Businesses going back to the old two-tax system
If you hated seeing the Harmonized Sales Tax introduced, you may also hate seeing it leave.
But like it or not, the HST is vanishing April 1, when the government splits the tax back into the provincial sales tax and the federal Goods and Services Tax.
"For the most part, businesses are ready to make the switch back," said Kathi Halpin, certified general accountant with EPR CGAs, in Maple Ridge.
"Transition will be easy for many corporate clients."
The B.C. Liberal government cancelled the hated HST after being forced to do so in a referendum in the summer of 2011, after the surprise introduction of the HST a year before.
Halpin, the Maple Ridge-Pitt Meadows Chamber of Commerce and the BIA are helping people make the transition back to the PST and GST on Feb. 7 at a reception titled Tips on Transitioning from HST to PST, at West Coast Ford Lincoln.
Customer relations coordinator at the dealership, Devon Marrello is coordinating the event and has some ideas to get people networking and doing business.
Appetizers and door prizes will be included, though the chamber would like to know how many are attending next Thursday.
Tops on Halpin's list of tips is the requirement to get a new PST registration number.
Even though businesses may have had a previous PST number, they need to apply for a new number now that the tax is returning. That PST number registration process can be done online (www.gov.bc.ca/etaxbc/register) and takes about 20 minutes.
If computers aren't your thing, go to a Service BC Centre in Maple Ridge, beside the municipal hall, and fill out the forms there.
Or, just mail in your application after completing the forms that can be found at www.gov.bc.ca/pst.
The return of the two taxes – five per cent GST and seven per cent PST – means sales taxes on most goods won't change from the 12- per-cent HST now charged, so most shoppers won't notice the difference on most of what they buy.
For shoppers, the return to the old system means restaurant meals, concerts/sports events, haircuts and dry cleaning no longer will have the seven-per-cent sales tax portion that used be part of the 12-per-cent HST charged on the services. The old exemptions of PST on bicycles and kids clothing also will return.
Halpin said the transition period has many businesses putting decisions on hold until the PST returns.
Under the HST, businesses were refunded input tax credits for the 12-per-cent HST tax they paid on the services and products they needed to keep their business operating.
Returning to the old PST system, businesses will receive five per cent GST only. PST is not refunded in the form of input tax credits.
For example, business owners no longer will be able to claim the entire 12-per-cent tax paid for renting their premises and instead can only claim five per cent GST.
When it comes to vehicle and equipment leases, businesses no longer can claim a 12-per-cent HST input tax credit. This will decrease to a five-per-cent GST credit.
From a business point of view, Halpin said the single tax HST was simpler, adding the government at one point announced it would be reducing it to 10 per cent.
Ineke Boekhorst, with Downtown Maple Ridge Business Improvement Association, said the event will help people get through the transition and said that some are struggling with the paperwork.
"People are waiting to the last minute and we're hoping to get people motivated to just get it done so you're not stuck on a last-minute rush."
Home builders in particular are being cautious and in some cases delaying some projects until the transition period is complete.
HST will generally cease to apply on the purchase of new housing as of April 1, regardless if a contract was signed or new home construction started before April 1, provided ownership didn't transfer before that date. However the provincial government may collect a temporary transition tax of two per cent if certain conditions are met.