It is necessary for any business, especially those in British Columbia, to be aware of the BC provincial government re-implementing the Provincial Sales Tax (PST) along with Goods and Services Tax (GST) that will take the place of the Harmonized Sales Tax (HST) that is currently in place. In order to be ready for the shift back, here is some information and tips that might make for an easier transition.
What will be affected?
First off, it is important to note that some of the items below are not finalized and may change prior to the implementation on April 1, 2013. Most items that were exempt from the PST will be re-implemented into the new system and therefore will not have any Provincial tax consequences associated with them. here are some of the items that the Provincial Government intends to be exempt:
- food (groceries and prepared food), books, newspapers and magazines, children’s clothing, admissions and memberships
- bicycles, transportation fares (bus, train, ferry, airline)
- sales of real property (residential housing, commercial real estate), professional services
Although there are certain items that will no longer be affected by the PST and will be considered exempt, PST will still be applicable to many different purchases. Here are a few items that PST will generally be applied to:
- The purchase or lease of new and used goods in B.C.
- Any goods brought, sent or delivered into B.C. for use in B.C.
- The purchase of Software, Services to goods (vehicle maintenance, furniture assembly, or computer repair), Accommodation, Legal services, Telecommunication services (internet services, digital and electronic media)
There will be different rates that apply to different products and services that range from 7% to 12%; listed below are some of the PST rates for different items (Effective April 1, 2013)
Who has to register?
Most businesses will have to register with the provincial government to be able to collect PST and file a remittance. Registering would also apply to any business outside of BC that makes sales in the province. A majority of businesses will have to register but there are a few that will be exempt from this; mainly those businesses who sell only non-taxable or PST exempt goods. Registration will be open in early January, 2013. If you are unsure as to whether or not you need to register, it would be a good idea to look at Bulletin PST 001 that was posted by the BC government. It gives a detailed list that will help to determine if registration is required by any business, as well as the steps required to complete registration.
How can you prepare?
A good place to start would be to review the control systems of the business and make certain that internal controls are in place by April 1, 2013 that allow for the easy charge and application PST. This could include training certain staff members to recognize what types of transactions would require applying PST and those that would be considered exempt. Another area that would benefit from preparation would be recognizing any current transaction or ongoing payments that will be affected as the shift takes place. For example; If a vehicle lease started in January 2012 and went for 2 years the payments you are making up to April 1, 2013 will be the same as they have been from the start, but any payments made after the implementation date will have to include PST.
Staying up to date with all of the current information regarding the PST shift would also benefit the business and help make the transition smoother due to the fact that the provincial government has been releasing bits of information at a time in the form of bulletins. Staying current and following the ‘steps’ will help to avoid a rush to implement all the necessary components in the business right before the implementation date. Recently the BC government posted a bulletin offering new tools and services to help people with questions and concerns about the PST shift. Some of these tools include an email and toll free number where you can ask questions about the new PST. In addition, you are able to submit a request for a one-on-one consultation with a ministry tax specialist in order to ask more directed questions and get planning advice leading up to the implementation date.
For more general information visit the Provincial Government’s Frequently Asked Questions page, and remember to stay up to date with all of the information that will be posted at PST in BC.ca in order to be fully prepared for when the shift does happen on April 1, 2013.
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