Yesterday, the British Columbia Ministry of Finance issued two notices which provide a general overview on how provincial sales tax (“PST”) will apply on goods purchased or leased in the province as of April 1, 2013: Notice 2012-011, “Purchases of Tangible Personal Property (Goods) in British Columbia” and Notice 2012-012, “Lease of Tangible Personal Property (Goods)”. While the information in these documents relates to goods defined as tangible personal property under the province’s Provincial Sales Tax Act, including items removed from real property to be repaired, it does not apply to vehicles subject to the multijurisdictional vehicle tax or conveyances used interjurisdictionally.
Goods purchased or leased in British Columbia will generally be subject to 7% tax, with the exception of the following items taxed at a different rate: liquor (10%); passenger vehicles (7% to 12%); boats and aircrafts (7% or 12%); certain manufactured mobile homes (7% of 50% of the purchase price); and certain manufactured modular homes (7% of 55% of the purchase price). Purchasers will be entitled to all the permanent exemptions which existed under the previous Social Service Tax Act, as well as specific exemptions for businesses, which will only be available where required documentation is provided to a registered vendor. Registered customers may be entitled to an exemption for resale purchases where a PST registration number is provided and the number is recorded on the invoice for the supply. For wholesale customers and vendors who have not yet received a registration number, exemptions may be provided upon receipt of a completed exemption certificate.
A lease in British Columbia will generally include situations where: a lessee enters into a lease in the province; goods are located in the province at the time a lease is entered into; or a lessee takes possession or delivery of good in the province. Where, during a lease rental period, leased goods are removed from the province for use outside the province, a lessee may be entitled to a refund of PST proportionate to the use outside British Columbia. Leased goods brought or sent into the province will be subject to PST where the goods are for use by a resident or for the use of another person at the resident’s expense. In addition, tax will apply where the goods are for use in a person’s business, whether or not the business is carried on in the province.
Where leased goods are used both inside and outside of the province during a rental period, PST will be payable in proportion to use inside British Columbia. With the transition back to PST, taxpayers are reminded that, although in most situations tax will be collected by registered sellers and lessors of goods in the province, where goods are brought or sent into the province and acquired from unregistered suppliers, PST is required to be self-assessed. Vehicles brought into the province or acquired at a private sale, that are required to be registered in British Columbia, are exceptions to this self-assessment obligation; tax will be collected by the Insurance Corporation of British Columbia ("ICBC") at the time of vehicle registration.
BC Notice 2012-011
BC Notice 2012-012