One of the more notable differences between Income Tax and GST/HST is that for GST/HST purposes partnerships are expressly defined to be “persons” – separate from the partners of the partnership. Most provincial sales tax statues take the same approach and define partnerships to be separate legal persons. However, this is not the case in British Columbia (“BC”), which is the sole Canadian jurisdiction that does not treat partnerships as persons for Provincial Sales Tax (“PST”) purposes.
This could change as the BC Ministry of Finance (the “Ministry”) has released a Consultation Paper seeking feedback on proposed legislative changes to bring BC in line with the rest of Canada. Subject to public support, the Ministry has identified four legislative or regulatory changes which would be required:
Effective July 1, 2022, tobacco retail dealers in British Columbia (“BC”) must register to collect and remit provincial sales tax (“PST”).
The tobacco industry is no stranger to high taxes and complicated regulatory schemes – but BC appears made the situation even worse, by making provincial sales tax (“PST”) apply on top of its pre-existing stand-alone tobacco tax!
British Columbia’s (“BC’s”) new PST rules regarding online marketplaces have been in effect for about three months now. First announced in the 2022 provincial budget, the provincial government claims the changes will close tax loopholes and “better adapt BC’s consumption taxes to the rapid expansion of e-commerce during the pandemic.” It is expected to result in an additional 100 million of revenue for the province in each of the next two years.
But where is all that new revenue really coming from?
Determining whether contracts are for the sale of tangible personal property or for provision of services is often of central importance in provinces still levying Provincial Sales Tax (“PST”). This issue has been the subject of on-going litigation in the context of providing oilfield services to oil and gas exploration companies in British Columbia and Saskatchewan. A recent case from the British Columbia Court of Appeal (“BCCA”) provides practitioners with increased guidance on how to avoid application of PST on materials used in the provision of oilfield services. The bottom line still remains: get advice early and often !
