Countdown to the HST Hosted by the Certified General Accountants Association of BC

T. Charlotte Hoggard, CGA

HST Transition

TaxApplication PST/ some HSTOctober 14, 2009 Amounts paid or payable after Certain businesses and PSBs must self-assess HST for supplies on or after July 1,2010 Selling lifetime memberships - 25% Large construction contracts and contracts >3months PST/ HSTMay 1, 2010 Collect /pay HST for amounts paid or payable on or after this date for supplies on or after July 1, 2010 HSTJuly 1, 2010 – BC HST

BC BooksYes Children’s sized clothing and footwearYes Children’s car seats and booster seatsYes Feminine hygiene products and diapersYes Motor fuels for motor vehicles, trains, boats, as well as aviation fuel Yes Residential energyYes

Organization5% GSTBC 7% HSTOntario 8% HST Municipality100%75%78% Universities & Colleges 67%75%78% School Boards68%87%93% Hospitals83%58%87% Charities & Qualifying Non- profits 50%57%82%

Point 1 Point 2 Point 3 Point 4 Before July 1, 2010July 1, 2010 Goods - Delivered or ownership transferred PSTHST Taxable ServicesPST on portion performed (if 90% or more all PST) Prorated otherwise HST on portion performed (no HST if =<10%) – or prorated Lease of TPPPST on Lease interval that begins and ends before July 31 HST on lease interval beginning Intangible personal property (e.g. intellectual property) Generally HST on sale paid or payable; however, sometimes lease license rules apply

Continuous supplies Budget purchase arrangements Direct sellers using alternate collection Combined supplies

Candace Nancke, CGA

HST Real Estate Transitional Rules

Grandparented sales can be assigned in many situations, but not all Builder disclosure agreements after Nov. 1, 2009 and before July 1, 2010 – be careful Rental housing, owner built homes, resellers – rules are close but variations – be careful

Some housing types do not qualify for grandparenting Grandparenting does not apply to all purchasers

Sale of New or Substantially Renovated Properties - Summary Date of Agreement Date of Title Transfer* Rate of Tax Due BC New Housing Rebate (Table 1) Transitional Tax Adjustment (Table 2) Transitional New Housing Rebate (Table 3) Single-Unit Homes Nov. 18, 2009 or before (grandparented) After June 30, 20105%NoYesNo After Nov. 18, 2009Before July 1, 20105%Non/a After Nov. 18, 2009After June 30, %YesNoYes * ownership and/or possession

Sale of New or Substantially Renovated Properties Summary Date of Agreement Date of Title Transfer* Rate of Tax Due BC New Housing Rebate (Table 1) Transitional Tax Adjustment (Table 2) Transitional New Housing Rebate (Table 3) Condominiums Nov. 18, 2009 or before (grandparented) After June 30, 20105%NoYes Yes - Claimed by Builder After Nov. 18, 2009Before July 1, 20105%Non/a After Nov. 18, 2009After June 30, %YesNo Yes - Claimed by Builder * ownership and/or possession

Unlike GST rebate, it is not reduced Will be administered by CRA, similar to GST rebate Builders will have the option of providing the rebate at the time of sale A rental rebate has been proposed

BC New Housing Rebate (Table 1) Type of HousingRebate Rates & Factors* Price to Pay to Get Full Refund New Home with Land71.43% of the Provincial component of HST $ 525,000 New Home with Leased Land 4.47% of the price attributable to the building $ 588,000 New Mobile or Floating Home 71.43% of the Provincial component of HST $ 525,000 New Co-Op Housing Unit 4.47% of the price paid for qualifying shares in the co-op $ 588,000 * maximum rebate in all cases is $26,250

Paid by builder Based on % of completion at July 1, 2010 – documentation will be important

Transitional Tax Adjustment (Table 2) Single - Unit Homes Degree of Completion or Substantial Renovation on July 1, 2010 Transitional Tax Adjustment Rate Less than 10 %2.00% 10% or more but less than 25%1.50% 25% or more but less than 50%1.00% 50% or more but less than 75%0.50% 75% or more but less than 90%0.20% 90% or more0.00% Residential Condominiums All Degrees of Completion on July 1, 2010 Transitional Tax Adjustment Rate All grandparented salesFlat 2%

Rebates for single unit homes can be claimed by builder or purchaser Rebates for residential condominiums must be claimed by builder Will be administered by CRA

Builder will require clearance certificate from the Province to claim Purchaser will require certificate of percentage of completion from builder (as at July 1, 2010)

Transitional New Housing Rebate (Table 3) Two calculation methods for % of estimated PST: Floor Space Method - $60 per square meter of floor space in the home - apply after July 1, 2010 Selling Price Method - 2% of the selling price - apply after sale complete Transitional New Housing Rebate Degree of Completion or Substantial Renovation on July 1, 2010% of estimated PST claimed Less than 10 %0% 10% or more but less than 25%25% 25% or more but less than 50%50% 50% or more but less than 75%75% 75% or more but less than 90%90% 90% or more100%

John Pankratz, FCGA

HST Thresholds

The $30,000 small supplier threshold that currently exists under current GST provisions will continue Businesses with taxable supplies under the threshold amount can “voluntarily register”

Affects “large businesses” making taxable supplies more that $10 million annually and certain financial institutions Based on taxable supplies made in the last fiscal year Restricts Input Tax Credit claim on the provincial portion of HST paid on certain expenditures (BCVAT)

Specified road vehicles Motor vehicle licensed for use on public roadways with weight less than 3,000 kg Applies to parts and services in respect to specified road vehicles Does not apply to routine repairs or maintenance of a specified road vehicle

Specified energy Generally includes electricity, gas, fuel and steam Does not apply to energy used by producers used directly in the production process and farmers Does not apply to convention use Optional “production proxy” method based on North American Industry Classification System (96%/87%/70%)

Specified Telecommunication Services Generally applies to telephone, television, fax/ , audio and computer link-ups Does not apply to internet access services, web-hosting services, toll-free telephone services or convention use purposes

Specified Meals and Entertainment Applies to food, beverages and entertainment that are subject to the existing 50% ITC restriction under the ETA Does not apply to “re-supply” situations, events where all employees from a location are invited, or expenses included in an employees income as taxable benefits

Large businesses will be required to report “Gross ITCs” and RITC in separate input fields on future GST/HST returns Option to use Estimation/Installment/Reconciliation approach to reporting RITC amounts

RITC system will apply as follows: 100% - July 1/10 to June 30/15 75% - July 1/15 to June 30/16 50% - July 1/16 to June 30/17 25% - July 1/17 to June 30/18 0% after July 1/18

Other HST Thresholds Electronic filing of GST/HST returns - $1.5 M BC HST New Housing Rebate (7% - 2% x purchase price) maximum $525,000 (max. rebate $26,140)

Questions?