Businesses face new B.C. PST rules on April 1, 2021

Businesses face new B.C. PST rules on April 1, 2021

Some businesses outside of B.C. must collect PST on sales of goods to B.C. consumers

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Certain businesses may be affected by B.C. provincial sales tax (PST) changes effective April 1, 2021. Among other changes, some businesses located outside of British Columbia will have to start collecting PST on sales of goods to B.C. consumers as well as on certain carbonated beverages. The province is also amending its carbon tax rates effective April 1, 2021. Affected businesses should adjust their processes and systems to reflect these changes.

Background

British Columbia proposed several indirect tax measures in its 2020 provincial budget. These measures were initially announced to be effective July 1, 2020 but were later delayed until April 1, 2021. As a result, businesses have to prepare for these upcoming measures that will:

  • Expand the PST registration requirements for Canadian sellers of goods, along with Canadian and foreign sellers of software and telecommunication services, where specified B.C. revenues exceed $10,000
  • Eliminate the PST exemption for carbonated beverages that contain sugar, natural sweeteners or artificial sweeteners
  • Adjust the carbon tax rates to align with the federal carbon pricing backstop methodology.

PST registration

Canadian businesses located outside of British Columbia that do not solicit orders from consumers in British Columbia will have to register and collect PST if they sell taxable goods, accept orders and deliver the goods to B.C. consumers, effective April 1, 2021. These new rules apply to businesses that meet a $10,000 minimum revenue threshold in the previous 12 months. Currently, Canadian businesses located outside of British Columbia that sell taxable goods, accept orders and deliver the goods to consumers located in British Columbia are generally required to register for PST if they solicit orders from B.C. consumers. Special registration rules may apply if businesses hold inventory in British Columbia.

Similar new rules also apply to Canadian and foreign sellers of taxable software and telecommunications services, effective April 1, 2021.

Carbon tax increases

Businesses should also determine whether they may be affected by B.C. carbon tax rate adjustments to align the rates with the federal carbon pricing backstop methodology. Some businesses will have to collect the carbon tax at the new tax rates while other businesses may see their fuel cost vary. B.C. notes that the Carbon Tax Inventory Notice and Inventory Tax Return should be available as of March 1, 2021. These changes will take effect on April 1, 2021 and April 1, 2022.

For more information, contact your KPMG advisor.

Information is current to March 1, 2021. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour 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 upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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