From HST to PST: tax changes in British Columbia could affect your business

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Starting April 1, 2013, British Columbia will be re-implementing its provincial sales tax (PST). For virtually all Alberta companies doing business in BC, this move away from harmonized sales tax (HST) will mean a change in your accounting processes.

The new PST
British Columbia’s PST will be a 7% retail sales tax payable when a taxable good or service is acquired for personal or business use. It applies to:

  • the purchase or lease of new or used goods;
  • goods brought into BC for use in BC;
  • the purchase of most services to goods (like vehicle maintenance or computer repair);
  • the purchase of telecommunication services (such as internet access or cell phone use); and
  • the purchase of legal services.

PST rates differ for accommodation (8%), liquor (10%) and certain energy products (0.4%).

Exemptions
Although specifics will be released with upcoming regulations, the BC government has stated all permanent PST exemptions will be re-implemented, including:

  • all food for human consumption (such as basic groceries and restaurant meals);
  • most services (personal services such as haircuts or dry cleaning);
  • admissions and memberships;
  • bicycles;
  • newspapers and magazines; and
  • all permanent PST exemptions for business.

How PwC can help your company
Our tax team at PwC is up-to-speed on the new PST. We can provide advice on how to assess the impacts to your business operations and tax processes, especially for those industries affected most: residential housing, software, and companies not involved in manufacturing operations. Many business processes will be altered (procurement, budget, sales, invoice, etc.) and PwC has the insight on wins and losses that could apply to your business functions.

You may need to self-assess your PST on taxable goods or services you bring into the province and on goods your business provides for promotional purposes below cost. And, unlike the HST, the lack of refundability of the provincial sales tax paid on purchases will impact your budgets and capital expenditures. Most companies may want to think about accelerating purchases before the April 1, 2013 PST implementation date. Some will want to delay such purchases. PwC can provide advice on how to emphasize the province’s transitional rules to align with the timing of your business purchases.

If your company needs further assistance, please contact one of our experts:

Dan Weland
Senior tax manager
+1 403 509 7374