March 4, 2013
Is your business ready to face a new B.C. PST system on April 1, 2013? With less than one month left before the new tax system fully applies, you have to make sure that your business is ready for all the challenges that a new tax system may bring.
Late last week, the British Columbia government released almost 200 pages of regulations related to the upcoming new provincial sales tax (PST). The new regulations reveal further details on PST exemptions and compliance requirements, among other information. This new information will help businesses complete the necessary changes and test their systems and processes to be ready for the April 1, 2013 transition date.
This TaxNewsFlash-Canada provides a general overview of some of the key points in the new PST regulations.
B.C. will implement its new PST on April 1, 2013, when it will transition from a 12% harmonized sales tax (HST) back to the 5% goods and services tax (GST) and a new 7% PST.
The new PST regulations
Exemptions under the new PST
The new B.C. PST regulations provide details on a wide range of exempting provisions, many of which include various definitions and conditions. Vendors have to carefully review these provisions to determine the status of their sales and ensure they obtain the appropriate documentation to support exempt sales, where necessary.
Purchasers must consider the extent to which the goods and services they purchase qualify for exemption and, where necessary, provide the appropriate documentation to the vendor to exempt the transaction.
Although the PST Act and Regulations are similar in nature and scope to the old PST legislation that applied prior to the introduction of the HST on July 1, 2010, the PST Act is a completely new piece of legislation.
While we understand that B.C.’s intent is to provide the same permanent exemptions that applied under the old PST, the scope or the rules of an exemption under the new PST may vary in some situations from the previous exemption under the old PST. Vendors should carefully review the new regulations before applying an exemption.
More details for refunds
The new PST regulations also provide details for various PST refunds. These refunds include PST paid on bad debts and qualifying motor vehicles transported outside of B.C.
Transfer between related entities
The new PST regulations include provisions to exempt qualifying transfers of goods and software between related parties. The conditions and rules related to PST-exempt transfers between related parties are complex and must be carefully reviewed before applying them.
Administrative and interpretative issues
B.C. also released almost 50 pages of additional details on compliance and interpretative issues, including a list of records that PST collectors and persons required to self-assess the new PST must keep.
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We can help
Your KPMG adviser can help you understand and apply the new PST regulations. We can also help you keep up-to-date on developments and help you assess possible opportunities that may be available to your business during this transitional period. For details, contact your KPMG adviser.
Information is current to March 4, 2013. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.
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