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Elimination of the HST in British Columbia in 2013 – Questions and Answers

From: Canada Revenue Agency

GST/HST Notices - Notice 270
March 2012

NOTE:  This version replaces the one dated February 2012.

The Excise Tax Act imposes the goods and services tax/harmonized sales tax (GST/HST) on most goods and services consumed in Canada. GST/HST applies in the participating provinces of Ontario, New Brunswick, and Newfoundland and Labrador at the rate of 13%, in Nova Scotia at the rate of 15%, in British Columbia at the rate of 12%, and elsewhere in Canada at the rate of 5%.

It is proposed that, effective April 1, 2013, the 12% HST for British Columbia, comprising of a 5% federal part and a 7% provincial part (the provincial part) would no longer apply in British Columbia. We are providing the following questions and answers to assist you in understanding how the transition from the 12% HST to the 5% GST would apply to transactions that straddle that date.

This publication provides questions and answers that reflect the proposed transitional rules as announced in the News Release of February 17, 2012, Department of Finance Announces Transitional Rules for the Elimination of the Harmonized Sales Tax in British Columbia.

Note: Contact the government of British Columbia for transitional rules regarding the implementation of its proposed new retail sales tax by telephone at 1-877-388-4440, or by e-mail at CTBTaxQuestions@gov.bc.ca.

Any commentary in this publication should not be taken as a statement by the CRA that these proposed rules will be enacted in their current form.

Effective April 1, 2013, the 12% HST would no longer apply on taxable supplies of personal property or services made in British Columbia or to personal property or services imported or brought into British Columbia. Instead, as of that date, the 5% GST would apply to such taxable supplies and importations.

For most taxable supplies made before April 1, 2013, the rate of tax would be determined by the date the GST/HST becomes payable or is paid. If GST/HST becomes payable or is paid before April 1, 2013, the HST rate of 12% would apply. Otherwise, the 5% GST would apply if the tax becomes payable on or after April 1, 2013, or is paid on or after April 1, 2013, without having become payable before that day.

For the transitional rules concerning taxable supplies of real property, refer to General – Real property of this document.

The following detailed set of questions and answers is provided to assist businesses and consumers in understanding how the transition from HST to GST would apply. For more information on the elimination of the HST, please call 1-800-959-5525. If you are located in Quebec, please call 1-800-567-4692 (Revenu Québec).

Note: Legislative references in this notice refer to the Excise Tax Act (the Act) unless otherwise specified.

Table of Contents

Information for businesses

General

1. What would happen to the 12% HST?

The 7% provincial part of the HST would no longer apply. This means that the federal part of the HST, the 5% GST, would remain.

2. When is the transition to the 5% GST effective?

The transition to the5% GST is effective April 1, 2013.

3. When would I apply the 5% GST rate?

The general transitional rules would operate on the basis of the time at which tax becomes payable. You would pay the 5% GST on purchases of taxable goods, intangible property (such as rights), and services if

If the tax becomes payable or is paid before April 1, 2013, the 12% HST would apply.

4. When is GST/HST payable?

GST/HST on the consideration for a supply is usually payable the earlier of the day payment is made and the day the supplier issues an invoice. If there is an undue delay in issuing an invoice, GST/HST becomes payable when the invoice would have been issued if there had been no such delay. In addition, if either the date of an invoice or the payment date under a written agreement is earlier than the date the invoice is issued, GST/HST becomes payable on the earlier date.

For a supply of property by way of lease, licence or similar arrangement under a written agreement, GST/HST becomes payable the earlier of the date the payment is made and the date it is required to be made under the agreement.

If GST/HST is not otherwise payable by the last day of the calendar month after the calendar month in which any of the following events takes place, it becomes payable on that day:

The 12% HST would be payable where GST/HST becomes payable under these rules before April 1, 2013. The 5% GST would be payable where it becomes payable under these rules on or after April 1, 2013.

Sales of property (excluding real property)

5. I invoice a customer before April 1, 2013 for the sale of computers. The customer pays the invoice on or after April 1, 2013. What rate of tax do I charge on this sale?

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% HST.

6. In June 2012, we have a sales promotion where our customers purchase furniture without having to make any payments until June 2013. What rate of tax should apply to these sales, where our customers would receive ownership and possession of this furniture in June 2012, but would not receive an invoice for payment until June 2013?

If the customers receive possession and/or ownership of the furniture in June 2012, under a written agreement entered into at that time, the 12% HST is considered to be payable at the end of July 2012. Since this date is before April 1, 2013, the 12% HST applies to the sale of this furniture.

7. In December 2012, a consumer buys a refrigerator under a layaway plan. Under the written agreement, the consumer must make six equal monthly payments from December 2012 to June 2013 (the payments become due during each of these months). Possession and ownership of the refrigerator would be transferred to the consumer after the final payment is made in June 2013. What rates of tax apply to these payments?

HST at the rate of 12% would apply to the monthly payments required to be made before April 1, 2013. Payments required to be made on or after April 1, 2013, would be subject to GST at the rate of 5%.

8. We sell heavy-duty equipment under a conditional sales contract where the customer receives possession of the property on March 1, 2013, but does not receive ownership of the property until full payment of the purchase price. The customer agrees to make monthly payments for the property over a period of time, starting on March 1, 2013. How would the elimination of the HST affect such a conditional sales contract?

In a conditional sales contract, the GST/HST on the consideration for the property is payable no later than the last day of the month following the month during which you transferred ownership or possession of the property to the customer. In this example, 12% HST would be payable on the payment made on March 1, since this is before April 1, 2013, while 5% GST would be payable on the payment made on April 1, 2013. On April 30, 2013, (i.e., the last day of the month following the month in which your customer took possession of the property), 5% GST would apply on the remainder of the consideration that has not yet been paid or become due for the property.

9. How would the rules regarding the elimination of the HST impact sales of goods from coin-operated devices, such as vending machines?

The prices of goods from a coin-operated device, such as a vending machine, include GST/HST, and you are considered to have collected the tax at the time you remove the money from the coin-operated device. Consequently, if you remove the money from a vending machine on or after April 1, 2013, you would be deemed to have collected GST at the rate of 5%.

Exception: If the GST/HST equalled zero on supplies you made through vending machines before April 1, 2013, it would continue to be zero on or after April 1, 2013.

10. If a person has an equal billing plan set up for electricity which covers the period July 2012 to June 2013, how would the supplier (i.e., the utility) determine which of the payments made in 2013 should be subject to GST at the 5% rate?

The supplier would collect HST at the rate of 12% on payments made or that become due before April 1, 2013, and GST at the rate of 5% on payments made without having become due on or after April 1, 2013, or as they become due on or after that date.

11. A person has an equal billing plan set up for electricity that covers the period July 2012 to June 2013. The supplier (i.e., the utility) reconciles the person's actual consumption of electricity and the consideration payable by the person against the amount of the consideration the person actually paid throughout the period. As a result of the reconciliation, the supplier issues an invoice on or after April 1, 2013, for the remaining consideration due on the electricity that the person had consumed during the period. What rate of tax applies on the amount of consideration charged on this invoice?

If, as a result of the reconciliation of the account, the supplier issues an invoice on or after April 1, 2013 for the remaining consideration payable on the electricity, the supplier would charge 5% GST.

12. A person has an equal billing plan set up for electricity that covers the period July 2012 to July 2013. The supplier (i.e., the utility) reconciles the person's actual consumption of electricity and the consideration payable by the person for that consumption, against the amount of the consideration the person paid throughout the period. As a result of this reconciliation, the supplier issues the person a credit note on or after April 1, 2013, for the overpayment of consideration the person has made. What rate of tax applies to the credit given to the person on or after April 1, 2013?

If, as a result of the reconciliation of the account, the supplier issues the person a credit note on or after April 1, 2013, for the amount of consideration the recipient overpaid the supplier, the supplier may generally credit the recipient using the rate of GST or HST to which the original supply had been subject. For example, a price adjustment in relation to a supply that was originally subject to HST at the rate of 12% would be subject to HST at that same rate.

13. We are selling admissions to a concert that is to be held in June 2013. If customers purchase tickets in December 2012 to attend this concert, what rate of tax would apply to the purchase of these tickets?

The 12% HST rate would apply to tickets purchased before April 1, 2013, for admission to a concert to be held on or after April 1, 2013.

14. 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?

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% HST, even though the magazines would be provided on or after April 1, 2013.

Services

15. I am an accountant who will be issuing an invoice on or after April 1, 2013 for services to be performed in March 2013. What rate of tax do I charge on these services?

Since the invoice would be issued on or after April 1, 2013, you would charge 5% GST. If you issue the invoice before April 1, 2013, the 12% HST would apply.

16. I am a contractor hired to renovate a kitchen. I finish the renovation work in March 2013, but do not invoice the client until April 16, 2013. What rate of tax would I charge on these services?

Since you would be issuing the invoice on or after April 1, 2013, you would charge 5% GST. If you issue the invoice before April 1, 2013, the 12% HST would apply.

17. I will be invoicing my client on or after April 1, 2013 for construction services to be performed in March 2013 and April 2013. What rate of tax would apply on this invoice for my services?

Since you would be issuing the invoice on or after April 1, 2013, the 5% GST would apply to the services billed on this invoice. If you issue the invoice before April 1, 2013, the 12% HST would apply to the services billed on this invoice.

18. My customer makes a partial payment of $100 before April 1, 2013 for services that are to be performed after April 1, 2013. The total consideration for the services would be $500. The invoice for these services would be issued on or after April 1, 2013. What rates of tax apply?

The 12% HST rate would apply to the partial payment of $100 that is made before April 1, 2013. The 5% GST rate would apply to the remaining $400 of consideration for these services invoiced on or after April 1, 2013.

19. Before April 1, 2013, we enter into a long-term fixed-price contract for services, which includes tax. Would the elimination of the HST affect the payments we make under this contract?

Any payments made under this contract before April 1, 2013 would include 12% HST. Payments made under this contract on or after April 1, 2013, would include GST at the rate of 5%.

20. If I prepay an amount before April 1, 2013 for a transportation service that will be provided on or after April 1, 2013, what rate of tax applies to the prepaid amount?

A payment made before April 1, 2013 would be taxable at 12% HST, even if the transportation service will be provided on or after April 1, 2013.

21. I am a real estate broker. In March 2013, I enter into a listing agreement with a vendor to arrange for the sale of the vendor's house situated in British Columbia. The closing date of the sale is on or after April 1, 2013, which is when I will issue the invoice to the vendor for my services. What rate of tax would I charge on these services?

Since you would be issuing the invoice on or after April 1, 2013, you would charge 5% GST.

Leases (excluding real property)

22. How would the elimination of the HST affect leases of property?

The 5% GST rate would apply to a lease payment due on or after April 1, 2013, unless it was paid before that date. The 12% HST rate would apply to a lease payment due before April 1, 2013, even if it is paid on or after April 1, 2013.

23. I pay the lease for my photocopier on the 15th of every month. What rate of tax would apply to the payment made on March 15, 2013, that covers the lease for the month of March 15, 2013, to April 14, 2013?

Since the payment is made before April 1, 2013, 12% HST would apply to the lease payment.

24. The lease payment for my passenger vehicle is due before April 1, 2013. What rate of tax applies to this lease payment if I do not make it until on or after April 1, 2013?

Since the lease payment is due before April 1, 2013, 12% HST would apply to the lease payment, even though you would make the payment on or after April 1, 2013.

25. How would the elimination of the HST affect existing leases for vehicles?

The 5% GST would apply to lease payments that become payable on or after April 1, 2013, without having been made before that date, including those for existing leases. As a result, all lessees of automobiles, RVs and boats would be subject to the 5% GST rate on payments required to be made under the lease agreement on or after April 1, 2013.

Importations

26. What rate of GST/HST would I pay when I import goods?

The 5% GST would apply to taxable importations by a British Columbia resident of non-commercial goods on or after April 1, 2013, or non-commercial goods released from customs control on or after that day. The 5% GST would also apply to a specified motor vehicle or commercial goods brought into British Columbia from a place outside Canada on or after April 1, 2013.

27. What rate of tax would apply to imported taxable supplies of services and intangible personal property?

The 5% GST and the 7% provincial part of the HST on imported taxable supplies of services and intangible property are payable on the earlier of the day consideration is paid or becomes due. Therefore, in general, if the earlier of the day the consideration is paid or becomes due is on or after April 1, 2013, only the 5% GST would apply to the imported taxable supply of services and intangible personal property.

Inter-provincial transactions

28. If I bring taxable property or services into British Columbia from other provinces on or after April 1, 2013, would I be required to self-assess the provincial part of the HST?

You would not be required to self-assess the provincial part of the HST for:

29. On or after April 1, 2013, would there continue to be rebates of the provincial part of the HST if I remove tangible personal property from British Columbia to a non-participating province, or if I acquire intangible personal property and services in British Columbia for use in a non-participating province?

There will be no rebates for the provincial part of the HST in respect of:

Price adjustments and returned goods

30. Would the GST/HST apply to a price adjustment, such as a volume rebate, paid on or after April 1, 2013, where the supply to which the price adjustment relates occurs before April 1, 2013?

If a supplier chooses to credit a recipient an amount of GST/HST on a price adjustment, the rate of the GST/HST that applies to the price adjustment would be the rate of tax on the supply to which the price adjustment was subject. For example, a price adjustment in relation to a supply that was subject to HST at 12% would be subject to HST at that same rate.

31. A consumer purchases a stereo in March 2013, and pays 12% HST. After March 31, 2013, the consumer returns the stereo to the supplier because it is defective and the supplier gives the consumer a refund of the price of the stereo and the GST/HST. What rate of GST/HST would apply to the refund?

The supplier would refund the consumer the rate of HST that the consumer had originally paid, in this case the 12% HST.

32. A consumer purchases a shirt in March 2013, and pays 12% HST on the price of the shirt. After March 31, 2013, the consumer returns the shirt to the supplier and exchanges it for another one. What rate of tax applies to the exchange of the shirts?

If there is a straight exchange of the shirts, without any credit note being issued for the returned shirt, or without any refund or additional payment, there would be no GST or HST consequences. However, if, at the time the shirt is exchanged the supplier issues a credit note for the returned shirt, there are two transactions occurring: the refund of the price of the shirt being returned, and the purchase of the new shirt. The refund of the purchase price of the returned shirt would include the 12% HST the consumer paid. The purchase of the new shirt would be subject to 5% GST, since the GST is payable on the purchase price of the new shirt on or after April 1, 2013.

Tax accounting and invoicing

33. I use the Quick Method of Accounting to determine the amount of net tax I have to remit. Would the Quick Method rates that I use change?

For taxable supplies made in British Columbia for reporting periods beginning before April 1, 2013, and ending on or after that date, the existing Quick Method rates would apply for consideration that becomes due, or that is paid without having become due, before April 1, 2013. The Quick Method rates applicable to supplies made in a non-participating province would apply for all other consideration.

For taxable supplies made through a permanent establishment in British Columbia for reporting periods beginning before April 1, 2013, and ending on or after that date, the current Quick Method percentage rates applicable to supplies made through a permanent establishment in British Columbia would apply to consideration that becomes due or that is paid without having become due, before April 1, 2013, and the Quick Method rates for supplies made in a non-participating province would apply to all other consideration for this reporting period.

For reporting periods that begin on or after April 1, 2013, you would use the applicable Quick Method rates for supplies made in a non-participating province, or through a permanent establishment in a non-participating province, as the case may be.

For information on the Quick Method of Accounting, refer to Guide RC4058, Quick Method of Accounting for GST/HST.

34. What happens to GST-included pricing on gasoline?

There is currently a point-of-sale rebate equal to the provincial part of the HST on purchases of gasoline in British Columbia. This means that, in effect, you are only paying the federal part of the HST (the 5% GST) on these purchases. Effective April 1, 2013, the tax-included pricing on gasoline would include the 5% GST.

35. How do I calculate the new rate of tax on a tax-included invoice?

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.

36. How would I complete my GST/HST return to account for the GST/HST?

You would continue to report the total GST/HST collected or collectible in a reporting period on line 103 of the GST/HST return. This total could include GST/HST collected or collectible at 5%, 12%%, 13%, or 15%. ITCs for the GST/HST paid or payable would continue to be reported on line 106 of the return.

37. I am an annual filer for GST/HST reporting purposes and I am required to make quarterly instalment payments. The amount required as an instalment payment is the lesser of ¼ of the net tax for the current annual reporting period, or ¼ of the net tax for the previous reporting period.

a) If I calculate my instalment payments based on the 5% GST rate and I underpay, would I be charged interest?

The provisions regarding interest would not be amended as a result of the elimination of the HST. If the instalments as required under the Act are underpaid, interest would be charged on the underpaid amount.

b) Is there any tolerance if I calculate my instalments incorrectly?

No, unless the reason the instalments were underpaid falls within the CRA's administrative guidelines under taxpayer relief for cancelling interest. The CRA may waive or cancel interest when it results from circumstances that are beyond your control, such as illness, or from an inability to pay because of financial hardship.

38. What happens to the 12/112 calculations I use to calculate input tax credits (ITCs) using the Simplified Method for Accounting for ITCs?

Effective on or after April 1, 2013, when you use the Simplified Method for Accounting for ITCs and you make purchases subject to the 5% GST, to calculate your ITCs on these purchases you would separate your purchases that are taxable at 5% from those taxable at the HST rates of 12%, 13% or 15%, and multiply by 5 and divide the result by 105 for those GST purchases. For the purchases subject to the HST rates of 12%, 13% or 15%, you would separate these purchases according to the applicable HST rate and:

You can use the Simplified Method to calculate ITCs only for purchases you use to provide taxable goods and services. If you use your purchases for personal use, or to provide both taxable and exempt goods and services, only the portion used to provide taxable goods and services can be included in the ITC calculation. If you use a purchase at least 90% to provide taxable goods and services, you can include the total purchase price in your ITC calculation.

Employee and partner rebates

39. I claim an employee and partner GST/HST rebate for the GST/HST paid on expenses deducted from my employment income for income tax purposes. How do I calculate the rebate where I may be paying 5% GST or 12% HST on my expenses?

The current rate for calculating a rebate of the GST/HST to employees or partners with respect to eligible expenses on which you paid the HST in the taxation year, is 12%, which means you may claim a rebate equal to 12/112 of the amount of those expenses. For expenses on which you paid the 5% GST, the current rate is 5%. This means that you may claim a rebate equal to 5/105 of the amount of those expenses.

For the 2013 taxation year, the rate will be 6.75% for expenses on which the 12% HST was payable and for subsequent taxation years, 5%. This means that a rebate would be available in relation to the provincial part of the HST payable on expenses equal to 6.75/106.75 of the amount of those expenses, and for subsequent years, 5/105 of the amount.

Miscellaneous

40. What are the rules for determining what rate of tax would apply to deposits?

The rules that normally determine when GST/HST is payable would continue to apply to determine the appropriate rate of tax. A deposit is not treated as a payment for a supply until the supplier applies it against the consideration for the supply.

For example, if a person makes a deposit of $100 in December 2012, for a supply that is made on or after April 1, 2013, the $100 would not be treated as consideration for the supply until on or after April 1, 2013. The 5% GST rate would apply to the consideration for that supply.

41. What happens if I do not change my cash registers or computer systems in time to charge the new rates of tax on or after April 1, 2013?

The Act requires that any amount collected, or charged, as or on account of tax must be included in your net tax calculation. For example, if you collect or charge 12% HST when, in fact, 5% GST should have been collected or charged, you must include the 12% amount as or on account of GST/HST you collected or charged in your net tax.

However, if you refund or credit your customer the amount that you overcharged, and issue a credit or debit note containing the information required under the Act to substantiate the refund or credit, you may deduct the amount of the refund or credit given to your customer from your net tax. This refund or credit must be given within two years after the day the tax was paid or charged.

42. Would there be any anti-avoidance legislation introduced to prevent tax benefits from related parties arranging transactions solely to take advantage of the elimination of the HST?

Anti-avoidance rules would be introduced. These rules would apply to transactions to which the transitional rules apply, in order to maintain the integrity of the GST/HST system during the transition from 12% HST to 5% GST.

43. Does the transition from 12% HST to 5% GST have an impact on the change-in-use rules for capital property?

The change-in-use rules for capital property deem an amount of tax to be collected, or paid, equal to the basic tax content of the property. The basic tax content of a property generally means the amount of GST/HST payable on the acquisition of the property and on any improvements to the property, less any amounts that would be reimbursed to you (such as rebates or remissions, but not ITCs). You also have to consider the fair market value of the property at that time and the original cost of the property (including any improvements).

The basic tax content rules are to be changed so that as of February 17, 2012, the provincial part of the HST would not be included in calculating the basic tax content of real property situated, or tangible personal property ordinarily situated, in British Columbia.

44. I am deregistering for GST and therefore the ITCs I claimed on the property I have on hand at the time I deregister must be recaptured. If I deregister on or after April 1, 2013, how I do ensure that these ITCs are recaptured, since the BC provincial part of the HST would no longer apply?

When you cease to be a registrant, any property on hand that you had purchased for consumption, use or supply in your commercial activity is considered to have changed to non-commercial use. As a result, you must ensure that the ITCs previously claimed on such property are recaptured. To do so, you are treated as having disposed of each property (other than capital property) at its fair market value immediately before ceasing to be a registrant and to have collected GST/HST on that amount. The GST/HST is then included in your net tax calculation on your last return as a registrant.

If you cease to be a registrant on or after April 1, 2013, you would be required to account for the tax at the rate of 5% GST on the fair market value of the property (other than capital property) in your net tax calculation.

Where the property on hand is capital property, the change-in-use rules would generally apply to deem you to have paid tax equal to the basic tax content of the property. This would apply regardless of when you deregister. The basic tax content of a property is an amount calculated using a formula that takes into account all of the GST/HST you paid when you acquired the property and on any improvements made to the property. The basic tax content rules are to be changed so that as of February 17, 2012, the provincial part of the HST would not be included in calculating the basic tax content of real property situated, or tangible personal property ordinarily situated, in British Columbia.

45. What rate of tax applies to progress payments made on or after April 1, 2013, that relate to work performed, or property delivered, before that date?

When progress payments are made under a construction contract, GST/HST is payable on the value of each payment on the earlier of the day on which it is paid and the day on which it is due. The 5% GST would apply to progress payments made on or after April 1, 2013, (provided that they were not due before April 1, 2013), even though these payments may relate to work performed, or property delivered, before that date.

46. I am a sole proprietor who is using my passenger vehicle less than exclusively in commercial activities. I may only claim ITCs for the GST/HST I paid when I acquired my passenger vehicle based on the capital cost allowance that I claimed on my income tax return for that vehicle. How do I do this with the elimination of the HST?

For the taxation year ending December 31, 2012, you are deemed to have acquired the passenger vehicle and to have paid tax on that day in respect of the vehicle equal to an amount determined by the formula

A × B

where

A   is the tax fraction (i.e., 12/112 based on the 12% HST you paid on the vehicle), and

B is generally the capital cost allowance deducted under the Income Tax Act for that taxation year in respect of the passenger vehicle.

For the 2013 taxation year, the tax rate would be 6.75% for a passenger vehicle for which the HST was paid. This tax fraction would be 6.75/106.75 and for subsequent taxation years, 5/105. For the 2013 taxation year, you would be deemed to have paid tax equal to 6.75/106.75 of the capital cost allowance that would be deducted in computing income under the Income Tax Act for that particular year.

47. Would the elimination of the HST affect how the security requirement for non-resident registrants is calculated?

With the elimination of the HST, your net tax calculation may be affected which may, in turn, have an impact on your non-resident security requirements.

48. Taxi businesses that have their fares regulated by law are required to include GST/HST in their fares. Would these tax-included fares be subject to GST at the rate of 5%?

An amount paid as a taxi fare on or after April 1, 2013 would be a tax-included amount that includes GST equal to 5/105 of the amount, if the transportation is in British Columbia.

49. The Act requires GST/HST registrants to pay GST/HST on certain taxable benefits provided to individuals who are employees or shareholders. For most taxable benefits for employees who ordinarily reported to work in British Columbia in the 2011 calendar year, or for shareholders resident in British Columbia in that year, the registrant is deemed to have collected HST equal to 11/111 of the value of the taxable benefit reported for income tax purposes, and, if the taxable benefit is for a standby charge, on the amount of any reimbursement. If the registrant is a large business and the taxable benefit is in relation to a motor vehicle for which the registrant reported the recapture of input tax credits, the registrant is deemed to have collected an amount equal to 4/104 of the benefit. For taxable benefits relating to the operating costs of a passenger vehicle, the registrant is deemed to have collected HST at a rate equal to 5%, on the value of the benefit reported for income tax purposes and on any reimbursements. Would these rates of tax change as a result of the elimination of the HST?

GST/HST registrants would be required to pay GST/HST on certain taxable benefits provided to employees and shareholders at the following rates:

  1. For the 2012 taxation years of the individuals, the registrant would be deemed to have collected the GST/HST using the current rates shown above.
  2. For the 2013 taxation year of the individuals, if the taxable benefit relates to the operating cost of an automobile, the registrant would be deemed to have collected GST equal to 3.5%, on the value of the benefit reported for income tax purposes and on any reimbursements.
  3. For subsequent taxation years of the individuals, if the taxable benefit relates to the operating cost of an automobile, the registrant would be deemed to have collected GST equal to 3%, on the value of the benefit reported for income tax purposes and on any reimbursements.
  4. For the 2013 taxation year of the individuals, if the taxable benefit relates to the standby charge of an automobile, or other taxable benefits, the registrant would be deemed to have collected GST equal to 5.75/105.75 of the amount of the value of the taxable benefit reported for income tax purposes, and, if the taxable benefit is for a standby charge, on the amount of any reimbursement.
  5. For subsequent taxation years of the individuals, if the taxable benefit relates to the standby charge of an automobile, or other taxable benefits, the registrant would be deemed to have collected GST equal to 4/104 of the amount of the value of the taxable benefit reported for income tax purposes, and, if the taxable benefit is for a standby charge, on the amount of any reimbursement.

50. I am an independent sales contractor selling taxable goods for a direct seller who uses the alternate collection method to account for GST/HST. What rate of tax applies when I sell these goods to consumers on or after April 1, 2013?

The 5% GST rate would apply to the goods you sell to consumers on or after April 1, 2013.

Information for consumers

General

51. What would happen to the 12% HST?

The 7% provincial part of the HST would no longer apply. This means that the federal part of the HST, the 5% GST would remain.

52. When is the transition to the 5% GST effective?

The transition to the 5% GST is effective April 1, 2013.

53. When would I pay the 5% GST?

The general transitional rules will operate on the basis of the time at which tax becomes payable. You would pay the 5% GST on purchases of taxable goods, intangible property (such as rights), and services if the tax becomes payable on or after April 1, 2013, without having been paid before that day or if the tax is paid on or after April 1, 2013, without having become payable before that day.

If the tax becomes payable or is paid before April 1, 2013, the 12% HST will apply.

54. When is GST/HST payable?

GST/HST on the amount payable for the purchase of a good, intangible property or a service is usually payable the earlier of the day payment is made and the day the supplier issues an invoice.

If there is an undue delay in issuing an invoice, GST/HST becomes payable when the invoice would have been issued if there had been no such delay. In addition, if either the date of an invoice or the payment date under a written agreement is earlier than the date the invoice is issued, GST/HST becomes payable on the earlier date.

If property is supplied by way of lease, licence or similar arrangement under a written agreement, GST/HST becomes payable the earlier of the day payment is made and the day it is required to be made under the agreement.

If GST/HST is not otherwise payable by the last day of the calendar month following the calendar month in which any of the following events takes place, it becomes payable on that day:

The 12% HST would be payable where GST/HST becomes payable under these rules before April 1, 2013, whereas the 5% GST would be payable where it becomes payable under these rules on or after April 1, 2013.

55. How do I calculate the new rates of tax on a tax-included price?

The invoice or receipt should show the rate of GST/HST that has been charged. The amount of the GST on a tax-included price is 5/105 of the price. To calculate the price of an item excluding the GST, multiply the price by 100/105.

Purchases of property (excluding real property)

56. In October 2012, I purchase furniture from a store that has a sales promotion where I do not have to make any payments until October 2013. What rate of tax should apply to this purchase, since I would not receive an invoice for payment until October 2013?

If you receive ownership or possession of the furniture in October 2012, the GST/HST would be considered payable at the end of November 2012. Since this date is before April 1, 2013, you would be required to pay 12% HST at the end of November 2012.

57. What happens if I purchase an item on or after April 1, 2013, and the supplier charges me 12% HST instead of the 5% GST rate?

You may ask the supplier to refund the overpaid tax.

As an alternative, you may file for a rebate for the tax paid in error with the CRA, using Form GST189, General Application for Rebate of GST/HST.

58. I use my credit card to pay for property in March 2013. Since the credit card statement would not be issued until on or after April 1, 2013, what rate of tax would I pay?

The GST/HST becomes payable before April 1, 2013, when purchasing the property even though the purchase was made with a credit card. The 12% HST rate would apply.

59. I purchased a refrigerator under a layaway plan in December 2012. Under the written agreement, I am required to make six equal monthly payments from December 2012 to May 2013 (the payments become due during each of these months). I would only receive possession and ownership of the refrigerator after the final payment is made. What rates of tax apply to these payments?

The 12% HST rate would apply to the monthly payments required to be made before April 1, 2013. Payments that are required to be made on or after April 1, 2013, would be subject to 5% GST.

60. If I sign a magazine subscription renewal notice accepting the renewal offer on December 1, 2012, for magazines that would be delivered to me in 2013, what rate of tax applies to the amount I would pay for this subscription, if I pay it before April 1, 2013?

If the payment due date on the renewal offer is before April 1, 2013, the subscription would be subject to 12% HST, even though the magazines would be provided in 2013.

61. What happens to tax-included pricing on gasoline?

There is currently a point-of-sale rebate equal to the provincial part of the HST on purchases of gasoline in British Columbia. This means that, in effect, you are only paying the federal part of the HST (the 5% GST) on these purchases. Effective April 1, 2013, the tax-included pricing on gasoline would include the 5% GST rate.

62. If I receive my electricity bill in a month that includes the day the 12% HST rate changes to the 5% GST rate, what rate of tax would apply?

If the date of the invoice is on or after April 1, 2013, 5% GST would be charged on that invoice.

63. If I have an equal billing plan set up for electricity which covers the period June 2012 to May 2013, how would the supplier (i.e., the utility) determine which of the payments made in 2013 should be subject to GST at the 5% rate?

The supplier would collect 12% HST on payments that are made or that become due before April 1, 2013, and the 5% GST on payments made without becoming due on or after April 1, 2013, or as they become due on or after that date.

64. I have an equal billing plan set up for electricity that covers the period June 2012 to May 2013. The supplier (i.e., the utility) reconciles my actual consumption of the utility service and the amount that would have been payable on that consumption against the amount I actually paid throughout the period. As a result of the reconciliation, the supplier issues an invoice on or after April 1, 2013, for the remaining amount due on the electricity that I had consumed during the period. What rate of tax applies on the amount of consideration charged on this invoice?

If, as a result of the reconciliation of the account, the supplier issues an invoice on or after April 1, 2013, for the remaining amount payable on the electricity, the supplier would charge 5% GST on the amount owing.

65. I have an equal billing plan set up for electricity that covers the period June 2012 to May 2013. The supplier (i.e., the utility) reconciles my actual electricity consumption and the amount that would have been payable on that consumption against the amount I paid throughout the period. As a result of this reconciliation, the supplier issues me a credit note on or after April 1, 2013, for the overpayment that I made. What rate of tax applies to the credit amount given to me?

If, as a result of the reconciliation of the account, the supplier issues a credit note on or after April 1, 2013 for the amount of consideration that was overpaid, the supplier may generally credit you using the rate of GST/HST to which the original supply had been subject. For example, a price adjustment in relation to a supply that was originally subject to HST at the rate of 12% would be subject to HST at that same rate.

66. If I sign a membership renewal notice from my fitness club accepting the renewal offer on December 1, 2012, for membership in 2013, what rate of tax applies to the amount if I pay it before April 1, 2013?

If the payment due date on the renewal notice is before April 1, 2013, the membership would be subject to 12% HST, even though the membership is for 2013.

67. If I purchase tickets before April 1, 2013, to attend a concert that is to be held on or after April 1, 2013, what rate of tax would apply to the purchase of these tickets?

The 12% HST rate would apply to tickets purchased before April 1, 2013, for admission to a concert held on or after that date.

Services

68. If the contractor I hire to renovate my kitchen before April 1, 2013, finishes the renovation work in March 2013, but invoices me on April 16, 2013, what rate of tax would he charge me on these services?

Since the contractor issues the invoice on or after April 1, 2013, the contractor would charge you 5% GST. If the contractor issues the invoice before April 1, 2013, the contractor would charge you 12% HST.

69. A contractor that I hire to renovate my home would be invoicing me on or after April 1, 2013, for construction services that would be performed before and after April 1, 2013. What rate of tax would apply on this invoice for the services?

Since the contractor would be issuing the invoice on or after April 1, 2013, 5% GST would apply to the services billed. If the contractor issues the invoice before April 1, 2013, the 12% HST would apply to the services billed.

70. I will be required to make a prepayment of $100 before April 1, 2013, for services that are to be performed on or after April 1, 2013. The total amount that I will be required to pay for these services is $500 and the invoice would be issued on or after April 1, 2013. What rate of tax would apply to these payments?

The 12% HST rate would apply to the prepayment of $100 made before April 1, 2013. The 5% GST rate would apply to the remaining $400 due for these services invoiced on or after April 1, 2013.

71. If I make a deposit of $100 in March 2013 for a service that would be provided on or after April 1, 2013, what rate of tax would apply to this deposit?

A deposit is not treated as a payment until such time as the amount is applied against the total consideration payable for the supply. Where you make a deposit of $100 in March 2013 for a service to be provided on or after April 1, 2013, the $100 would not be treated as payment for that service until it is applied against the payment for the service. If the payment is made or becomes due (whichever is earlier) on or after April 1, 2013, the 5% GST would apply to the payment for that supply.

72. Taxi businesses that have their fares regulated by law are required to include GST/HST in their fares. Would these tax-included fares be subject to the 5% GST rate?

An amount paid as a taxi fare on or after April 1, 2013 would be a tax-included amount that includes GST of 5/105 of the amount.

73. I am a home owner. In March 2013, I enter into a listing agreement with a real estate broker who will arrange for the sale of my house situated in British Columbia. The closing date of the sale is on or after April 1, 2013, which is when the real estate broker will issue the invoice to me for their services. What rate of tax would the real estate broker charge me on these services?

Since the real estate broker would be issuing the invoice on or after April 1, 2013, the real estate broker would charge you 5% GST.

Leases

74. The lease payment for my car is due March 15, 2013, but I would not pay it until on or after April 1, 2013. What rate of tax applies to this lease payment?

Since the lease payment is due before April 1, 2013, the 12% HST would apply, even though you would make the payment on or after April 1, 2013.

75. How would the elimination of the HST affect existing leases for vehicles?

The 5% GST rate would apply to lease payments that become payable on or after April 1, 2013, without having been paid before that date, including those for existing leases. As a result, all lessees of automobiles, RVs and boats would be subject to the 5% GST rate on payments required to be made under the lease agreement on or after April 1, 2013.

Importations

76. What rate of GST/HST would I pay when I import goods?

In most cases, 12% HST applies at the border to taxable importations of non-commercial goods imported by a resident of British Columbia, a participating province, regardless of the point of entry into Canada or customs clearance. Effective April 1, 2013, British Columbia would generally no longer be a participating province. If you import these non-commercial goods on or after April 1, 2013, or if these goods are released from customs control on or after that day, as a resident of a non-participating province, you would pay 5% GST.

Inter-provincial transactions

77. If I bring taxable goods into British Columbia from other provinces on or after April 1, 2013, would I be required to pay the provincial part of the HST on a self-assessment basis?

You would not be required to pay the provincial part of the HST on a self-assessment basis for taxable goods brought into British Columbia from other provinces on or after April 1, 2013.

General – Real property

78. What is the current harmonized sales tax (HST) treatment for taxable supplies of real property in British Columbia?

The HST at 12%, composed of a federal part at 5% and a provincial part at 7%, currently applies to a taxable supply of real property in British Columbia.

79. When would the 5% GST apply to a taxable sale of real property in British Columbia?

The GST at 5% would apply to a taxable sale of real property in British Columbia where, under a written agreement of purchase and sale, tax becomes payable after March 31, 2013.

In respect of a sale of most types of real property, tax becomes payable on the earlier of the day ownership of the property is transferred to the recipient of the supply and the day possession of the property is transferred to the recipient under the agreement for the supply. In respect of the sale of a residential condominium unit where possession of the unit is transferred before the condominium complex in which the unit is situated is registered as a condominium, tax is payable on the earlier of the day ownership of the unit is transferred and 60 days after the complex is registered as a condominium.

Further information on the British Columbia measures affecting residential real property will be made available separately.

80. When would the GST at 5%, rather than the 12% HST, apply to a taxable lease of commercial real property?

The GST at 5% would apply to a lease payment due on or after April 1, 2013, unless it was paid before that date.

The 12% HST rate would apply to a lease payment due before April 1, 2013, even if it is paid on or after April 1, 2013.

Information for public service bodies

Charities, qualifying non-profit organizations and selected public service bodies may claim a public service bodies' rebate to recover a portion of the GST and the federal part of the HST paid or payable on eligible purchases and expenses. In some cases, these entities may also be eligible for a partial rebate of the provincial part of the HST. For information on eligibility, the applicable rebate rates and how to calculate the rebate, see Guide RC4034, GST/HST Public Service Bodies' Rebate.

The following questions and answers are provided to assist charities, qualifying non-profit organizations and selected public service bodies in understanding how the transition from HST to GST in British Columbia on April 1, 2013, would affect their public service bodies' rebate calculation.

81. I am a charity, qualifying non-profit organization or selected public service body. Will the transition from HST to GST on April 1, 2013, affect my ability to claim a public service bodies' rebate of the GST or the federal part of the HST?

No, the transition from HST to GST will not affect your ability to claim a public service bodies' rebate of the GST or the federal part of the HST. You will continue to enter the amount of this rebate on Line A of your rebate application (Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-government Refund or GST284, the personalized form of the rebate application).

82. I am a charity, qualifying non-profit organization or selected public service body resident only in British Columbia. Would I be entitled to claim a public service bodies' rebate of the provincial part of the HST paid or payable on my eligible purchases and expenses if my claim period is January 1, 2013 – June 30, 2013?

Where your claim period includes March 31, 2013, you would be entitled to claim a public service bodies' rebate of the provincial part of the HST using the current rebate percentages for British Columbia if the HST became payable or was paid without having become payable, was deemed to have been paid or collected, or was required to be added to your net tax before April 1, 2013.

Your ability to claim a public service bodies' rebate of the GST or the federal part of the HST is unaffected by the transition from HST to GST.

83. I am a charity, qualifying non-profit organization or selected public service body resident only in British Columbia. Would I be entitled to claim a public service bodies' rebate of the provincial part of the HST paid or payable on my eligible purchases and expenses if my claim period is April 1, 2013 – June 30, 2013?

Where your claim period starts on or after April 1, 2013, you would not be entitled to claim a public service bodies' rebate of the provincial part of the HST. When filing your rebate claim, you would no longer use the provincial schedule (Form RC7066 SCH, Provincial Schedule –GST/HST Public Service Bodies' Rebate or GST284 SCH, the personalized schedule), or enter any amount on Line B of your rebate application (Form GST66 or GST284).

Your ability to claim a public service bodies' rebate of the GST or the federal part of the HST is unaffected by the transition from HST to GST.

84. I am a charity, qualifying non-profit organization or selected public service body resident in British Columbia and another province. Would I be entitled to claim a public service bodies' rebate of the provincial part of the HST using the current rebate percentages attributable to charities, qualifying non-profit organizations and selected public service bodies resident in British Columbia if my claim period is January 1, 2013 – June 30, 2013?

Where your claim period includes March 31, 2013, you would be entitled to claim a public service bodies' rebate of the provincial part of the HST using the current rebate percentages for British Columbia if the HST became payable or was paid without having become payable, was deemed to have been paid or collected, or was required to be added to your net tax before April 1, 2013.

Where a charity, qualifying non-profit organization or selected public service body is resident in more than one province, at least one of which is a participating province, the public service bodies' rebate for the provincial part of the HST is based on the extent you intend to consume, use or supply the property or services in the course of your activities in each province where you are resident.

Your ability to claim a public service bodies' rebate of the GST or the federal part of the HST is unaffected by the transition from HST to GST.

85. I am a charity, qualifying non-profit organization or selected public service body resident in British Columbia and another province. Would I be entitled to claim a public service bodies' rebate of the provincial part of the HST using the current rebate percentages attributable to charities, qualifying non-profit organizations and selected public service bodies resident in British Columbia if my claim period is April 1, 2013 – June 30, 2013?

Where your claim period starts on or after April 1, 2013, you would not be entitled to claim a public service bodies' rebate of the provincial part of the HST using the current rebate percentages for British Columbia.

If, in addition to being resident in British Columbia, you are resident in a participating province, you may still claim a rebate of the provincial part of the HST to the extent you intend to consume, use or supply property or services in the course of your activities in that participating province.

If you are not resident in a participating province, you would not be entitled to claim a rebate of the provincial part of the HST. When filing your rebate claim, you would no longer use the provincial schedule (Form RC7066 SCH or GST284 SCH), or enter any amount on Line B of your rebate application (Form GST66 or GST284).

Your ability to claim a public service bodies' rebate of the GST or the federal part of the HST is unaffected by the transition from HST to GST.

All technical publications on GST/HST are available on the CRA Web site at www.cra.gc.ca/gsthsttech.

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