With the announcement of the 2014 budget, British Columbia (“BC”) has taken the opportunity to revise nineteen Provincial Sales Tax (“PST”) bulletins (and issue two new ones) for legislative changes as well as other clarifications.
The following changes were included in multiple bulletins:
- Moved certain defined terms to the Provincial Sales Tax Act(“the Act”) from the regulations, including “band”, “First Nation Individual” (Bulletins PST 101, 106, 301, 314, and 319) and “parents’ advisory council” (Bulletin PST 202 and 304).
- Added the following exemptions to the Act:
- Software purchased for the purpose of being processed, fabricated or manufactured into, attached to or incorporated (or substantially for incorporating copies of the software) into a telecommunication service for the purpose of retail sale. (Bulletins PST 105 and 200)
- Goods that are purchased, brought, sent or delivered into BC substantially for the purpose of incorporating any software program or telecommunication contained in those goods into other goods for the purpose of retail sale or lease, or software or a telecommunication service for the purpose of retail sale. (Bulletins PST 105, 107, and 200)
- Goods for the purpose of packaging other goods, for the purpose of retail sale or lease are exempt from PST. (Bulletins PST 110 and 200)
The following changes are specific to each bulletin noted below.
Registration and Remittance
Bulletin PST 002, “Charging, Collecting and Remitting PST”:
- All collectors, whether registered or not, are required to collect and remit PST on sales in BC including sales and leases outside the ordinary course of business, which may involve, for example, sales of business assets such as vehicles, office equipment and furniture.
- Returns must be filed in Canadian dollars and remittances must also be made in the same currency.
- Further information on the filing and payment options for PST and Municipal and Regional District Tax (“MRDT”) returns are provided.
Bulletin PST 003, “Small Sellers”
- Small sellers can now claim the PST exemption for “certain materials used in the production process, including abrasives, dies, grinding wheels, jigs and moulds”. This will be retroactive to April 1, 2013.
- New legislation on liquor sold at auction has now been incorporated into the Act.
- Information on cancelling a PST registration has been updated.
Industry Specific
Bulletin PST 101, “Farmers”
- Minor adjustments on the calculation of depreciated purchase price for change in use.
- Updates to the list of taxable items.
Bulletin PST 105, “Software”
- The following are now also exempt from PST:
- services to software in a tangible format
- software incorporated into a telecommunication service for retail sale .
Bulletin PST 107, “Telecommunication Services”
- As is the current practice, charges for paper bills or invoices are confirmed not to be subject to PST.
- Clarified that PST applies to prepaid, pay as you go, and top-up cards and charges for mobile phones.
- Software incorporated into a telecommunication service for retail sale is exempt from PST .
Bulletin PST 108, “Boats”
- Adjustments to the calculation of depreciated purchase price for change in use.
- As a result of the Budget:
- As of February 19, 2014, only goods brought into BC by new residents, within one year of the person becoming a new resident of the province, will qualify for the PST exemption.
- Effective April 1, 2013, goods that are exempt from PST at the time they are leased are subject to change in use tax, if they are used for a taxable purpose.
Bulletin PST 110, “Production Machinery and Equipment Exemption”
- Retroactive to April 1, 2013, goods obtained for the purpose of packaging other goods for retail sale or lease are exempt from PST. This amendment confirms current practice.
- Dentists can qualify as manufacturers to the extent that they manufacture crowns, implants or dentures.
- The calculation on the depreciated value has been clarified.
Bulletin PST 120, “Accommodation”
- The rules regarding the exemption for “rooms that do not contain a bed” have been clarified.
- The procedures for making exempt sales of accommodation on First Nation land to a First Nation Individual or band have been removed and are discussed further in Bulletin PST 314, “Exemptions for First Nations”.
- As of February 19, 2014, regardless of what services are being provided or who the accommodation provider is, the special rules for calculating the purchase price of accommodation provided with meals and services will apply.
- Retroactive to April 1, 2013, special rules now ensure that certain goods are not sold or leased when provided with a sale of accommodation (e.g., items provided free of charge to guests).
Bulletin PST 135, “Multijurisdictional Vehicles”
- Retroactive to April 1, 2013, the following will apply:
- New rules for the exit tax when a vehicle ceases to be prorate licensed and then becomes licensed for use solely within BC.
- Refunds for vehicles that cease to be prorate licensed.
- Self-assessment rules for the change in use of an exempt trailer.
Exemptions
Bulletin PST 200, “PST Exemptions and Documentation Requirements”
- While the amendment does not change the tax application, the exemption from the transitional tax for real property contractors who have contracts with persons exempt from the PST has been moved from the Provincial Sales Tax Exemption and Refund Regulation (“the Regulation”) to the Act.
Bulletin PST 202, “School Supplies”
- Clarifications on the procedures for making exempt sales of specified school supplies to a qualifying school, school board or similar authority.
- Clarifications on the exempt and taxable lists.
Bulletin PST 203, “Energy and Energy Conservation”
- Residential dwellings do not include time shares that provide short-term accommodation.
- Goods provided on a continuous basis may be exempt from PST if they meet certain conditions.
- Materials and equipment listed in the section for energy conservation are only exempt if they are obtained for use to conserve energy.
Applications of Tax
Bulletin PST 301, “Related Services”
- Effective April 1, 2013 services to grow plants (e.g. tree seedlings) if provided at a location other than property owned, leased or used by the owner of the plants, has been added to the list of exempt related services.
Bulletin PST 304, “Thrift Stores, Service Clubs, Charitable Organizations and Societies”
- New legislation regarding liquor sold at auction has been added.
Bulletin PST 306, “Goods Brought Into BC by New Residents”
- The rules regarding personal goods brought into BC that are later used for business use have been clarified - PST must be self-assessed as of the date the goods are applied for business use.
- As of February 19, 2014, only goods brought into BC by new residents, within one year of the person becoming a new resident of the province, will qualify for the PST exemption. Different rules apply if the goods were brought into BC before February 19, 2014.
Bulletin PST 308, “PST on Vehicles”
This bulletin has been completely rewritten.
- More information is provided for non-residents bringing non-registered vehicles into BC; PST may apply if the non-resident owns or leases real property in the province or acquires the vehicle for use primarily in BC.
- For vehicles purchased for use outside BC, additional criteria are included in order to be PST-exempt.
- The section on Modified Vehicles has been removed from this bulletin and is now covered in the new Bulletin PST 116, “Motor Vehicle Dealers and Leasing Companies”. We will cover this bulletin in a separate Tax Development.
Bulletin PST 314, “Exemptions for First Nations”
- Clarified that contractors are exempt from PST on goods they obtain to fulfil a written contract to supply and affix, or install, affixed machinery or improvements to real property that is located in BC, where all the criteria of the exemption is met.
- Clarified the documentation:
- for procedures providing exemptions to First Nation individuals and bands; and
- required to claim refunds of PST overpaid in relation to a Special Occasion Licence.