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Short Term Accommodations Taxed

Effective October 1, 2018, new rules will be in place for short term accommodation providers in British Columbia.

As of that date, unless an owner is listing their property on an online accommodation platform such as Air BNB, or they have an exempt property, they must be registered for Provincial Sales Tax (PST), and if applicable, Municipal Regional and District Tax (MRDT).

The rate of tax for PST is 8%, and the MRDT can be up to 3%. If the provider is registered on an online accommodation platform, the platform will start collecting the taxes for them.

In the past, there were exemptions available if a provider had less than 4 units of housing available. This exemption will be removed when the new rules come into place.

It will be replaced by an exemption from registration for providers who have revenue of less than $2,500 in the last 12 months, can reasonably expect to have revenue of less than $2,500 in the next 12 months, and are not registered on an online accommodation platform.

Long term accommodations are still exempt under the new rules. However, there has been a reduction in the number of days needed to qualify for this exemption.

Previously a unit had to be rented for a month to be considered long term accommodation. Under the new guidelines, the rental property only has to be rented for 27 days to qualify.

Online classified listings and listing services that do not collect tax on behalf of the owner are not online accommodation platforms for the purposes of the new regulations.

Providers may also need to charge Goods and Services Tax on their accommodations. There have been no changes to these regulations.

Ready for PST?

Monday morning will see a Provincial Sales Tax on tangible personal property. But what is that exactly anyways?  Tangible Personal Property (TPP)  is anything you can see, touch, weigh, measure, feel or that is perceptible.  Hmmm that sounds like pretty much everything.

From PST 2012-13 “…Tangible personal property also includes natural or manufactured gas, heat, electricity and affixed machinery, butdoes not include real property. Real property is land and any items permanently attached to land (buildings and structures).

Please note:
An improvement to real property, or a part of an improvement to real property, that is removed from the site at which it is affixed or installed (i.e. to be repaired) is tangible personal property while it is removed…”
So – what does this means?  That most “goods” at the consumer level will be impacted by PST unless it has some specific exemption.
Examples of TPP from my desk:  My water bottle, my computer monitor, my calculator – pretty much everything in my view.

PST exemptions

When PST returns in less than a month, for the most part it will apply to the same goods and services that it did under the old Social Services Tax.  Exemptions included then, and now, will be things like basic groceries, food items, many services (including accounting, for now), admissions, bicycles and magazines, among others.

And if you missed it, you need to apply for a PST number this month, if it applies to you.  So don’t delay.

You can read more about PST at http://www.pstinbc.ca/moving-forward/faqs/ and you can get your PST number by going to the eTaxBC website

Return to PST – update

The Provincial Sales Tax (PST) is returning to British Columbia on April 1, 2013 and it isn’t exactly the same as when it left us.

If you sell taxable products or services, you will need to register before April 1, 2013.   If you rent four rooms or more, sell liquor, if you’re a contractor who bills materials separately you will most likely have to register.

PST will have to be remitted by the end of the month after it is collected, but this time around there are lots of electronic ways to make the payments.

If you have something that spans the March 31, 2013 time frame, there may be some transitional rules that apply.  If you are in that situation, seek professional help.

The new Provincial Sales Act defines what a sale is.  If you’re not sure, ask, or check out the definition.

Important to note that if you have an audit and need to appeal, you ONLY have 90 days to do so.  When you appeal, ALL the facts must be included.  That is important to note because if you miss that deadline, there are no second chances.  And many items can be solved at the audit stage, so try and avoid the need for an appeal.  In short, if you have an audit, hire a professional.

Another unpleasant surprise in this upcoming Act is s.231 – Onus of proof.  This section dictates that you are guilty until proven innocent.

If you lose an audit and decide to appeal, there is no provision to stop collection action even if you are in appeal.  So you have to pay what the auditor says, even if you disagree with it.  Moreover, it is not just a director who is liable, but there may also be assessments against board members and deemed board members.  Does this make you think twice about volunteering for a worthy cause?  Before you do, check their directors and officers insurance.  If it doesn’t cover penalties then it may not cover you in the event of an audit that results in those penalties.

There is a lot more and we strongly encourage you to talk with your CGA professional before March 31, 2013.

The BC Government has lots of information on some of the requirements and there are links below to read some of the information:

General Transitional Rules

What’s taxable under PST

 

BC Returns to PST

From the BC Government website

On April 1, 2013, B.C. will return to a provincial sales tax (PST) system.

The PST is a retail sales tax that is payable when a taxable good or service is acquired for personal use or business use, unless a specific exemption applies.

The PST will generally apply to:

  • The purchase or lease of new and used goods in B.C.
  • Goods brought, sent or delivered into B.C. for use in B.C.
  • The purchase of:Gifts of vehicles, boats and aircraft
    • Software
    • Services to goods such as vehicle maintenance, furniture assembly, computer repair
    • Accommodation
    • Legal services
    • Telecommunication services including internet services and digital and electronic media content such as music and movies

Businesses need to register to collect PST if they sell or lease taxable goods, or provide software or taxable services in the ordinary course of business in B.C.  Businesses may also need to register if they are located outside the province but make sales in B.C.

On January 2, 2013, the online system for registering will begin.  We will post more information as it comes along, but mark January 2, 2013 on your calendar.

The BC Government has online webinars to assist with the transition and there are a number of Bulletins and other forms on their website as well