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In August of 2011, the Governments of British Columbia held a referendum where the HST was overturned. On February 17, 2012, the Provincial and Federal Governments released transitional rules to guide businesses and consumers through the changeover to the Goods and Services Tax (GST ) and the BC Provincial Sales Tax (BC PST). The purpose of the transitional rules is to provide businesses and consumers with the technical guidelines to ensure the smoothest possible transition back to these two taxes.
The GST and PST transitional rules apply to transactions that straddle the implementation date of April 1, 2013.
The Goods and Services Tax applies to all goods and Services provided in Canada unless they are exempt or zero rated.
Generally, if tax is payable before April 1, 2013, then the supplies will be subject to HST; if tax becomes payable after March 31, 2013, then GST will be applicable (and PST if applicable).
A lawn care company provides lawn services to Mr. Webster in Coquitlam for the months of March and April. The invoice is issued on April 15, 2013. As the invoice is issued after March 31, 2013, the service is only subject to GST.
Another example is when Mrs. Petras places an online order for blinds on March 25, 2013. The blinds will be delivered and installed on April 10, 2013. The order requires payment at the time of purchase. Mrs. Petras is required to pay HST on the blinds.
Where goods are delivered into BC after March 31, 2013, they will not be subject to HST. Where goods have been brought into BC by a third party carrier before April 1, 2013, but not released or delivered until after March 31, 2013, they will not be subject to HST.
Where an individual consumer imports goods into BC, they will not have to pay HST on goods that are received after March 31, 2013.
Mr. Cooper purchases a new vehicle in Washington and brings it into BC on April 2, 2013. Mr. Cooper will not be required to pay HST on the vehicle when it crosses the border; he will pay only the GST (and PST).
The Quick Method and other special filing methods will still be available after the transition date of April 1, 2013; however, the rates for BC will revert back to the rates currently applicable for a non-participating province.
A business that sells retail items in BC will currently be using a Quick Method rate of 4.1%. After April 1, 2013, the Quick Method rate will be 1.8%.
Refunds and rebates will continue to be available subject to the filing deadlines currently in place.
If you are a family that built your own house and moved in on December 15, 2012, you will have two years from the date your home was completed to apply for the New Housing Rebate ( the Federal and the Provincial Portion).
Another example covers the situation where Mrs. Kimble purchased a new TV on March 30, 2013. Mrs. Kimble would pay 12% HST on the purchase of the TV. On April 7, 2013, Mrs. Kimble decides that she no longer requires the TV so she returns it to the store for a full refund. Mrs. Kimble will be able to receive the full 12% HST paid refunded.
There will be restrictions on refunds of HST on goods removed from the province of BC after March 31, 2013. When goods are removed after March 31, 2013, they will not be eligible for a refund of the provincial portion of the HST.
The Canada Revenue Agency will continue to audit pre- and post-HST periods within the normal four year filing period that is generally available for review.
The rules surrounding the GST and PST transition are complex. That’s why it is important to work with a professional who can help you understand the rules and set up the proper systems so you can take advantage of all the tax savings. Working closely with you, MNP will perform a diagnostic analysis, establish priorities for necessary systems, process changes and help you minimize cost and cash flow impacts that improve the performance of your business.
For more information or to find out how MNP can help you successfully manage the transition, please contact your local MNP Tax advisor.
Related Topics:HST; GST; PST; Canada Revenue Agency
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