Does your business perform improvements to real property? If so, then you are considered to be a Real Property Contractor for PST purposes.
The definitions of improvements to real property and Real Property Contractor are at the bottom of this post.
A Real Property Contractor (RPC) does not charge PST to its customers on materials and services.
A RPC pays PST on the materials it purchases to fulfill its contracts with customers – unless a specific exemption applies. The PST becomes part of the material expense.
When a RPC (who is GST registered) wants to get a full reimbursement from its customers on materials purchased, the RPC would charge GST on the materials and PST.
Here is an example:
ABC Contracting buys $1,000 of lumber from Home Depot to build new front steps for its client, Miss Brown. ABC Contracting is charged GST and PST on the lumber.
The total Home Depot invoice is $1,120 ($1,000 plus $70 PST plus $50 GST).
ABC Contracting incurs $500 in labour to build the stairs.
ABC Contracting would bill Miss Brown as follows:
Material ($1,000 plus PST of $70) $1,070.00
GST $ 78.50
Total $ 1,648.50
For more information please refer to the Small Business Guide to PST.
Improvements to Real Property
Real property is land and any items permanently attached to land (buildings and structures). Goods that become permanently attached to the land, buildings or structures on installation cease to be personal property at common law upon installation and are called improvements to real property.
You are a real property contractor if, under a contract, you construct buildings, or supply and affix, or install, goods that become improvements to real property or supply and affix, or install, affixed machinery. This includes contractors and subcontractors in the construction industry, as well as other businesses that supply goods with installation services where the goods will become affixed machinery or an improvement to real property or upon installation (e.g. flooring, dishwashers).
Update: It’s now June 27th…have you filed your May PST return?? The deadline is Tuesday, July 2nd because the 30th falls on a Sunday and the 1rst is a holiday. If you are finding monthly filing and paying too onerous, you can request to switch to a different frequency.
Today is the deadline for the first PST filing for businesses registered as monthly filers. Have you remembered to file?
You may want to analyze what reporting period works best for your company. Businesses are eligible for a commission on the PST they collect, to a maximum of $198.00 per filing. If you business collects more than $333 of PST in a given reporting period, you can claim a 6.6% commission to the $198 maximum. If your records are kept up to date and you have your revenue numbers, it may be more lucrative to file monthly in order to maximize your commission. More information.
If you fail to remit PST on or before the due date, you will not be able to claim the commission and may be subject to a penalty and interest.
You can request a change to the frequency, but will have to file for April and May (as monthly returns) before the change comes into effect.
To file and pay your return online, follow this link.
On April 1, 2013, the PST (Provincial Sales Tax) will be returning to BC. A great deal of information is provided on a special website (provided by the Province of BC) dedicated to this transition.
There is also a request form if you would like a consultation with a ministry tax specialist. This can be found here.
Samples from the FAQ section of the website:
When will the PST be re-implemented?
The PST will be reinstated effective April 1, 2013.
Will the PST be re-implemented at 7%?
British Columbia’s provincial sales tax (PST) will be re-implemented effective April 1, 2013 at a general tax rate of seven per cent.
Will all permanent PST exemptions return?
The PST will apply to the same goods and services that were subject to PST prior to the implementation of the HST. All permanent PST exemptions will be re-implemented with the new PST, including:
- all food for human consumption (e.g. basic groceries and prepared food such as restaurant meals);
- most services (e.g. personal services such as haircuts, dry cleaning, funeral services);
- admissions and memberships;
- newspapers and magazines; and
- all permanent PST exemptions for business.
Will people still receive the B.C. HST credit when the PST is re-implemented?
No. The $230 B.C. HST credit will be replaced with the $75 PST credit when the PST is re-implemented.
When will registration information be available?
In December 2012, letters will be sent out to businesses with information on how to register. If you do not receive a letter, or are unsure if you need to register, please contact us.
When will I be able to register my business for the PST?
Online registration for businesses will commence on January 2, 2013, with the PST implementation effective April 1, 2013.
Do I use my old PST registration number?
No, you will need to apply for a new PST registration number.
What is the format of the new PST registration numbers?
When you register for the new PST you will be assigned a new PST number. The new PST numbers will be 11 characters long in the format: PST-1234-5678
How will I register for collecting PST?
- E-services website for businesses with a business number
- www.OneStopBC.ca for new businesses
- Victoria customer service location
- Service BC locations
- Fax number will be posted once the information is available.
- Mailing address will be posted once the information is available.
The Province of BC has posted Small Business Guide to PST. This guide provides a refresher as to how the PST and small businesses work together.
CRA also has information on the transition from HST back to GST/PST including many specific examples:
15. I am an accountant who will be issuing an invoice on or after April 1, 2013 for services to be performed in March 2013. What rate of tax do I charge on these services?
Since the invoice would be issued on or after April 1, 2013, you would charge 5% GST. If you issue the invoice before April 1, 2013, the 12% HST would apply.
16. I am a contractor hired to renovate a kitchen. I finish the renovation work in March 2013, but do not invoice the client until April 16, 2013. What rate of tax would I charge on these services?
Since you would be issuing the invoice on or after April 1, 2013, you would charge 5% GST. If you issue the invoice before April 1, 2013, the 12% HST would apply.
Our advice: if you are a business owner, you may want to plan your purchases to optimize the tax transition period. For example, if you purchase items through a wholesaler, these are PST exempt (you pay only 5% GST). By waiting until April 1, 2013 or later, you save 7% due to the PST exemption. For items purchased from a regular retail source, it would be beneficial to purchase those before April 1, 2013 as you will be able to claim to the full 12% sales tax (HST) as an input tax credit. Items purchased on April 1, 2013 or later would still cost the same total amount, but only the 5% GST would be eligible as an input tax credit.
Please check back for updates related to the return to the PST.