What we know:
•Transition will occur April 1, 2013
•To tackle a tax discrepancy on new homes between the two regimes, B.C. will increase the number of new homes eligible for an HST rebate by raising the eligible new housing price threshold to $850,000 as of April 1, 2012
•For newly built homes where construction begins before April 1, 2013, but ownership and possession occur after, purchasers will not pay the 7% provincial portion of the HST but will pay a transitional provincial tax of 2% representing the foregone costs of embedded PST
•For goods and services that will be subject to PST, PST will generally apply where tax becomes payable on or after April 1, 2013
•Also as of April 1, 2012, purchasers of new secondary vacation homes outside the Greater Vancouver and Capital regional districts priced up to $850,000 will be eligible to claim an HST rebate of up to $42,500
What we don’t know:
•What, if any, administrative changes the province will make to the PST
•If the government will align the PST with the federal GST in terms of remittances and filing requirements
•How the province will handle the transition from non-taxable business inputs to taxable business inputs – and whether there will be an incentive for businesses to stockpile inputs before the tax change
•Whether the province will introduce any HST relief on home renovations prior to the tax transition
Q: When the HST was introduced, the basic personal amount income tax credit was increased. Will it be reversed?
Yes, it will revert to its previous level on April 1, 2013.
Q: What are some business-oriented improvements that B.C. could consider for the PST?
A few options include:
•extending the PST exemptions that existed prior to 2010 for business purchases of machinery and equipment to industries beyond manufacturing and resource processing;
•developing full or partial PST exemptions for other kinds of business inputs that are closely aligned to boosting productivity; and
•Strengthening administrative processes around PST appeals, including the establishment of timelines for decisions.
Q: What’s the plan for the $1.6 billion transfer payment?
Finance Minister Kevin Falcon said in January the province has five years to repay the transition funding to the federal government; interest will be waived during this period.
Q: When are we getting new information on the transition back to PST?
Detailed general transition rules for goods and services will be available when the full PST legislation is introduced in the legislature this spring.
Q: What will happen to liquor taxes and mark-ups?
The PST rate of 10% on liquor will be reinstated with the re-implementation of the PST. Liquor mark-ups will be reduced to their pre-HST levels to generally keep shelf prices constant
Q: Will tobacco taxes increase?
With the re-implementation of the PST, the provincial portion of the HST on tobacco products will be eliminated.
In an effort to offset that reduction, tobacco tax rates will be adjusted upward to keep tax fairly consistent.•
