Return To The Provincial Sales Tax In British Columbia

Return To The Provincial Sales Tax In British Columbia

Following the defeat of the Harmonized Sales Tax (HST) in the August 2011 referendum, the British Columbia Government announced that it plans to re-implement the Provincial Sales Tax (PST) on April 1, 2013, about 19 months after the referendum, well within the timeline of 18 - 24 months estimated by the HST Independent Panel in their May 2010 report.

The PST system being reintroduced will essentially be the same system that was in place in June 2010 when the HST was implemented. The federal HST will now be replaced by the Goods & Services Tax (GST).

Some quick facts for those who don't remember the PST system: PST rate: 7%; GST rate: 5%

PST will apply on the following:

  • the purchase or lease of new or used goods;
  • goods brought into BC for use in BC;
  • the purchase of most services to goods (for example, vehicle maintenance, furniture assembly, computer repair);
  • the purchase of telecommunication services including internet access, non-basic cable, non-residential telephone services, cell phone use, satellite services and facsimile services; and
  • the purchase of legal services.

PST exemptions will return, including:

  • all food for human consumption (e.g. basic groceries and prepared food such as restaurant meals);
  • most services (e.g. personal services such as haircuts, dry cleaning, funeral services);
  • admissions and memberships;
  • bicycles;
  • newspapers and magazines; and
  • all permanent PST exemptions for business (e.g. items purchased for re-sale).

For businesses, the biggest difference will be that unlike the HST where the 12% paid on any purchase was eligible to be claimed back via the Input Tax Credit (ITC) system, businesses will NOT be able to claim back the 7% PST as an ITC, only the 5% GST will be available for the ITC. Essentially, any goods or services that attract PST will cost businesses 7% more.

Businesses will be required to re-register for a new PST number; the old PST registration number will not be valid. The registration information is expected to be available in December 2012, the government will be sending out letters to businesses at that time informing them on how to register. An online registration and e-service system is being developed at this time to support registration as well as filing of returns, payments and other account maintenance functions. This system is expected to be up and running by January 2013.

Further announcements by the government regarding some of the transitional measures will be forthcoming in the months ahead.

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About the Author
Gloria Terhaar
CCS (CA/US), CTCS, CBSA Prof. Designate

Gloria Terhaar began her career in Canadian customs brokerage 2007. She currently works in our Canadian division as a Trade Compliance Supervisor and Regulatory Compliance Specialist. Gloria has extensive experience in all aspects of documentation and regulatory requirements as they relate to importing products into Canada. Gloria is often called upon to train industry with some recent talks for MNP, the Surrey Board of Trade, TFO Canada and the BC Produce Marketing Association. In 2018, Gloria also participated in the Canadian Produce Marketing Association and the Canadian Horticultural Council advocacy event "Fall Harvest" in Ottawa where she participated in advocacy efforts for the Canadian produce industry.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.