold, subject to certain rules, is set at $10,000 or less in annual sales of taxable goods, software and services. Some small sellers will find themselves having to collect PST but not GST since the thresholds for those two taxes are different (the GST threshold is $30,000 in taxable supplies per year).

Planning decisions and other considerations

  • Businesses contemplating the purchase of an asset may consider purchasing the asset before the PST is reinstated. The total amount of HST is eligible for an input tax credit whereas PST is a cost to the business.
  • Businesses may also consider purchasing the assets rather than leasing them as this may avoid having to pay unrecoverable PST on the lease payment after the PST is reinstated.
  • Businesses engaged in exempt activities such as medical professionals, financial institutions and residential landlords may want to defer acquiring property (such as real property or some intangible personal property) or services that are currently subject to unrecoverable HST but should not be subject to PST.
  • Consider what modifications need to be made to your systems, including accounting software, billing software, A/P and A/R, etc.
  • The elimination of the B.C. HST input tax credit recapture requirements.
  • The elimination of the partial B.C. HST rebates for qualifying public service entities.
  • The elimination of the point-of-sale rebates in B.C.
  • The factors for calculating GST/HST for employee and shareholder benefits for 2013.
  • The calculations of input tax credits for manufacturers' rebates.

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