HST Transition...what does it mean for you?

British Columbia will cease to operate a Harmonised Sales Tax (HST) system on April 1, 2013 after transitional proposals were released and relief measures outlined.

The federal Canadian Department of Finance has issued the proposed transitional rules which facilitate the province's elimination of the HST system. The HST had blended the 5% federal Goods and Services Tax (GST) with the 7% provincial sales tax (PST), but was widely criticised. Electors rejected the HST in a referendum last summer, opting instead to return to the GST/PST system.

The BC Finance Department has said that the province will return to the PST as quickly and responsibly as possible, while ensuring businesses can plan their training and systems switch-over effectively to apply the sales tax correctly. Following the referendum in August, 2011, it announced its intention to transition to GST/PST by March 31, 2013.

The proposed transitional rules specify how and when the BC component of the HST would cease to apply to transactions straddling that date. The rules will affect the Excise Tax Act and its related regulations. Comments on the proposals may be submitted by March 19, 2012.

Also released are new measures from the provincial government, which it says will benefit purchasers and builders of new homes. These, the government argues, will help ensure that when a newly constructed home is purchased under the PST, whether built entirely under the HST, entirely under the PST, or partly under HST and partly under the PST, a consistent and equitable amount of tax will be paid by all. The temporary housing transition measures will be in place for two years, until March 31, 2015.

The BC new housing rebate threshold will be increased to CAD850,000 (USD853,000), effective April 1, 2012. This will mean that more than 90% of newly built homes will now be eligible for a provincial HST rebate of up to CAD42,500. The HST does not apply to resale housing. In addition, purchasers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital regional districts priced up to CAD850,000 will now be eligible to claim a provincial grant of up to CAD42,500, effective April 1, 2012.

Finance Minister Kevin Falcon said: “These measures ensure that there is fairness and equity throughout the transition period, and provide a roadmap for the housing industry to make the transition back to PST as smooth as possible. The relief measures announced today are a boost to home buyers purchasing either a new primary residence or a secondary home. At the same time, they help an important job-creator in all parts of the province.”

For additional information or if you need a more detailed explination on the HST transition contact The Aziz Group. 

 

The Aziz Group

604-726-3257

Source tax new.com

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