Tax matters made a little clearer by BCYCNA
With the introduction of Bill 2 on February 27, the provincial government took one step closer towards removing HST and re-implementing PST and GST. With the transition scheduled to be completed on April 1 of this year, the BC ministry has stated that more than 100,000 businesses will need to register to make the transition from HST to PST. To help ease the transition, the government has provided online instructions at bgov.bc.ca/etaxbc/register.
The PST and GST tax rates will be five per cent and seven per cent, respectively. From their website: "The new PST is being implemented under a more modern and streamlined Provincial Sales Tax Act that is, for technical taxation legislation, clearer, easier to understand and comply with, easier to administer, and which better reflects modern technology and business practices."
While the Finance Ministry confirmed that final details are still being developed, Canada Revenue Agency has provided a question and answer catalogue, which you can download at: http://www.cra-arc.gc.ca/E/pub/gi/notice270/notice270-e.pdf.
The following are a few of the questions answered in the catalogue:
Q: I invoice a customer before April 1, 2013. The customer pays the invoice on or after April 1, 2013. What rate of tax do I charge on this sale?
A: Since the GST/HST became payable on the date of the invoice and this is before April 1, 2013, you would charge the customer the 12 per cent HST.
Q: What rate of tax would apply to a magazine subscription renewal if it is accepted and paid by the customer before April 1, 2013 but the magazines would be provided to the customer on or after April 1, 2013?
A: If the magazine subscription renewal payment is made before April 1, 2013, or becomes due before April 1, 2013, the amount would be subject to 12 per cent HST, even though the magazines would be provided on or after April 1, 2013.
Q: How do I calculate the new rate of tax on a tax-included invoice?
A: The invoice or receipt should show the rate of GST/HST that has been charged. The amount of the GST on a tax-included amount of consideration is 5/105 of the amount. To calculate the amount of consideration payable on the invoice excluding the GST, multiply the tax-included amount by 100/105.
Dale Donaldson of Mallard's Source for Sports in Castlegar and Nelson feels the situation has been a mess ever since the government said they would not bring in the HST, then flip-flopped following an election win.
The businessman expressed frustration over the vagueness surrounding the regulations which are set to be instituted April 1.
"I went to a session put on by the Chamber the other week," he related on March 1,"and there are still questions that haven't been answered."
He referred to a positive feeling in regard to the HST in spite of the questionable way it had been brought in.
"It was more straightforward than the PST system it replaced, and the one that's coming back," said Donaldson who is resigned to what he expects will be increased expense and administrative headaches coming with the return to the PST/GST arrangement.
"For the customer there's really no difference," he said, "it's what goes on behind the scenes that's complicated."
Another viewpoint was obtained from Colleen Kalnins of Common Grounds coffee house.
"I've got a bookkeeper who's doing all the other stuff, so my transition will be just to get my till re-programmed," said Kalnins who is optimistic about what lies ahead.
"I think it's going to help small business… I'm hoping," she said. "Because when the extra tax went on it bumped my costs but I couldn't raise my prices to compensate. So I'm hoping it's going to help. I don't know, it's going to be hit and miss, we'll have to wait and see what happens."