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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




                                                         HST to PST - Legislation                                               HST to PST - Legislation


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




                                                        HST to PST - Legislation                                                              HST to PST - Legislation


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


Part 3 – Taxes in Relation to TPP                                                       Part 3 – Taxes in Relation to TPP
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




                                                                           HST to PST                                                            HST to PST


Part 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 PST


Part 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
HST to PST                                                                 HST to PST


Part 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 GST


Part 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 PST

Part 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
HST to PST                                                                    HST to PST


Part 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 PST


Part 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 PST


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
HST to PST                                                                    HST to PST

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




                                                                           HST to PST                                                                    HST to PST


Part 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 PST


Part 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
HST to PST                                                                            HST to PST


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




                                                                         HST to PST                                                                            HST to PST


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
HST to PST                                                                                HST to PST

Part 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 PST


Part 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 PST


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




                                                                         HST to PST                                                               HST to PST


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




                                                                         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
HST to PST                                                                          HST to PST


PST 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 PST


PST 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 PST


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
HST to PST                                                               HST to PST


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




                                                                    HST to PST                                                               HST to PST


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




                                                                    HST to PST                                                               HST to PST


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
HST to PST                                                           HST to PST


Federal Transitional Rules – Other                               Federal Transitional Rules – Other
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




                                                    HST to PST                                                           HST to PST


Federal Transitional Rules – Other                               Federal Transitional Rules – Other
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




                                                    HST to PST                                                           HST to PST


Federal Transitional Rules – Other                               Federal Transitional Rules – Other
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
HST to PST                                                       HST to PST


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




                                                   HST to PST                                                       HST to PST


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


New Housing Transition Tax and Rebate Act                       New Housing Transition Tax and Rebate Act
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
HST to PST                                                        HST to PST


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




                                                            HST to PST                                                        HST to PST


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




                                                            HST to PST                                                        HST to PST


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

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Hst to pst

  • 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 - 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
  • 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 - 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 HST to PST - Legislation HST to PST - Legislation 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
  • 3. 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 HST to PST - Legislation HST to PST - Legislation 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
  • 4. HST to PST - Legislation HST to PST Part 3 – Taxes in Relation to TPP Part 3 – Taxes in Relation to TPP 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 HST to PST HST to PST Part 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 PST Part 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. HST to PST HST to PST Part 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 GST Part 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 PST Part 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. HST to PST HST to PST Part 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 PST Part 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 PST 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
  • 7. HST to PST HST to PST 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 HST to PST HST to PST Part 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 PST Part 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. HST to PST HST to PST 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 HST to PST HST to PST 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
  • 9. HST to PST HST to PST Part 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 PST Part 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 PST 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
  • 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 PST 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 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. HST to PST HST to PST PST 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 PST PST 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 PST 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
  • 12. HST to PST HST to PST 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 HST to PST HST to PST 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 HST to PST HST to PST 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
  • 13. HST to PST HST to PST Federal Transitional Rules – Other Federal Transitional Rules – Other 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 HST to PST HST to PST Federal Transitional Rules – Other Federal Transitional Rules – Other 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 HST to PST HST to PST Federal Transitional Rules – Other Federal Transitional Rules – Other 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
  • 14. HST to PST HST to PST 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 HST to PST HST to PST New Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate Act 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 New Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate Act 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
  • 15. HST to PST HST to PST New Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate Act 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 HST to PST HST to PST New Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate Act 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 HST to PST HST to PST New Housing Transition Tax and Rebate Act New Housing Transition Tax and Rebate Act 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