By – Ann Harper, CA
In June 2011, British Columbians received a referendum ballot in their mailboxes. On August 25, 2011, it was announced that a year after implementation, B.C. residents voted “yes” to extinguish the HST, and on April 1, 2013, we will officially move back to the PST-GST tax system in this province.
Unfortunately, making the move back to the PST-GST tax system won’t be a snap for small businesses and a bit of paperwork will be required. In a survey conducted by Sage North America last year, 65 per cent of B.C. small business owners/managers reported that the greatest concern they had about reverting back to PST-GST was the increased paperwork required to remain compliant.
To help make the transition a little easier for small businesses across B.C., here are some things that they need to know, especially for those which were formed after March 2010 and have never dealt with the PST-GST tax system before.
Are there any improvements from the “old” PST?
• There are other changes being made to improve the PST from its earlier days, including:
o new online access for business, including registration, account updates and online payments;
o due dates for remittances and returns for monthly filers will be moved to the last day of the month to match GST remittances;
o 8% Hotel Room Tax will be incorporated into the PST instead of requiring separate registration, remittances and returns;
o businesses will be able to register with their federal business number;
o retailers will be allowed to refund tax to customers in a broader range of circumstances; and
o businesses that collect and remit tax will again receive commission of up to $198 per reporting period
When does PST-GST system take effect?
• April 1, 2013. However, you could register for a new PST number as of January 2.
Can I use my old PST number?
• No. You will need to register for a new one.
Will I still have to file HST?
• No. You will be filing GST at 5% using the same number and the same method as you do the HST
What do I need to do before April 1, 2013?
• You need to register to for a PST number that will be 11 characters long
• E-Services for businesses with a business number http://www2.gov.bc.ca/gov/topic.page?id=FD375F29EBF74FB1ABD5A5438E2A9672 Review the website first because you need to know certain things before you can register.
• You can also register in person at any Service BC Centre.
• Mail or fax 1-250-356-2195
What do I charge PST on?
• The re-implemented PST, like the previous PST, will be a retail sales tax that is payable when a taxable good or service is acquired for personal use or business use, unless a specific exemption applies. PST generally applies to:
o the purchase or lease of new or used goods;
o goods brought into B.C. for use in B.C.;
o the purchase of most services to goods (for example, vehicle maintenance, furniture assembly, computer repair);
o the purchase of telecommunication services including Internet access, non-basic cable, non-residential telephone services, cell phone use, satellite services and fax services; and
o the purchase of legal services.
What is exempt from PST?
• The PST will apply to the same goods and services that were subject to PST prior to the implementation of the HST. All permanent PST exemptions will be re-implemented with the new PST, including:
o all food for human consumption (e.g. basic groceries and prepared food such as restaurant meals);
o most services (e.g. personal services such as haircuts, dry cleaning, funeral services);
o admissions and memberships;
o professional services, other than legal services (e.g. accounting);
o bicycles;
o newspapers and magazines; and
o all permanent PST exemptions for business.
How will I remit the PST I collect?
• You will be able to remit your taxes:
o online through the E-services website (letters sent to businesses in December 2012 will have additional information on the E-service website)
o at your bank (in person or online)
o by mail
If you’re looking for more information on how to prepare for the transition back to the PST-GST system, a good place to start is the Government of B.C. website. It offers some great online resources including videos and webinars. http://www2.gov.bc.ca/gov/topic.page?id=589542DDDB6347F7A7C80C1783F4BA6D
Ann Harper is a Chartered Accountant (CA), Sage 50 Accounting–Canadian Edition Certified Consultant and owner of Mission City Business Center, a shared co-working space. As a CA, Ann has worked with the small business division of Deloitte and Touche and currently works with and provides accounting and advisory services to startups and micro-, small and midsized businesses.
