INDIRECT TAX KPMG LLP B.C. Harmonization Golf Club Operators Association B.C. Chapter November 11, 2009

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 2 B.C. Harmonization Agenda HST Overview Application to Golf Club Operations Transition Rules Planning / Implementation

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 3 HST Overview

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 4 B.C. Harmonization Overview Effective July 1, 2010, proposed 12% HST 5% federal component and 7% provincial component NOT a new tax Same general rules and tax base as GST Some differences Federally administered One return/one administration/one audit

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 5 B.C. Harmonization Overview Consequential sales tax changes Social Service Tax (PST) - 7% PST on TPP, certain services, telecom, parking eliminated PST on private sales of used vehicles, aircraft and boats retained - $5 tire and battery levy eliminated -.4% ICE levy eliminated - $1.50 per day vehicle rental eliminated Hotel Room Tax - 8% HRT eliminated - 2% tax collected for eligible municipalities retained to July 1, 2011 Liquor Markups - Adjusted to ensure no revenue loss

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 6 B.C. Harmonization Overview Differences between B.C. HST and GST: Point-of-sale rebates Residential energy rebates Input tax credit (ITC) restrictions No B.C. HST collected on commercial imports Public service body (PSB) rebates calculated at different rates New housing rebates calculated on different amounts

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 7 B.C. Harmonization Overview Point-of-sale rebates for B.C. HST on purchases by consumers: Books Children’s clothing and footwear Children’s car seats and car booster seats Diapers and feminine hygiene products Gasoline, diesel fuel, marine diesel fuel and aviation fuel including bio-fuel components for motor vehicles, boats and aircraft

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. B.C. Harmonization Overview Residential energy rebate Provincially administered rebate for energy (e.g., natural gas, electricity) acquired for residential use Mechanics of rebate not yet determined

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 9 B.C. Harmonization Overview Temporary ITC restrictions for Large Businesses (over $10M taxable sales) and financial institutions (FIs) As per MOA, full denial up to 5 years with 3-year phase- out, subject to acceleration by B.C. ITCs denied for provincial portion of B.C. HST for the following: Energy, except where purchased by farmers or used to produce goods for sale Telecommunications services other than internet access and toll- free numbers Road vehicles weighing less than 3,000 kilograms (and parts and certain services) Meals, beverages and entertainment

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 10 B.C. Harmonization Overview Generally reduced costs for businesses given no more unrecoverable PST (subject to ITC restrictions): Reduced compliance: No exemption certificates No dealing with PST complexities - Scope of exemptions - Goods for own use - Self-assessment One return and one audit

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 11 Export - Positive (subject to cash flow concerns) ENR / Manufacturing / Wholesale - Generally positive Retail - Mixed – goods positive, services negative (at least in short term) Financial Services - Negative, costly and complex Hospitality - Negative to some components (at least in short term) Real Estate - Mixed – commercial positive, residential negative Public sector - Mixed Harmonization – Impact by Sector

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 12 Application to Golf Club Operations

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 13 B.C. Harmonization Golf Club Revenues Any revenues currently subject to 5% GST will now be subject to 12% HST Green fees Lessons Club dues Equipment rentals Pro shop sales - Children’s clothing?

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. B.C. Harmonization Golf Club Expenditures Will cease paying PST on any expenditures currently subject to PST - Materials and equipment - Equipment Repair and Maintenance Costs - Telecommunications - Energy (electricity / natural gas) - Legal services Will pay HST on all expenditures currently subject to GST Can claim ITC for all HST unless revenues over $10M in which case restricted from claiming on energy and telcom

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. B.C. Harmonization Golf Club Impact Some reduction in costs but likely not significant 7% cost increase in cost to consumer (except on items currently subject to PST – cart rentals, pro shop sales) Will consumers accept increase?

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 16 Transitional Rules

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 17 B.C. Harmonization Transitional Rules (Other Than Residential Housing) Important dates: October 14, 2009 July 1, 2010 Announcement date Harmonization May 1, 2010 Specified pre- implementation date

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 18 B.C. Harmonization Transitional Rules – General GST (and PST where applicable) apply to property and services supplied prior to July 2010 HST applies to property and services supplied after June 2010

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 19 B.C. Harmonization Transitional Rules - Prepayments Club Dues HST applicable to club dues payable after April 2010 to the extent period covered is post June E.g. – annual payment on May 1, 2010 – HST collectible on 10/12’s of payment - E.g. – quarterly payment on June 1, 2010 – HST collectible on 2/3 of payment - E.g. – annual payment on April 1, 2010 – no HST Memberships Same rules as club dues except lifetime memberships - Where consideration for lifetime membership is payable after October 14, 2009 and before July 2010 and that consideration exceeds 25% of total consideration for membership the amount in excess of 25% is subject to HST.

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 20 B.C. Harmonization Transitional Rules – Prepayments Lesson Packages - HST applies where package sold after April 2010 to the extent lessons will take place after June 2010 unless 90% or more take place prior to July 2010 E.g. – 10 lesson package sold June 1 for 5 lessons each in June and July, HST applies to 50% Power Cart Rental Packages - HST applies where package sold after April 2010 to the extent rentals will be after June 2010 – issue how to apply given timing uncertain Charge GST/PST and reallocate based on actual use? Allocate based on time covered?

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 21 B.C. Harmonization Transitional Rules – Prepayments Green Fee Packages HST applies where package sold after April 2010 to the extent package covers post June 2010 period - Charge based on time period covered?

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 22 Planning/Implementation

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 23 B.C. Harmonization Are You Ready? Have you considered the following? (in no particular order) B.C. Announcement July 23, 2009 How will the transitional rules apply? What about tax saving opportunities? What are the differences between GST and HST? B.C. HST Ju ly 1, 2010 How much will it cost? Will we need to hire and budget for external resources? How will our cash flow be affected? Will our IT systems be ready? Should we provide GST refresher training? Can our software handle the required changes? Do we need an internal implementation committee? What is our implementation strategy? Should we develop a detailed implementation plan?

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 24 B.C. Harmonization Planning Considerations Defer purchases of PST-taxable items e.g., new mowing machinces

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. 25 Presenter’s contact details Information is current to October 15, The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Mark Worrall KPMG LLP (604)