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The Return of PST: What it Means for your Business

You will likely receive a letter from the CRA in the next month, explaining how to register for PST in time for the April 1, 2013 deadline.

To Register or Not?

Even if you were registered for PST pre-July 2010 you will be required to register for PST again this time around. Registration will be processed though the provincial government website, eTax BC, between January 2, 2013 and April 1, 2013.

Going forward the eTaxBC website will enable you to update your contact and business information at any time. It will also become the main point of contact for filing tax returns and making payments.

When registering for an account, you will be asked for your Business Number. If you were registered under the old PST system, you will not be allowed to use this number instead. If you do not have a Business Number, (should your business earn under $30,000) you will be provided with a new unique number by the eTaxBC system.

The Same but Different

Although the PST system will revert to many of the same rules used before July 1, 2010, there will be a small number of changes to reflect the recommendations made by an expert panel. These changes are likely to be announced in January 2013.

As before, there will be no PST on food, restaurant meals, gym memberships, movie tickets and any personal services e.g. haircuts, accountancy and realtor commission. Liquor sales will return to five percent GST plus ten percent Liquor Tax, for both stores and restaurants. And the $02.7 per litre Propane Tax will also be re-implemented.

Tax on the private sale of vehicles, boats and aircraft will continue at twelve percent but sales will not be subject to GST. If the sale is not private then you will be charged five percent GST plus seven percent PST plus the luxury Tax of one to three percent if your vehicle costs more than $55,000.

Industry Specific Changes

If you are part of the hotel industry, there will be one specific change to the way you collect tax. The pre-existing ‘Hotel Room Tax’ will not be re-implemented as a separate tax; it will be combined with PST. Tax will be changed at 8percent PST and 5percent GST. This change has been made to help reduce your paperwork.

There will also be some changes for those of you in the construction industry, specifically for projects started before April 1, 2013 but not completed.

All other changes are likely to be implemented after April 1, 2012.

Implications of the Change

If you are in a service-based industry, the transition to PST may affect the flow of your clients. By waiting after April 1, 2013 to employ your services, clients will effectively receive a seven percent “discount” as PST will not be charged. This may mean a lean few months at the beginning of the year and a hectic April.

Administration Requirements

If you have employees, it is also important to remember that you will be required to ask each of them to complete new tax exemption form before April 1, 2013.

Ways to Benefit

As Gabrielle Loren explained, back in August 2011, there is still time to make the most of HST while it’s still in place. She explains that by making capital purchases now, such as new computer equipment, you will be able to deduct the full amount of HST (twelve percent) from the amount you owe the CRA. If however, you choose to make these purchases after April 1, 2013, you will only be able to deduct the GST (five percent).