On February 19, 2019, Carole James, Minister of Finance and Deputy Premier, presented British Columbia’s 2019 budget. This year’s budget focused on making “life better for British Columbians” and, more specifically, on initiatives designed to make life more affordable, enhance essential services, and build a stronger economy. The announced measures include several proposals to improve health care, education, and child care for families. In addition, the province has reaffirmed its commitment to eliminate the Medical Services Plan (MSP) premiums for residents as of January 1, 2020.
From a commodity tax perspective, a few interesting changes were announced, as summarized below.
Provincial Sales Tax Measures
Designation to Clarify Tax Obligations under Agency Arrangements
The Provincial Sales Tax (PST) legislation will be amended to allow the parties in an agency relationship to jointly elect to designate one person to collect, report, and remit PST on sales or leases made in British Columbia. This designation will also be available for arrangements involving billing agents. Note that, for sales made by auction, the auctioneer will automatically be designated as the party responsible for the collection, reporting, and remittance of PST, unless the parties jointly elect to assign these obligations to the principal. These measures will take effect once the amended legislation receives Royal Assent.
Amendments will also be made to the Provincial Sales Tax Act (with various effective dates) to clarify the following:
- the tax treatment of vehicles brought into the province and immediately licensed as multijurisdictional vehicles (retroactive to April 1, 2013);
- refunds for motor vehicles returned to manufacturers (effective date to be specified);
- the suspension and cancellation of collector registrations (effective upon receiving Royal Assent);
- the conditions for small seller eligibility (effective upon receiving Royal Assent);
- the requirement to pay tax when an exemption is not documented (retroactive to April 1, 2013);
- the timing for tax payments by promotional distributors (effective upon receiving Royal Assent); and
- procedures related to unspent Municipal and Regional District Tax (MRDT) revenues held by dissolving societies (effective upon receiving Royal Assent).
Carbon and Motor Fuel Tax Measures
Continuing with its plan to reduce greenhouse gas emissions, the province confirmed that it will increase the Carbon Tax rate by $5 to $40 per tonne of carbon dioxide equivalent emissions, effective April 1, 2019. This rate will continue to increase by $5 per year until it reaches $50 per tonne in 2021. The province intends to direct a portion of Carbon Tax revenue to a clean industry fund to support large industrial operations with greenhouse gas reducing projects.
In addition, a penalty will be introduced for any person who sells natural gas at the retail level in British Columbia without being registered with the province as a natural gas retail dealer. The new penalty will be effective once the related amendment to the Carbon Tax Act receives Royal Assent.
Motor Fuel Tax
An amendment to the Motor Fuel Tax Act will allow Motor Fuel Tax (MFT) rates on clear gasoline and clear diesel to be increased to a maximum of 18.5 cents (from 17 cents) per litre in the TransLink (South Coast British Columbia Transportation Authority) service area, effective July 1, 2019. This measure is expected to raise $30 million annually towards funding transportation improvements.
Further amendments will clarify the treatment of refunds for MFT security related to relabeled fuel sales (retroactive to January 1, 2018) and the allowance for MFT collectors (retroactive to February 20, 2015), as well as appeal rights (pending Royal Assent).
Tobacco Tax Measures
Surprisingly, this year’s budget does not include an increase to the tax rate on tobacco, leaving the rate at 27.5 cents per cigarette ($55 per carton of 200 cigarettes) and 37.5 cents per gram of loose tobacco.
Further information on British Columbia's 2019 budget may be found on the province's web site at: https://www.bcbudget.gov.bc.ca/2019/default.htm.
If you have any questions about how these proposed changes might impact your organization, please do not hesitate to call the Ryan TaxDirect® line at 1.800.667.1600.