On October 15, 2012, the British Columbia Ministry of Finance released its long-awaited transitional rules for the re-implementation of Provincial Sales Tax (PST) in the province. Similar to the previously released federal transitional measures to address the elimination of HST in British Columbia, these rules describe how and when PST will apply to transactions straddling the April 1, 2013 re-implementation date. Note that these rules, which are designed to work in unison with the federal measures, must still be approved by the provincial Legislative Assembly.
On April 1, 2013, British Columbia PST will generally apply to the same goods and services that were subject to Social Service Tax prior to the introduction of HST on July 1, 2010, where such items are acquired, used, or brought into the province. However, with the exception of certain time-limited exemptions, all exemptions previously available under the Social Service Tax Act are to be reinstated.
General Rule
Under the general transitional rule, PST will apply to consideration in respect of taxable goods or services that becomes payable on or after April 1, 2013, where the consideration has not been paid prior to that date.
For these purposes, the consideration in relation to a purchase of goods is generally considered to become due on the earliest of:
- the date that the seller first issues an invoice in respect of the supply;
- the invoice date;
- the date that the seller, if not for an undue delay, would have issued the invoice; and
- the date that the purchaser is required to pay the consideration pursuant to a written agreement.
For services supplied under a written agreement and goods provided by way of lease, licence or similar arrangement, the consideration becomes due on the date that the purchaser is required to pay under the written agreement.
There is an exception to the general transitional rule where PST may become payable before the consideration for goods becomes due or is paid. Where the ownership or possession of goods is transferred to a purchaser, or delivered to a purchaser on a consignment or similar basis, PST will be deemed to be payable on the last day of the month immediately following the month in which ownership or possession was transferred to the purchaser, or the purchaser makes the goods available to a person other than the seller. In these situations, PST will not apply where it is deemed to be payable on a date prior to April 1, 2013.
British Columbia Provincial Sales Tax (PST) Notice 2012-010, “General Transitional Rules for the Re-implementation of the Provincial Sales Tax”, provides 28 useful examples and addresses more specific transitional rules with respect to the following types of transactions:
- goods purchased in British Columbia;
- leased goods;
- goods brought into British Columbia from sellers within and outside Canada;
- goods used in improvements to real property;
- software;
- services related to tangible personal property;
- accommodation;
- legal services; and
- telecommunication services.
Exceptions
There are a number of exceptions to the general transitional rule noted above. For example:
- PST may apply to a portion of the lease price attributable to goods brought into the province for use on or after April 1, 2013, even where all of the consideration under a lease has been paid prior to April 1, 2013;
- goods brought or sent into British Columbia, or delivered into the province by a seller outside Canada will be subject to PST based on where the goods enter British Columbia (i.e., on or after April 1, 2013);
- where not otherwise payable, PST will apply to goods incorporated into property subject to tax under the New Housing Transition Tax and Rebate Act, (or property that would be subject to tax under that act, if ownership or possession transferred before April 1, 2015) on or after April 1, 2013;
- PST will apply to software acquired on or after April 1, 2013, generally based on the proportion of use of the software in British Columbia; and
- PST will apply to services related to tangible personal property performed outside British Columbia where the goods are sent out of the province primarily for that purpose, and shipped back into the province on or after April 1, 2013 (i.e., after the service has been performed).
The province has indicated that, in the near future, it will provide additional information on the transitional rules for:
- mobile homes as defined by Part IX of the Excise Tax Act;
- liquor purchases made under a special occasion license;
- gifts;
- propane; and
- vehicle registration.
Other Taxes
With the re-implementation of PST, the province will be reinstating the following taxes related to goods:
Passenger Vehicle Rental Tax
Where a passenger vehicle is rented for more than eight consecutive hours and less than 28 days, a vehicle rental tax equal to $1.50 per day will apply to consideration paid for each day rented on or after April 1, 2013.
Multijurisdictional Vehicle Tax
This tax will apply in relation to multijurisdictional vehicles licensed under the International Registration Plan (IRP) on or after April 1, 2013.
Tax on Energy Products
In order to raise revenue for the Innovative Clean Energy Fund, a 0.4 percent tax will apply in respect of certain energy products purchased from a seller within Canada, or acquired from a seller outside Canada and brought or delivered into the province, on or after April 1, 2013.
BC Notice 2012-010