With the introduction of Bill 2, the provincial government took one step closer towards removing HST and re-implimenting PST and GST. With the transition scheduled to be completed on April 1 of this year, the B.C. ministry has stated that more than 100,000 businesses will need to register to make the transition from HST to PST. To help ease the transition, the government has provided online instructions at bgov.bc.ca/etaxbc/register.
The PST and GST tax rates will be 5% and 7%, respectively. From their website: “The new PST is being implemented under a more modern and streamlined Provincial Sales Tax Act that is, for technical taxation legislation, clearer, easier to understand and comply with, easier to administer, and which better reflects modern technology and business practices.”
While the Finance Ministry confirmed that final details are still being developed, Canada Revenue Agency has provided a question and answer catalogue, which you can download at: http://www.cra-arc.gc.ca/E/pub/gi/notice270/notice270-e.pdf.
The following are a few of the questions answered in the catalogue:
Q: I invoice a customer before April 1, 2013. The customer pays the invoice on or after April 1, 2013. What rate of tax do I charge on this sale?
A: 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.
Q: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?
A: 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.
Q: How do I calculate the new rate of tax on a tax-included invoice?
A: 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.