Canada - Indirect tax regulations are released 

While the new regulations relate mostly to the upcoming transition by the province of British Columbia from the HST back to the GST on 1 April 2013, they also amend other GST/HST regulations.

The new regulations include various effective dates.

B.C. HST measures – Systems may need to be adjusted

The new regulations address the transition from HST to GST in British Columbia for many different business transactions and circumstances, including:

• The general rules for the transition from HST to GST (e.g., when B.C. HST applies or ceases to apply to a supply)
• The elimination of the B.C. HST input tax credit recapture requirements
• The elimination of the partial B.C. HST rebates for qualifying public service entities
• B.C.’s specific rates for the streamlined accounting method and special quick method for qualifying public service bodies
• The elimination of the point-of-sale rebates in B.C.
• The factors for calculating GST/HST for employee and shareholder benefits for 2013
• The calculations for rebates for qualifying employees and partners
• The rules for performance bonds and related qualifying "contract payments" that become due before 1 April 2013 or after 31 March 2013
• The calculation of tax on imports into the province
• The calculations under the GST/HST pension plan rules of the tax payable by participating employers and the rebates for pension entities for claim periods that include 1 April 2013
• The calculations after 16 February 2012 of the "basic tax content" for real property or tangible personal property situated in B.C.
• The calculations after 16 February 2012 of the "basic tax content" of property of selected listed financial institutions
• The calculations of input tax credits for manufacturers' rebates.

The new regulations also include anti-avoidance rules related to the transition from HST to GST in B.C.

Other GST/HST measures

The new regulations confirm other previously announced GST/HST-related measures including the new GST/HST streamlined accounting thresholds announced in the 2012 federal budget and the new place of supply rules for specified motor vehicles and airport screening services.

KPMG observation

Registrants need to consider carefully reviewing the new regulations as well as the relevant effective dates as they prepare their systems and processes for the upcoming transition from the HST system to the GST in B.C.

Regulations relating to the new PST are expected later in the fall.