BC Budget 2018

BC Budget 2018

It’s that time of year again. Government budget season is upon us.  BC is the second province to bring down a budget this year. The focus of their budget was child care, affordable housing and services.  There was some provincial sales tax (PST) changes announced to help fund these initiatives.   BC imposes a tax on passenger vehicles based on the value of the vehicles.  Graduated tax rates, or luxury tax rates, start where the vehicle is valued at $55,000 at which point there is an additional 1% tax applied at the time of sale of the vehicle for a total tax of 8%.  The current luxury tax rate for vehicles valued at $57,000 and over carries a 10% tax (12% for gifts and private sales).  The BC budget added two additional categories of luxury tax rates as follows:

  •  Vehicles valued between $125,000 and $149,999.99 will be subject to tax at a rate of 15% effective April 1, 2018.
  • Vehicles valued at $150,000 or higher will be subject to tax at a rate of 20% effective April 1, 2018.

Other changes in BC PST are as follows:

  • Online accommodation platforms will be “enabled to collect and remit PST and the municipal and regional district tax (MRDT)”.  BC’s rationale for doing this is in the name of more affordable housing. The effective date of this change will be specified by regulation and will require online accommodation platforms to register as collectors of the BC PST and MRDT.
  • Effective April 1, 2018, the exemption for Avalanche airbag backpacks is expanded to include all Avalanche airbag backpacks.  Prior to this date, only those Avalanche systems that are specifically designed to carry gas cartridges and airbags were exempt from this tax.
  • The budget has decreed that on a date specified by regulation the available uses of the MRDT will be expanded to include affordable housing initiatives.
  • Retailers operating on cruise ships are not required to collect PST on sales and leases during the course of scheduled sailings.  This clarification is made retroactive to April 1, 2013.  Prior to the budget, it appeared that BC requested that retailers operating on cruise ships get written exemption from the province to support selling goods and services exempt of tax.
  • Effective April 1, 2013, the BC government has clarified that software provided in optional as-needed maintenance agreements is taxable.
  • Effective on royal assent, certain commercial rail services are able to use their Tax Payment Agreements to purchase related services in BC.

For further details on any of these budget, items contact B. Hoffmann & Associates at info@bhoffmannassociates.com.

Expertise in commodity tax issues, which extends to recovery, planning and audit defence, empowering clients to develop and implement indirect tax strategies processes and controls for significantly improved bottom line. Extensive experience and credentials in finance, administration and speaking at a number of tax forums, including the CPA Commodity Tax Symposium, the Canadian Tax Foundation, Infonex and the Society of Management Accountants of Ontario. Liaison to both the federal and provincial governments, advising them on sales tax issues that affect a number of industries.