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Canada: Carbon tax, PST changes for beverages postponed to 2021 (British Columbia)

Canada: Carbon tax, PST changes for beverages

British Columbia announced it will delay to 1 April 2021:

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  • Tax measures to expand registration requirements and eliminate the provincial sales tax (PST) exemption for certain carbonated beverages
  • Carbon tax increases

These measures were originally announced in the province's 2020 provincial budget.

In addition, British Columbia also extended the time limit for certain taxpayers to claim a refund of carbon tax, motor fuel tax, PST, and tobacco tax.

Background

British Columbia proposed several new indirect tax measures in its 2020 provincial budget to:

  • Expand 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 carbon tax rates to align with the federal carbon pricing backstop methodology

The province later announced it would delay these budget proposals as part of its coronavirus (COVID-19) pandemic response plan. These measures were later included in Bill 4, which indicated that the PST registration requirements and PST for carbonated beverages would be effective on a date to be set by regulation, while the carbon tax rate increases were effectively delayed to 1 October 2020 (from 1 April 2020) by a particular remission regulation.

PST changes delayed

British Columbia announced that it will postpone the implementation of the expanded PST registration requirements and the planned elimination of the PST exemption for certain carbonated beverages to 1 April 2021.

Carbon tax increase delayed

British Columbia announced that it will also further delay the carbon tax rate changes to 1 April 2021 and 1 April 2022 (from 1 October 2020 and 1 April 2021, respectively, but originally scheduled for 1 April 2020 and 1 April 2021). As a result, carbon tax rates will remain at their current levels until 31 March 2021.

Extended time limit for claiming a refund

British Columbia will provide an additional 90 days after the end of the provincial state of emergency to submit a refund claim of carbon tax, motor fuel tax, PST or tobacco tax, when the four-year deadline to submit a refund claim expires during the provincial state of emergency (originally declared on 18 March 2020).


Read a September 2020 report prepared by the KPMG member firm in Canada

*$=Canadian dollar

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