British Columbia has issued a new bulletin, CTR 002, to explain how vehicles, boats and aircraft purchased by a new corporation may be exempt from the tax on designated property. Effective July 1, 2010, vehicles, boats and aircraft purchased by private sale for use in British Columbia are subject to a 12% tax on designated property. Where a new corporation purchases designated property, the new corporation may be eligible for an exemption, subject to certain conditions, including:
- the designated property is purchased on or before the day the new corporation begins to carry on business;
- the new corporation is registered for HST at the time the designated property is purchased;
- the designated property is used in the new corporation’s commercial activity; and
- the seller paid or was exempt from the tax on designated property, HST or social service tax.
In addition, other conditions must be met depending on whether or not the seller of the designated property wholly owns and controls the new corporation.
Please note that the province’s previously released Tax Bulletin CTR 001, “Tax on Designated Property (Vehicles, Boats and Aircraft)” has been revised to provide further clarification on the exemptions from the tax on designated property, including the exemption available as noted in Tax Bulletin CTR 002.
BC CTR 002
BC CTR 001 revised