Commodity Clips, January/February 2008

Disclaimer: The headings in the following Commodity Clips publication link to the relevant government home pages. This new format prevents linking to government bulletins that change locations on government web sites after legislative announcements.

A bi-monthly publication of the PricewaterhouseCoopers Indirect Tax Group.

• GST/HST
• British Columbia
• Manitoba
• Ontario
• Nova Scotia
• Prince Edward Island
• Customs

GST/HST Rate Reduction
The reduction of the GST/HST rate to 5%, reported in the November/December 2007 Commodity Clips as being proposed by the Government of Canada, became effective on January 1, 2008. The rate reduction also results in a change of the HST rate for participating provinces (currently New Brunswick, Newfoundland and Labrador and Nova Scotia) from 14% to 13%. These changes were included in Bill C-28, which received royal assent on December 14, 2007.

To facilitate the change to the lower rate, transitional rules have been enacted for determining the GST/HST rates applicable to transactions that straddle the January 1, 2008 implementation date. On December 18, 2007, the Canada Revenue Agency (CRA) released Notice 226 — GST/HST Rate Reduction, which supersedes versions dated November 2007, November 9, 2007 and November 13, 2007 This notice includes a detailed set of questions and answers regarding how the rate reduction will apply.

In addition to the above Notice, the CRA has also produced the following specific GST/HST Information Sheets in respect of the GST/HST rate reduction:

• GI-038, The 2008 GST/HST Rate Reduction
• GI-039, Applying the 2008 GST/HST Rate Reduction to Allowances and Reimbursements
• GI-040, Applying the 2008 GST/HST Rate Reduction to Prepaid Funeral and Cemetery Arrangements
• GI-041, The 2008 GST/HST Rate Reduction and Streamlined Methods of Accounting for Small Businesses
• GI-042, Applying the 2008 GST/HST Rate Reduction to Price Adjustments, Adjustments for GST/HST Overcharged, and Returned Goods
• GI-043, The 2008 GST/HST Rate Reduction and Purchases of New Housing

Effect of the GST Rate Reduction on the New Housing Rebates
Calculation of the GST new housing rebate is effected by the GST rate reduction referred to above. The following GST/HST memoranda were re-issued by the CRA in December 2007 as a result of the GST rate reduction:

• GST Memorandum 19.3.1.2 — Stated Price Net of Rebate — GST at 5%, updates GST/HST Memorandum 19.3.1.1 dated August 2006. It explains how to derive and apply a "rebate factor" to determine the consideration, the GST payable and the GST new housing rebate amount in cases when a stated price for a single unit residential complex or a residential condominium unit is GST included and net of the new housing rebate.
• GST Memorandum 19.3.8 — New Housing Rebates and the HST, explains the GST/HST new housing rebates that are available for a portion of the federal component of the HST payable on the purchase of new housing in the provinces of Newfoundland and Labrador, Nova Scotia and New Brunswick (the participating provinces). It also explains the Nova Scotia rebate for a portion of the provincial component of the HST payable for new housing situated in the province of Nova Scotia.
• GST Memorandum 19.3.8.1 — New Housing Rebates and the HST at 13%, updates the tables and formulas given in GST Memorandum 19.3.8 to reflect the reduction of the GST rate and the federal component of the HST. It explains how to derive and apply a "rebate factor" for purchases of single unit residential complexes and residential condominium units located in the provinces of Newfoundland and Labrador, Nova Scotia and New Brunswick (the participating provinces).

Agriculture and Fishing — Supplies of Hay
GST/HST Memorandum 4.4 Agriculture and Fishing, was revised on December 17, 2007, to include a new paragraph dealing specifically with the GST/HST implications of supplies of hay products. The revised memorandum provides that for a supply of hay to be zero-rated, the quantity sold must be more than one large round bale of hay, weighing at least 750kg or 1650 lbs, or its equivalent. This memorandum supersedes Memorandum 4.4, Agriculture and Fishing, issued in September 1998 and revised August 14, 2000. It also incorporates the information from and supersedes Policy Statement P-235, Meaning of "Fertilizer."

Standardized Accounting
On December 27, 2007, the CRA issued a revised GST/HST Technical Information Bulletin B-100 – Standardized Accounting to correct an error in a calculation illustrating the penalty and interest applicable to a particular example from April 1, 2007, under Standardized Accounting. The previous calculation did not take into account the "one quarter of the amount calculated times the number of complete months the return is overdue, to a maximum of 12 months" element of the penalty calculation.

Implementation of Certain Provisions of the Budget Tabled in Parliament on March 19, 2007
On December 14, 2007, Bill C-28 — An act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, and to implement certain provisions of the economic statement tabled in Parliament on October 30, 2007, received royal assent. Part 1 of the bill implements the following GST/HST measures:

• increase the percentage of available input tax credits for GST/HST paid on meal expenses of truck drivers from 50% to 80% over five years, beginning with expenses incurred on or after March 19, 2007;
• increase the GST/HST annual filing threshold from $500,000 in taxable supplies to $1,500,000 and the annual remittance threshold from $1,500 to $3,000, both effective for fiscal years that begin after 2007;
• increase the GST/HST 48-hour travellers’ exemption from $200 to $400 effective in respect of travellers returning to Canada on or after March 20, 2007; and
• implement changes to the rules governing self-assessment under Division IV of Part IX of the Excise Tax Act to ensure that GST/HST applies appropriately in respect of intangible personal property acquired on a zero-rated basis and consumed in furthering domestic activities, applicable to supplies made after March 19, 2007.

Financial Institutions: GST/HST Requirements and Compliance Dates
Proposed GST changes create additional deadlines for financial institutions. PricewaterhouseCoopers has prepared a convenient one-page summary of the deadlines and the action required. Some requirements apply to all financial institutions, as defined by the Excise Tax Act, which includes taxpayers other than banks, insurers and securities dealers.

First Nations Goods and Services Tax (FNGST)

Implementation of the FNGST by Shuswap, Akisqnuk, Lower Kootenay, St Mary’s and Tobacco Plains First Nations
GST/HST Notice 230 — First Nations Goods and Services Tax (FNGST) imposed by Shuswap, Akisqnuk, Lower Kootenay, St Mary’s and Tobacco Plains First Nations was issued in December 2007. It explains the agreement entered into by each of these First Nations and the Government of Canada that allows the FNGST to be imposed. FNGST applies as of January 1, 2008 to supplies made on the lands of these First Nations.

QST

Pacemakers, Implantable Cardioverter Defibrillators and Artificial Cardiac Valves
TVQ 176-7 — Supplies of Pacemakers, implantable cardioverter defibrillators and artificial cardiac valves was issued by the Quebec Ministry of Revenue on December 28, 2007. This bulletin clarifies that a supply of a pacemaker, implantable cardioverter defibrillator and artificial cardiac valve is zero-rated for QST purposes.

Rebate for Hybrid Vehicles
On December 11, 2007, the Quebec Ministry of Revenue issued a news release in relation to the QST rebate for hybrid vehicles. The news release updates the list of prescribed hybrid vehicles for which a rebate may be claimed for QST paid when the vehicle is purchased, leased for a long term or brought into Quebec.

PST

Oil and Gas Industry — Taxable and Non-Taxable List
The British Columbia Ministry of Small Business and Revenue has updated the taxable and non-taxable lists explaining how the PST applies to biocides and other catalysts and direct agents. The revision moves meter skids from the taxable list to the non-taxable list.

Medical, Dental and Veterinary Industries
Notice to the Medical, Dental and Veterinary Industries was issued by the British Columbia Ministry of Small Business and Revenue in December 2007. The notice clarifies the circumstances in which the PST applies to sales of medicaments. A medicament is a drug or other substance, such as a pill, injection, medicated cream or similar item (including animal food), which contains active ingredients and is used to remedy, treat or prevent a disease or disorder.

Sellers and Purchasers of Electricity, Natural Gas, Fuel Oil and Propane
Notice to Sellers and Purchasers of Electricity, Natural Gas, Fuel Oil and Propane: Innovative Clean Energy (ICE) Fund Levy Exemption was issued by the British Columbia Ministry of Small Business and Revenue in January, 2008. The notice advises sellers and purchasers of energy products of an exemption from paying further ICE fund levies in a twelve-month period beginning on September 1 each year if the maximum amount payable of $100,000 has been reached. This process reduces the administrative burden on companies having to apply for multiple refunds.

Restaurants
Bulletin SST 027 — Restaurants, originally issued in September 1983 as "Application of Tax to Sales and Purchases Made by Restaurants and Similar Establishments", was revised in January 2008. The bulletin, which provides specific tax information to help the restaurant industry understand how the PST applies to their business, has been renamed and re-written in a new easier to read format

Veterinarians
Bulletin SST 038 — Veterinarians, originally issued in October 1981, has been reissued in November 2007. The section containing information for pharmaceutical companies has been removed because it does not affect veterinarians.

Motor Vehicle Dealers
Bulletin SST 042 — Motor Vehicle Dealers, originally issued in September 1986, was revised in January 2008. Information has been inserted into the latest revision in relation to whether an entity needs to register as a dealer.

Clubs, Thrift Stores, Societies and Charities
Bulletin SST 047 — Clubs, Thrift Stores, Societies and Charities, originally issued in November 1984, was revised in January 2008. The latest revision has been re-written and provides specific information to assist service clubs and thrift stores understand how the PST applies to their operations. This bulletin replaces the previous version dated February 2007.

Ready-Mixed Concrete Industry
Bulletin SST 052 — Ready-Mixed Concrete Industry, originally issued in March 1985, was revised in December 2007. The latest revision includes detailed information regarding refund of motor fuel tax paid on clear fuel used in a stationary motor vehicle and how to apply for such a refund. It provides further details regarding the refund available to transit mixers and concrete pump trucks regarding the difference between the clear and coloured fuel tax paid for 50% of all fuel consumed in the engine.

Manufacturers
Bulletin SST 054 — Manufacturers, originally issued in June 1989, was revised in December 2007. The bulletin includes the following:

• the process for remitting PST that is required to be self-assessed on parts purchased exempt, but used for taxable purposes;
• clarification that no PST is payable on the purchase price of catalysts and direct agents provided certain conditions are satisfied regarding the nature, composition and use of the catalyst or direct agent; and
• details regarding the ICE Fund Levy.

Oil and Gas Industry
Bulletin SST 055 — Oil and Gas Industry, originally issued in March 1985, was revised in January 2008. The bulletin includes the following:

• the process for remitting PST that is required to be self-assessed on parts purchased exempt, but used for taxable purposes;
• clarification that no PST is payable on the purchase price of catalysts and direct agents provided certain conditions are satisfied regarding the nature, composition and use of the catalyst or direct agent; and
• details regarding the ICE Fund Levy.

Dentists
Bulletin SST 059 — Dentists, originally issued in October 1985, was revised in November 2007. The bulletin now provides that a dentist is responsible for remitting PST due on purchases of taxable items from a supplier located outside British Columbia who has not charged PST. It also sets out the calculation and remittance procedure for such out-of-province purchases.

Taxidermists
Bulletin SST 069 — Taxidermists, originally issued in July 1986, was revised in November 2007. The bulletin clarifies that PST applies differently depending on the type of service or product a taxidermist provides. This bulletin replaces the previous version dated May 2001.

Service Charges, Trade-Ins and Returns
Bulletin SST 079 — Service Charges, Trade-ins and Returns, originally issued in March 1985, was revised in January 2008. The bulletin explains how PST applies to service charges, trade-ins and returns. This bulletin replaces the previous version dated January 2007.

Mining Industry
Bulletin SST 081 — Mining Industry, originally issued in March 1989, was revised in January 2008 to clarify how the PST applies to catalysts and direct agent and to provide information on the ICE Fund Levy. It also includes information regarding the process for remitting PST that is required to be self-assessed on parts, goods for own use and out-of-province purchases.

Bundled Sales
Bulletin SST 119 — Bundled Sales: Taxable and Non-Taxable Goods or Services Sold Together for a Single Price, originally issued in February 2005, was revised in January 2008. The bulletin explains how PST applies to bundled sales – taxable and non-taxable goods or services sold together for a single price. This bulletin is directed primarily at vendors.

Automotive Services and Parts
Bulletin SST 122 — Automotive Services and Parts, originally issued in April 2006, was revised in January 2008. The bulletin includes a number of changes, including when to charge PST and when not to charge PST. Further explanation is also provided in relation to PST treatment of services provided to visitors to British Columbia, and, in particular, the exemption from charging PST when an out-of-province customer brings a vehicle into British Columbia solely for the purpose of receiving a service and removes the vehicle from the province immediately afterwards.

Oil and Gas Industry — Exploration, Discovery and Development
Bulletin SST 127 — Oil and Gas Industry — Exploration, Discovery and Development, originally issued in April 2006, was revised in January 2008 to clarify how the PST applies to catalysts and direct agent and to provide information on the ICE Fund Levy. It also includes information regarding the process for remitting PST that is required to be self-assessed on parts, goods for own use and out-of-province purchases.

Farm-Use Equipment
In January 2008, the Manitoba Department of Finance revised Bulletin No. 018 — Farm-Use Equipment and Other Items, which was originally issued in May 2000. The revised bulletin incorporates a number of changes, including clarification of the definition of livestock, further details regarding the PST treatment of equipment used principally for farming, and the addition of several items to the following lists:

• conditionally exempt equipment and other items used for farming;
• unconditionally exempt equipment and other items used for farming;
• taxable equipment and other items that are not exempt for farm use; and
• items that may be eligible for a tax refund, upon investigation, if used principally for farming.

Changes to the Retail Sales Tax Return
In December 2007, the Ontario Ministry of Revenue announced that several changes would be made to the Ontario Retail Sales Tax Return. The December 2007 return (due January 2008) now reflects the following changes:

• "Account Balance," showing amounts owing or credit(s) to a taxpayer’s account, is displayed on the new return.
• A separate monthly statement with a payment advice is issued if a taxpayer has a balance owing.
• A "Payment Amount" line (Line 7) is added to the return, so taxpayers can show their calculated payment clearly.
• The "Adjustment" line (currently Line 6) is removed from the return.
• Taxpayers can now request an amended return to make amendments to previously filed returns.

These new features will also be available through the Internet banking service.

Retail Sales Tax Statement of Account
In January 2008, the Ontario Ministry of Revenue released Information Bulletin "How to read your new Retail Sales Tax (RST) Statement of Account." The RST Statement of Account was implemented as part of the changes to the RST return, outlined above. This information bulletin provides further guidance regarding the information included in the new Statement of Account.

Bicycles and Related Safety Equipment
In November 2007, Information Notice "Retail Sales Tax Exemption for Bicycles and Related Safety Equipment" was released by the Ontario Ministry of Revenue. The information notice explains the point-of-sale RST exemption for bicycles and related safety equipment, which is effective from December 1, 2007 to November 30, 2008. The exemption is available on the purchase of new or used bicycles that have a purchase price of $1,000 or less, and certain specified safety equipment including bicycle helmets, reflectors and lights.

Application of Tax to Used Light Vehicles
Information Bulletin "Notification of a Change in the Application of Tax to Used Light Vehicles", originally issued in November 2007, was revised by the Saskatchewan Ministry of Finance in January 2008. The bulletin provides that PST no longer applies to the sale of used light vehicles on which PST has previously been paid in full, effective November 8, 2007. The bulletin has been updated to include additional details regarding parts and service, trade-ins and discontinuance of the transitional provision that allowed dealers to self-assess PST on their cost of used light vehicles acquired for resale.

Information for Motor Dealers and Leasing Companies
Information Bulletin PST-18 — Information for Motor Dealers and Leasing Companies, originally issued in October 1986, was reissued by the Saskatchewan Ministry of Finance in January 2008. The revised bulletin provides detailed information regarding the new PST exemption for eligible used light vehicles, daily rental and new and used leased vehicles, new and used inventory, and warranties on new and used vehicles. The revised bulletin also clarifies when dealers are required to pay the tax on parts or repair labor used to repair vehicles that are in their taxable inventory for resale purposes and for daily rental and leased vehicles.

Information for Dealers of Recreational Vehicles
Information Bulletin PST-48 — Information for Dealers of Recreational Vehicles, originally issued in April 1996, was reissued by the Saskatchewan Ministry of Finance in January 2008. The revised bulletin updates the calculation of tax on recreational vehicle sales when the purchaser is a GST registrant and the trade-in allowance is GST included.

Effect of the GST/HST Rate Reduction
As a result of the GST/HST rate reduction, the following Revenue Act Tax Bulletins have been re-issued by the Nova Scotia government. The revised guides update the examples to reflect the reduction of the GST/HST rate.

• Revenue Act Tax Bulletin No. 5012R5 Volunteer and Municipal Fire Departments and Harmonization.
• Revenue Act Tax Bulletin No. 5056R1 Rebate of 8% Provincial Component of HST on Computers Paid by or on Behalf of Persons who are Physically or Visually or Hearing Impaired or Mentally Challenged
• Revenue Act Tax Bulletin No. 5058R1 Motor Vehicles – Rebate of Nova Scotia Sales Tax (13%) For Persons with Physiological Impairment.

Effect of the GST/HST Rate Reduction
As a result of the GST/HST rate reduction, the following Revenue Tax Guides have been re-issued by the Prince Edward Island Provincial Treasury updating the revised guides update the examples to reflect the reduction of the GST rate:

• Revenue Tax Guide RTG: 102 Asphaltic Concrete & Ready Mix Cement — Manufacturing
• Revenue Tax Notice RTN: 106 Provincial Sales Tax and GST
• Revenue Tax Guide RTG: 117 Motor Vehicle Receipts and GST
• Revenue Tax Guide RTG: 119 PST/GST Application for Contractors
• Revenue Tax Guide RTG: 123 Carpet Dealers and PST
• Revenue Tax Guide RTG: 125 Advertising and Promotional Materials
• Revenue Tax Guide RTG: 131 Tax Application and Coupons
• Revenue Tax Guide RTG: 158 Tax Information for Services Stations and Garages

Food and Beverages
Revenue Tax Guide RTG: 157 Food and Beverages, originally issued June 2003, was revised December 2007. The revised guide updates the list of food products, including prepared food products, to which PST does and does not apply.

Water and Energy Conservation Devices
Revenue Tax Guide RTG: 165 Water and Energy Conservation Devices, originally issued November 2005, was revised December 2007. Effective November 2, 2007, the revised guide now includes no flow urinals and low flow showerheads and aerators rated for ten (10) litres per minute or less among the list of water and energy conservation devices that are exempt from PST.

Excise Tax

Diesel Fuel Used in the Generation of Electricity for the Provision of Hotel Services on Vehicles
Excise Taxes and Special Levies Policy Statement EP-003 — Application of Excise Tax to Diesel Fuel Used in the Generation of Electricity for the Provision of Hotel Services on Vehicles, was issued in December 2007. The policy statement deals with excise tax on diesel fuel for use in the generation of electricity primarily for use in the operation of a vehicle. It explains the revision of the CRA policy with respect to the application of excise tax on diesel fuel used in the generation of electricity on vehicles for purposes of "hotel" services. Two specific changes are addressed in the policy statement, namely the application of the "primarily test" and establishment of the point of usage assessment at the "global level."

Excise Duty

Excise Duty Rates on Tobacco Products
Excise Duty Notice EDN17 — Changes to Excise Duty Rates on Tobacco Products was issued in November 2007. The notice provides additional information regarding the changes to tobacco excise duty rates that were announced by the Government of Canada on October 20, 2007, to offset the impact of the GST rate reduction. It sets out the new rates of excise duty on tobacco products as of January 1, 2008.

Tobacco Products Inventory Tax
Excise Duty Notice EDN18 — Questions and Answers on the Tobacco Products Inventory Tax was issued in January 2008. The notice provides additional information regarding the Tobacco Products Inventory Tax, which is a tax that was announced by the Government of Canada on October 20, 2007, and is imposed on certain duty-paid tobacco products held in inventory at the beginning of the day on January 1, 2008. Bill C-28, the legislation that enacted this new tax, received royal assent on December 14, 2007. The notice includes the products that are subject to the Tobacco Products Inventory Tax and the definition of what constitutes tobacco products.

Canada

Customs Self Assessment
Memorandum D17-1-7: Customs Self Assessment Program for Importers issued December 18, 2007, provides information and guidelines regarding the Customs Self Assessment Program (CSA) for importers. It reflects amendments made to the Accounting of Imported Goods and Payment of Duties Regulations, and the Reporting of Imported Goods Regulations explaining the requirements for the CSA. This memorandum explains the policies and procedures relating to the accounting, revenue reporting, payment of duties and adjustment of goods imported into Canada by an importer authorized under the CSA program. The memorandum also provides information about how to apply for authorization under the program and a general overview of the CSA clearance process.

Wood Slats
Customs Notice 07-035: Wood slats originating in or exported from Mexico and the People’s Republic of China, issued December 5, 2007, to advise that on November 14, 2007, the Canada Border Services Agency (CBSA) initiated a re-investigation of the normal values and export prices of wood slats originating in or exported from Mexico and the People’s Republic of China pursuant to the Special Import Measures Act (SIMA). The re-investigation is part of the CBSA’s enforcement of the injury finding made by the Canadian International Trade Tribunal (CITT) on June 18, 2004.

Declaration of Goods on Release Requests
Customs Notice 07-037: Declaration of Goods on Release Requests was issued on December 5, 2007 for the attention of importers and their service providers who are involved in the preparation and transmission of Release on Minimum Documentation (RMD) release requests to the CBSA. This notice provides clarification on the information contained in the Accelerated Commercial Release Operations Support System (ACROSS), Participants Requirements Document (PRD) for EDI. It specifically addresses the requirements for the submission of RMD.

Certain Laminate Flooring
Customs Notice 07-038: Certain Laminate Flooring From the People’s Republic of China and France was issued on December 14, 2007 to advise that on November 26, 2007, the CBSA concluded a re-investigation of the normal values and export prices of certain laminate flooring originating in or exported from the People’s Republic of China and France, as well as a re-investigation of the amounts of subsidy of certain laminate flooring originating in or exported from China, pursuant to the Special Import Measures Act (SIMA). The re-investigation is part of the CBSA’s enforcement of the finding by the Canadian International Trade Tribunal on June 16, 2005.

Special Economic Measure — Burma
Customs Notice 07-039: Summary of the Special Economic Measures (Burma) Regulations was issued on December 24, 2007. The purpose of this notice is to inform exporters and importers of the key provisions of the Special Economic Measures (Burma) Regulations that relate to the prohibition of goods exported to and from Burma (also known as Myanmar). The CBSA will help the Department of Foreign Affairs and International Trade administer the regulations.

Form D120 — Customs Bond
Customs Notice 08-001: Changes and updates made to Form D120 — Customs Bond was issued on January 15, 20008. This notice explains the revisions made to Form D120, Customs Bond, a multi-purpose bond used to provide security for a variety of CBSA programs. Effective January 15, 2008, all new CBSA security bonds will be required to use the revised Form D120.

European Union

Temporary Duty Suspensions on Importation of Certain Products into the EU
The European Commission published Council Regulation 1527/2007 on December 17, 2007 temporarily suspending the autonomous common customs tariff duties on certain industrial, agricultural and fishery products. The purpose of this "duty suspension scheme" is to provide relief from duty on imported goods when no alternative EU source of supply is readily available. The duty relief is not confined to products for re-export and is available to all importers of the goods concerned.

European VAT

ECOFIN Agrees to Adopt Elements of the "VAT Package"
On December 4, 2007, the EU's Economic and Financial Affairs Council (ECOFIN) agreed to formally adopt key elements of the VAT Package, meaning sweeping reforms to the rules for determining the application of VAT for businesses that supply or purchase services. Some of the changes are due to take effect from January 1, 2010; changes to the taxation of supplies of services to private consumers by EU businesses will be implemented in 2015.

The VAT package is composed of interlocking elements intended to establish new rules for determining the place of supply for services (which determines which EU country applies VAT to those services) and minimizing regulatory burdens on business engaged in cross-border trade. For some businesses, this will be a fundamental change to the VAT jurisdictions to which they are exposed and their VAT reporting requirements. The main hurdle that the proposal presents to businesses is the practical difficulty of determining the location of a recipient of a service, especially when multiple locations may be involved.

The following are some of the areas that businesses need to consider before the implementation of the VAT package proposals:

• a process of identifying where and how the changes will affect trading patterns;
• reconfiguration of accounting systems and procedures to ensure compliance;
• training of staff to ensure that they are familiar with the new rules;
• additional VAT registrations in other Member States; and
• for each Member State in which the business is registered, the collection and collation of additional information from customers and suppliers in order to be able to make decisions regarding the correct VAT treatment of a supply. For example, is the recipient a business, private consumer or a non-taxable legal person; where does the recipient belong; has any other establishment intervened in the supply; who must account for the VAT, and where must the VAT be accounted for?

By addressing these issues now, companies can ensure that they will have sufficient time to reconfigure their accounting systems and avoid penalties for non-compliance.