British Columbia 2010 budget highlights (March 2, 2010)
The government of British Columbia announced on July 23, 2009 that it would implement a Harmonized Sales Tax (HST) on July 1, 2010.
http://www.bcbudget.gov.bc.ca/2010/bfp/2010_Budget_Fiscal_Plan.pdf
Harmonization Basics
- BC’s 7 per cent PST and 8 per cent Hotel Room Tax are eliminated.
- A 7 per cent BC rate is added to the 5 per cent federal Goods and Services Tax (GST). This combined 12 per cent tax is renamed the HST
- HST applies to the same goods and services that were taxable under the GST
Transitional rules
Transitional PST Refund Provided
- Effective July 1, 2010, a refund of provincial sales tax is provided to contractors for PST paid on construction materials purchased by the contractor, held in inventory at the end of the day on June 30, 2010 and used by the contractor on or after July 1, 2010 to repair or improve residential real property under a contract to which the HST applies.
- Improvement of residential real property does not include construction of residential housing for which a PST Transitional New Housing rebate is available.
- A refund is not available in respect of tax paid on construction materials if the PST is recoverable by the contractor or any other party.
Transitional PST Refund for Eligible Business Purchases Provided
- Effective July 1, 2010, a refund of provincial sales tax is provided for PST paid on goods and services paid for after October 14, 2009, and before May 1, 2010, that are delivered or performed on or after July 1, 2010 and are for use exclusively in the course of commercial activities as defined for purposes of the Excise Tax Act (Canada). Under the “General Transitional Rules for British Columbia HST” (HST notice #1)
- These transactions are not subject to the HST even though the goods and services are delivered or performed on or after July 1, 2010 and, therefore, purchasers are not eligible for input tax credits.
- The refund of PST is provided to ensure that tax is not payable by businesses that would have been eligible for input tax credits under HST had the timing of payment for these goods and services been on or after May 1, 2010.
- The refund of PST is provided to prevent double taxation on goods and services that would otherwise be subject to both PST and HST.
Non-profit sector Rebates
The following rebate percentages were announced for all public service bodies. These rates are different from the rates for the federal component of the HST. The rates are:
|
Federal component rebate rate |
Provincial component rebate rate |
Charities and Qualifying Non-Profit Organizations |
50% |
57% |
Hospital Authorities |
83% |
58% |
Municipalities |
100% |
75% |
School Authorities |
68% |
87% |
Universities and Public Colleges |
67% |
75% |
Note: For example, Municipalities and other eligible local government entities may claim a 100 per cent rebate of the 5 per cent federal portion of the HST (which replaces the GST in BC) paid and a 75 per cent rebate of the 7 per cent provincial portion of the HST paid.
Measures concerning individuals
BC HST Credit
The government will provide a maximum annual tax credit of $230 per family member for individuals with incomes below $20,000 and families with incomes below $25,000.
HST Invoicing Requirements
As announced on July 23, 2009, British Columbia’s provincial sales tax (PST) and hotel room tax will be eliminated and a B.C. rate will be added to the federal Goods and Services Tax (GST) to create a single Harmonized Sales Tax (HST) for B.C., effective July 1, 2010.
The provincial portion of the HST will be seven per cent and the federal portion will be five percent, for a combined HST rate of twelve per cent. GST/HST registrants will need to let customers know if HST is being applied to their purchases. The disclosure and invoicing requirements for the HST for British Columbia will follow the existing rules for the GST/HST.