Planning for transitioning from
HST to GST/PST
Diana Mau, C.A.
205-8833 Odlin Crescent,
Richmond, B.C.
Tel: 604-279-9270
www.dianamau.bc.ca
History of consumer taxes
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Prior to July 1, 2010
Federally, we have 5% GST
Provincially, we had 7% PST
Total 12%
History of consumer taxes
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On July 1, 2010, GST & PST combined
together to become 12% HST
(Harmonized Sales Tax)
HST is a combination of Federal 5% GST
plus BC portion of 7% to 12
HST basically follows the rules of GST
with some minor allowances
April 1, 2013 revert to GST/PST
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HST drops from 12% to 5% GST
PST of 7%
Mechanism of GST
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Multi-stage tax
GST applies to a very broad base of most
property & services, including real property
Refund of GST to businesses through the Input
Tax Credit (ITC) on taxable supplies
Businesses collect GST on sales from its
customers and claim back all its GST paid on
purchases
GST is truly a tax borne by final consumers
Efficient Tax, avoid tax cascading
Exceptions to general taxable
supplies- Zero-rated
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Instead of the general 5% GST, the 5% become
0% on certain items that the Govt consider
necessary, such as
Basic grocery, farm livestock, fishery
Prescriptive drugs, drug dispensing fees
Medical devices
Exports
International transportation except in North
America
Exempt Goods & Services
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Under the exempt supply rules,
businesses do not charge GST/HST on
sales from the customers, but businesses
cannot claim the GST/HST paid on the
purchases.
Examples of Exempt Supplies
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Used residential housing- no HST on purchases
of used homes
Most health, medical and dental services
performed by licensed physicians or dentists
Child care services
Educational services
Music lessons
Financial services
Elect to be Exempt Suppliers
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Small businesses with annual sales under
$30,000 may elect not to be a taxable
supplier, and be an exempt supplier
Usually beneficial for those small
businesses who deal with final consumers
and who have little purchases on which
GST/HST being paid, e.g. some small
home-based businesses
Understanding PST
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Single (final) stage tax
A much narrower base than GST
Applies to most goods
Real property and most services not
taxable
Notably are new home purchases, home
repairs, restaurant services
PST Imposition
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General rate of 7% on tangible personal
property (goods)
Liquor – 10%
Vehicles under $55,000 – 7%; $55,000 to
<$56,000 – 8%: $56,000 to <$57,000- 9% &
$57,000 or over - 10%. No graduation rate.
Boats & aircrafts – 12%, no GST
7% on related services
7% on legal services
Accommodation – 8% + 2% hotel tax
Tangible personal property goods
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Tangible goods that you can see, weigh,
measure, feel or touch
Also included are gas, heat, electricity
But does not include real property
Taxable Goods
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Alcoholic beverages
Automobiles & parts
Boats
Building materials
Clothing & footwear
Furniture & appliances
Natural gas, heat, telecommunications
Office supplies & equipment
Taxable goods – Exemptions (1)
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All food for human consumption (basic
groceries and restaurant meals)
Bicycles
Children-sized clothing & footwear
Adult-sized clothing and footwear
purchased for children under the age of 15
Used clothing & footwear under $100
Taxable goods – Exemptions (2)
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Books, newspaper & periodicals
Medications (prescriptive & specific overthe counter medications)
Vitamins
School supplies
Energy products for use in residential
dwellings
Taxable Related Services
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Repair or maintain of taxable goods, such
as automobiles, knives, watches TVs,
stereos, office equipment or computers
Apply protective treatments to taxable
goods such as fabric protection, rust
proofing
Restore taxable goods such as furniture
Exempt Related Services
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Services to exempt goods such as repair
bicycles
Cleaning services
Services to clothing & footwear
Services to household appliances such as
fridges, stoves, ovens, dishwashers, washers,
dryers, freezers, vacuums, rug cleaners,
curtains & drapes
Services to animals
Exemptions specific to
businesses
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Goods purchased for resale or lease
Goods incorporated into goods for resale
Eligible machinery & equipment for use in
manufacturing , logging mining etc
Specified goods purchased for use by
qualifying farmers & fishermen
Exemptions - specific
circumstances
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Goods shipped directly by the seller
outside B.C.
Eligible goods purchased from small seller
Independent sales Contractor
Small Seller
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Located in BC but does not maintain an
established business premises, such as
home based is O.K.
Sells taxable goods or services
Gross annual taxable sales under $10,000
Not registered as a vendor
Independent Sales Contractor
(ISC)
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Not an agent or employee of the direct seller
Offer to sell exclusive products at temporary
locations like PNE/fairs
Pay PST on the suggested retail price when
purchase from direct sellers
Purchase exclusive products from a direct seller
or another ISC for resale or personal use
ISC charges & collects PST from customers &
reimburse themselves for PST paid
Example of HST vs GST/PST
Legal service provided
GST/PST collected
Expenses
HST GST/PST paid on
expenses
Net GST/PST remittance
Example 1
12% HST
Example 2
5%GST /7%PST
$1000
$120
$1000
$600
$72
$600
$48
GST $20
PST $70
Amount of non-refundable PST
Consumer paid
$1120
GST $50
PST $70
GST $30
PST $42
$42
$1120
Bookkeeping for HST
DR.
Cash
CR.
$1,120
HST payable
$ 120
Fee revenue
$1,000
Cash
$672
HST receivable
$ 72
Office supplies/ Equip
$600
Bookkeeping for GST/ PST
Cash
GST payable
PST payable
Fee Revenue
Cash
GST Receivable
Office supplies/equip
DR.
$1,120
CR.
$ 50
$ 70
$1,000
$672
$ 30
$642
Registration to collect PST
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Vendors of PST taxable products /
services must register and collect PST
Vendors include those who sell & lease
taxable goods, provide related services,
provide 4 or more short term
accommodation, provide legal services,
provide telecommunication services, direct
sellers to independent sales contractor
Registration not required
Person who does not make taxable sales
 Persons excluded from definition of
vendor including
 Small Seller
 Independent Sales Contractor
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Registration for Manufacturers &
Wholesalers
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Manufacturers/Wholesalers who don’t make
retail sales are not required to register.
Required to provide exemption certificate on
purchase of raw materials or goods for resale.
Manufacturers/ Wholesalers who make retail
sales are required to register unless make
infrequent sales, can remit PST as casual
remitter.
PST registration
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PST registration begins on Jan 2, 2013
PST registration done prior to April 1, 2013
New 11 digit PST numbers
When PST is due
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Earlier of date consideration is paid or is
due
For most businesses (other than exempt
or small suppliers), consider making
payments or getting invoice prior to April 1,
2013 to save PST even if not taking
possession of goods before April 1, 2013
Housing, Transition Tax & Rebate
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What you need to know about
HST/GST/PST on new housing transition
tax, rebate & vendor information
requirement
HST of 12% on new housing
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Until March 31, 2013, HST of 12% on new
housing, comprising of Federal GST of 5%
and B.C. portion of 7%
Federal GST Housing Rebate
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Federal Govt Rebate equals 36% of the
5% GST paid on the first $350,000 to a
max of $6,300 ($350,000 x 5% x 36%)
The GST rebate is phased out on a
straight–line basis for homes priced
between $350,000 and $450,000
No Federal rebate for homes priced at
$450,000 or above
B.C. New Housing Rebate (1)
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From July 1, 2010 to March 31, 2012, BC
rebate equals to 5% of new home price (or
71.43% of tax) up to a max of $26,250 (or
5% of $525,000)
From April 1, 2012 to March 31, 2013, the
max B.C. rebate is increased to a max
$42,500 (or 5% of $850,000)
B.C. New Housing Rebate for
owner built new homes (2)
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April 1, 2012, max rebate increased to
$42,500 if HST is paid on land
$28,475 if no HST is paid on land
Rebate available on homes under
construction at March 31, 2013, home
must be occupied and rebate apply before
April 2017
B.C. New Housing Rebate (3)
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In addition, during the HST period from July 1,
2010 to March 1, 2013, B.C. Govt estimates that
there would be about 2% savings on the PST
otherwise payable on building cost that may be
passed to home owners.
Hence for lower cost homes (max $850,000),
there should be no increase in B.C. portion of
taxes
B.C. First Time Home Buyer
$10,000 Refundable Tax Credit
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Effective between February 21, 2012 to
March 31, 2013
For B.C. residents who are first-time home
buyers ( has never previously owned a
primary residence anywhere in the world)
and who purchase an eligible new home
as primary residence
B.C. First Time Home Buyer
$10,000 Refundable Tax Credit
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For new homes purchased from a builder.
a written agreement of purchase and sale
is entered into on or after Feb 21, 2012
and sale is completed prior to April 1, 2013
HST is payable on the home
No one else has claimed the $10,000
bonus
B.C. First Time Home Buyer
$10,000 Refundable Tax Credit
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For owner-built homes, a written
agreement of purchase is entered on or
after Feb 21, 2012 and construction of the
home is completed or occupied before
April 1, 2013
No one else has claimed the $10,000
bonus
How is the credit calculated
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5% of the home price to a max of $10,000
Claw back if single individual net income
>$150,000 @ 20 cents per every dollar,
zero at net income of $200,000
Claw back for couples net income >
$150,000 @ 10 cents per every dollar,
zero at net income of $250,000
No PST on New Housing, but 2%
B.C. Transition Tax
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Effective April 1, 2013, no 7% of B.C.
portion of HST on new homes
2% B.C. transition tax on substantially
renovated or new housing where 10% or
more is completed as of April 1, 2013 and
the sale occurs before April 1, 2015
No tax if less than 10% completed on April
1, 2013
Rebate to builders for work done
after March 31, 2013
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Intended to compensate builders for PST
paid on materials after March 31, 2013
Rebate based on % completion
Transition Rebate to Builders
% completed-April 1, 13 Rebate as % of sales price
- Less than 10%
No transition tax
- 10% - < 25%
1.5%
- 25% - < 50%
1.0%
- 50% - < 75%
0.5%
- 75% - < 90%
0.2%
- 90% or more
none
Transition Rebate to Builders
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To claim the transition rebate, builder will
be required to certify that the builder paid
PST on substantially all of the building
materials that were incorporated on or
after April 1, 2013 into the construction
The builder will be required to keep
receipts fro audits
Example on B.C. Transition Tax
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Builder enters into a sale agreement to
sell a newly constructed home for
$600,000
Ownership & possession date June 1,
2013
The home is 80% completed on April 1,
2013
Example on B.C. Transition Tax
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Builder has to collect 5% GST on
$600,000 to Federal Govt
Builder has to collect 2% B.C. transition
tax = $600,000 x 2% = $12,000
Builder can claim builder’s rebate of 0.2%
= $600,000 x 0.2% = $$1,200
Builder can make a net remittance of
$10.800 ($12,000- $1,200) to B.C.
Other transition provision for
contractors
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Contractors subject to PST selfassessment on materials purchased prior
to April 1, 2013 but used after March 31,
2013 to improve property on both
residential & commercial real property
Builder Disclosure Requirements
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Applicable to agreement made on or after Feb
17, 2012 with closing after Dec 31, 2012
Disclosure must include no 7% B.C. portion of
the HST and 2% B.C. transitional tax for
ownership & possession of newly constructed or
substantially renovated housing between April 1,
2013 and April 1, 2015
Must provide disclosure to purchaser at later of
Jan 2, 2013 or the date agreement signed
Builder Disclosure Requirements
Additional information required for sales
closing after March 1, 2013 on
 Consideration for GST purposes
 Whether transition tax applies and if so,
the amount of B.C. transition tax
 % of completion as of April 1, 2013
 Amount of B.C. transition rebate claimed
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Builder Disclosure Requirements
Failure to comply Builder Disclosure
Requirements, builder is subject to
penalties of
 1% to a max of $10,000 per home
 Penalty quadruples of willful default or
gross negligence
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Impacts for consumers
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Whether PST will increase or decrease
the cost of purchases for consumers?
What’s not taxable under PST
Most newspaper
Certain school supplies
Most magazines
Thermal insulation,
weather stripping,
caulking
First aid kits
Smoke detector <$250
Food producing plants
HST
12%
12%
12%
12%
GST + PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
12% 5% GST, no PST
12% 5% GST, no PST
12% 5% GST, no PST
What’s not taxable under PST
HST GST + PST
Adult sized clothing for children
Shoe repairs
Tailoring services
Dry cleaning
Used clothing or
footwear for less than
$100
Snack foods
Prepared foods
Restaurant meals
12%
12%
12%
12%
12%
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
12% 5% GST, no PST
12% 5% GST, no PST
12% 5% GST, no PST
What’s not taxable under PST
HST GST + PST
Basic cable TV services
Local residential phone
Services to household
appliances as fridges
Cleaning services
Home security monitoring
Services to real property
– painting, roofing
plumbing, electricity
12% 5% GST, no PST
12% 5% GST, no PST
12% 5% GST, no PST
Landscaping to real property
12% 5% GST, no PST
12% 5% GST, no PST
12% 5% GST, no PST
12% 5% GST, no PST
What’s not taxable under PST
HST GST + PST
Computer software repairs
service, software installation
12% 5% GST, no PST
Taxi fares
Camping sites
Domestic air
12%
12%
12%
12%
12%
Newly constructed homes
New homes where
construction begins
before April 1, 2013
Real estate commission
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, + 2%
B.C. transition
tax
12% 5% GST, no PST
What’s not taxable under PST
HST GST + PST
Drugs & medications e.g.
Cough syrups, flu remedies
Vitamin & supplements
Admission fees, movies
Memberships, golf /sports
Bicycles
Safety helmets
12% 5% GST, no PST
12%
12%
12%
12%
12%
Children’s ski gloves, boots
12%
Adult’s sized ski boots for 12%
children < age 15
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
What’s not taxable under PST
Massage therapy
Fitness training services
Hair/barber services
Veterinarian services
Accounting services
Interior design services
Wedding planning
Funeral services
HST
12%
12%
12%
12%
12%
12%
12%
12%
GST + PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
5% GST, no PST
What’s not taxable under PST for
consumers
HST
GST + PST
Cigarettes
5% GST, no PST
Cigars
5% GST, no PST
Chewing Tobacco
5% GST, no PST
Nicotine Replacement
products
5% GST, no PST
What’s going up in PST for
consumers
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B.C. first time new home buyers’
refundable tax credit up to $10,000
For purchase agreement entered into on
or after February 21, 2012 and sales
completed prior to April 1, 2013, i.e.sales
subject to 12% HST
Beneficial for new home buyers of homes
under $850,000
What’s going up in PST for
consumers
Purchase or lease of
vehicles
Under $55,000
HST GST + PST
$55,000 to <$56,000
12% 5%GST+ 8%PST
$56,000 to <$57,000
12% 5%GST+ 9%PST
$57,000 and over
12% 5%GST+ 10%PST
12% 5%GST+ 7%PST
What’s going up in PST for
consumers
HST GST + PST
Children’s disposable
diapers
Alcoholic beverages
5%
Short term hotel
accommodation
12% 5%GST+ 8%PST
5% GST+7%PST
12% 5%GST+10%PST
Impacts for Businesses
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Consider whether your business is taxable
or exempt
Most businesses are taxable suppliers, the
PST will increase their cost of doing
business. Buy or pay before April 1, 2013.
Exempt businesses may realize savings.
Buy after March 31. 2013.
Need more information ?
CTB (Consumer Taxation Branch)
 Phone: 1-877-388-4440 or 604-660-4524
 Email: CTBTaxQuestions@gov.bc.ca
 Website: gov.bc.ca/pst
 Website: sbr.bc.ca
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