On Friday February 17, 2012, rules were announced to determine how the HST will apply during the transition back to PST which is to take place April 1, 2013.
TANGIBLE PERSONAL PROPERTY ("GOODS")
- HST will apply to any amount for a taxable supply made in BC that is paid or becomes due before April 1, 2013.
- HST will not apply to goods delivered in or into BC on or after April 1, 2013.
- HST will not apply to goods imported into BC from outside Canada and accounted for under the Customs Act after March 31, 2013.
SERVICES AND INTANGIBLE PROPERTY ("IP")
- HST will not apply to any amount that is paid or becomes due after March 31, 2013 for a service or IP supplied to a BC resident by a person in a non-participating province.
- HST will not apply to a supply of services or IP made outside Canada to a BC resident after March 31, 2013; or to an amount paid after March 31, 2013 for a supply made before that date.
- For sales of real property, the tax becomes payable on the earlier of the day ownership and possession is transferred. HST will apply to taxable sales of real property where ownership or possession transfers before April 1, 2013.
- For sales of new condominium units, tax becomes payable on the earlier of the day ownership transfers and 60 days following registration. HST will not apply where possession and ownership is transferred before April 1, 2013; or possession is transferred before April 1, 2013 and registration of the condominium complex occurs before January 31, 2013.
- The HST will not apply where a person is required to self assess the tax on a self-supply of real property after March 31, 2013.
- For purposes of applying the special rules in respect of government-subsidized housing, the BC component of the HST would not be included in the total of all tax that was payable by the builder where under the general transitional rules for deemed supplies of real property, the BC component of the HST would not apply.
- The transitional rules for new housing transactions that straddle July 1, 2010 implementation date will generally continue to apply subject to certain exceptions:
- Sales of certain newly constructed or substantially renovated homes for which both ownership and possession transfer after June 30, 2010 are not subject to HST if the written agreement was entered into on or before November 18, 2009. The builder will continue to be required to pay a transitional tax adjustment if the home was completed in whole or part after June 2010 if the tax becomes payable on the home before April 1, 2013.
- The transitional housing rebate may be available to the builder if 10% or more of the construction or substantial renovation of a residential condominium, traditional apartment building, seniors' residence or long-term care facility was completed before July 1, 2010. As of February 17, 2012 builders will not be eligible to claim the rebate before the earlier of the day the HST or the transitional tax becomes payable.
BASIC TAX CONTENT
Effective February 17, 2013, the BC component of the HST will not be included in calculating the basic tax content of real property situated in BC or tangible property ordinarily situated in BC.
The ITCs that a surety may claim with respect to direct inputs that are consumed, used or supplied exclusively and directly in the course of carrying out the construction is capped at an amount equal to the tax calculated on the total contract payments to which the surety becomes entitled from the oblige. In recognition that contract payments occur throughout the construction process, a special transitional rule will adjust the cap for contract payments that are paid or become due after March 31, 2013.
RETURNS, EXCHANGES, REFUNDS, REBATES
- Provided a credit or debit note is issued, a refund of HST would be available on the amount refunded where a person purchases a good prior to April 1, 2013 and returns or exchanges it after March 31, 2013.
- Existing time limits will apply for refunds or rebates of the provincial component of the HST. However new limitations may apply.
TAXABLE BENEFITS, ITCS FOR PASSENGER VEHICLES/AIRCRAFT, REBATES TO EMPLOYEES/PARTNERS
The GST/HST is determined by multiplying the amount determined for ITA purposes by a specified factor. These factors will be changed for BC as follows:
- Automobile operating expense benefits: from 5% to 3.5% for the 2013 taxation year and 3% for taxation years thereafter.
- Employee and shareholder benefits: from 11% to 5.75% for the 2013 taxation year and 4% for taxation years thereafter.
- ITCs for passenger vehicles and aircraft not used exclusively in commercial activities on which the BC component of the HST was payable: from 12% to 6.75% for the 2013 taxation year and 5% for years thereafter.
- Rebates of GST/HST to employees or partners for certain expenses on which the BC HST was payable: from 12% to 6.75% for the 2013 taxation year and 5% for years thereafter.
FINANCIAL INSTITUTIONS ("FIS") AND PENSION PLANS
- An FI is required to determine its liability for the BC component of the HST on an apportionment basis. Where a fiscal year or reporting period of an FI includes April 1, 2013, the apportionment method that must be used is the number of days in the taxation year or reporting period that are before April 1, 2013 to the total number of days in the taxation year or reporting period.
- Where a participating employer is deemed to have made a taxable supply to the pension plan for a fiscal year that includes March 31, 2013, HST would apply if the property or service was acquired before April 1, 2013.
- The pension plan will determine its liability for the BC component of the HST for deemed supplies of "employer resources" for a fiscal year that includes March 31, 2013 on an apportionment basis using the ratio of days in the employer's fiscal year before April 1, 2013 to the total days in the fiscal year.
- The pension plan will determine the BC component of the pension entity's provincial pension rebate for a claim period that includes March 31, 2013 on an apportionment basis using the ratio of the days in the claim period that are before April 1, 2013 to the total number of days in the claim period.
CHARITIES, QUALIFYING NON-PROFIT ORGANIZATION, SELECTED PUBLIC SERVICE BODIES ("PSBS")
PSBs resident in BC will no longer be eligible for a rebate of the provincial component of HST for claim periods ending after March 31, 2013. For claim periods including March 31, 2013, a rebate would be available for the tax that became payable or was deemed to have been paid or collected or required to be added to net tax before April 1, 2013.
STREAMLINED ACCOUNTING METHODS
The remittance rate for supplies made in BC by users of the Quick or Special Quick Method of Accounting will no longer apply for reporting periods that begin after March 31, 2013 at which time these users will begin to use the remittance rates that apply for supplies made in non-participating provinces. Where the reporting period straddles April 1, 2013, the current remittance rates for BC would apply to consideration that is paid or becomes due before April 1, 2013.
ASSESSMENTS, OBJECTIONS, APPEALS, ENFORCEMENT, ANTI-AVOIDANCE
Limitation periods under the ETA will generally continue to apply to past transactions where the applicable limitation periods have not expired. Anti-avoidance rules will apply to transactions to which the transitional rules apply.About BLG
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.