British Columbia intends to harmonize its provincial sales tax (PST) with the Federal goods and services tax (GST) effective July 1, 2010.
The current PST rate in BC is 7%, which, when combined with the GST will result in a harmonized sales tax (HST) rate of 12%.
Businesses which are registered to collect GST or HST can claim input tax credits to recover all of the GST or HST that they have paid. The change to HST will mean a significant savings and boost in productivity for businesses in BC, because: bullet
- they will no longer have to pay PST
- they will no longer have to prepare PST remittances
- they will save on consulting costs - the PST rules are very complicated, and frequently require professional advice in their interpretation
- employees will spend much less time trying to find the answers to PST questions
- PST audits will be eliminated
Although consumers will now have to pay 12% HST on some items on which they only paid 5% GST, several items which are
currently PST exempt will not be subject to the provincial portion of the HST. These items are:
- gasoline and diesel fuel for motor vehicles
- children's-sized clothing and footwear
- children's car seats and car booster seats
- diapers and feminine hygiene products
- Other provisions of the proposed HST:
- a partial rebate of the provincial portion of the single sales tax for new housing to ensure that new homes up to $400,000 will bear no more tax than under the current PST system, while homes above $400,000 will receive a flat rebate of about $20,000
- a refundable BC HST credit will be paid quarterly with the GST and carbon tax credit to offset the impact of the tax on those with low incomes.
- a temporary delay in the provision of input tax credits for certain purchases by businesses with taxable sales in excess of $10 million.
The proposed changes are subject to legislative approval.
For further information, see Harmonized Sales Tax on the BC Ministry of Finance website