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November 21, 2011

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How will the coming GST & PST impact you? The Aug 26, 2011 announcement about the death of HST seems a long time ago, but in reality, the changes could be complex and are not likely to happen quickly. I wish we could give you some information as to how the coming GST/ PST regime will impact buying equipment, building a house, building a warehouse, etc. but there is no legislation as yet – we are all in the dark.

We had PST only 14 months ago, so the process of going back to GST/ PST should be simple. But it is not. The change from HST to GST / PST is very complex and will not happen quickly. To draw a comparison, it took nearly 8 months from the announcement of HST coming (July 2009) and the first meaningful draft legislation as to how the transition from GST/ PST to HST would occur. That was quick, as tax authorities were simply building onto a pre-existing tax platform (the GST) in which the taxes were known, the legislation was written, what was taxed was known, how the tax was collected was all in place and all tax collecting authorities were already there.

Now we are moving to a completely new tax platform because the PST system is gone; all point of sale programming is gone; all tax collection / remittance systems are gone; the software, legislation and even the people are gone. The BC government is not likely to pull the old PST legislation out of the recycle bin and reprint it as the previous PST system was an antiquated, inefficient, often contradictory patchwork of rules cobbled together over 50 years. If the BC government recycles old PST legislation we will see business flee BC for Ontario, Alberta and Washington State. Let us hope the BC Government spends time…a lot of time, creating a PST regime that is efficient and will not scare away business.

In the August 26 announcement we were advised of an approximately 18 month transition from HST to GST/ PST. If so, I would not expect to see meaningful legislation dealing with the transition rules for 12 months. In reality I expect the transition will be approximately 12 months, so we could be in the GST/ PST regime by September 2012 but even then I would not expect to see meaningful legislation dealing with the transition rules until April or May 2012.

How these rules will impact you or your business, no one knows for sure. Even educated guesses are still guesses. In general, HST increased costs where a substantial component of the input costs was service/ labour because services were not generally subject to PST but were subject to HST. For example, the cost of building a house increased by an estimated 2% and the cost of a restaurant meal increased by 2% to 4% when HST came into place.

I would not expect the reverse to apply when HST is replaced by GST/ PST because I expect a new, more comprehensive PST regime – one that taxes much of the same things HST taxed. I expect we will see additional PST on some of the same services that were subject to HST. For example, I expect the cost of building a house to not be less under the upcoming GST/ PST regime and I do not expect the cost of your Tim Horton’s Double-Double coffee to go down, which will be very bad news to those who voted to get rid of the HST.

– comment by Tom Morton, Partner

August 26, 2011


The results of the HST vote are in. BC has voted to not have the HST. Once details are released on how the transition back to PST and GST will happen, we will provide information here as to how this will affect you.

January 1, 2010

BC HST Credit

Effective for the 2010 tax year, there will no longer be the Sales Tax Credit which allotted $75.00 to low income individuals. This year it has been amalgamated into the BC HST Credit. The BC HST Credit is combined with the GST Credit and the BC Low Income Climate Action Tax Credit into one payment every quarter.

In order for eligible individuals to receive the BC HST Credit, you must file an income tax return and check the “Yes” box in the GST/HST Credit application area on page 1 of the return.

For more information about the BC HST Credit click here

July 23, 2009

HST Overview

On July 23, 2009, the BC Government announced its plans to harmonize the provincial sales tax (“PST”) with the federal Goods and Services Tax (“GST”) effective July 1, 2010. As a result, the BC Harmonized Sales Tax (“HST”) rate will be 12% (7% provincial and 5% federal) effective July 1, 2010. On October 14, 2009, the BC government released the transitional rules in respect to the implementation of HST. The transitional rules provide a guideline on the transition to the HST system.

The change to an HST system may have a significant impact on you. We have highlighted some of the key considerations in moving from PST to HST, as well as some of the transitional issues surrounding the implementation date of July 1, 2010. We will be providing more information as it becomes available.

If you have any questions regarding HST, contact your Smythe Ratcliffe Tax Partner.

HST Impact on Business
HST Impact on Consumers
Low Income Credit
New Housing Rebate
Transitional Rules
Prepayments on Goods or Services
Real Property
Overall Comments

HST Impact on Sectors

Real Estate
Private, Member-Owned Clubs
Rebates for Charities and Non-Profit Organizations
HST Sales Tax Harmonization in BC for Medical Practitioners

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