I attended a workshop on Saturday with Rosemary Anderson of Thorsteinssons. The topic was the new PST in BC legislation. The short version of what I learned? The old PST is not the new PST - none of the jurisprudence will hold up, as the language is sufficiently different that this is a whole new law. And wait for it...
The new law does not include ANY exceptions. Those are all relegated to the regulations. The regulations (with all the exceptions) hadn't been released yet, but it's supposed to be soon.
The same exceptions as before may or may not be in place. The documentation required for those exceptions has yet to be clarified of course.
I made notes during the first half, then switched to Tweeting in the second half. So you'll find the second half tweeted as much as I could absorb because Rosemary was rapid firing stuff at us for the second half which was about 2 hours. The workshop was 3.5 hours. I felt totally overwhelmed by the end of it.
DO NOT ASSUME YOU KNOW THE RULES or that the old rules work the same way. For example, fixed price contracts can now be broken apart into time and materials and PST charged only on materials. But there were some weird quirks so if that's something you need to know about, you may have to connect with the PST experts at the PST offices and GET IT IN WRITING. If someone just told you something, you can't assume that it will hold up. Ask for written rulings. That's why their PST email query system is great. But it's only great if they will actually answer your questions, but at the moment, they can't even do that, because, guess what, they don't know what the rules will be, just like the rest of us.
Apparently they are re-hiring 400 auditors and putting them on the phone lines and query by email to help us get those 418,000 small businesses in BC up and running in a month and 2 days.
I would say there are three things to be concerned about now so you can roll with the punches as they happen in the next few weeks.
1)Set up your system to add PST in BC to be able to charge the tax now, and as you don't know what's exempt, or if there were will be special rates, and yes there will be as hotel accommodation tax will be 8% and liquor will likely be 10% (just heard that from someone) and there's a 2% tax on something to do with construction. Oh yes, and if you sell webinars that are recorded, unless they meet the definition of educational products as defined (definition not yet released) you'll be paying tax on those too. Live webinars, I don't believe so, but not totally sure. I spent an hour with a CGA who works at the Finance Ministry asking about the products I sell on my website, and got absolutely no-where. I'm just assuming for now that I charge PST until I hear different.
2)Be prepared to have a system to self-assess PST on any purchases you haven't paid tax on at the till. Anything that is a right, a view, or a download as anything digital is being taxed and because you download or import it from out of BC, you'll have to self-assess. At the end of May when you file your first return for April, you'll need your books up to current for April in order to self-assess for everything on which you didn't pay PST during the month. You don't get this back, as PST is an end user tax, not a value added tax.
3)Inventory count and % of completion on anything under construction. At March 31, the value of everything you will sell will need to be computed, as when you sell that product, or deal with that completion invoice, you'll need to self-assess on the PST at the date of transition. Do I know how that will work, of course not. If you're in the Oil and Gas industry in the north, you may want to check with your accountant, because it may be a wise move to move your equipment to BC before the end of March because you'll be required to self-assess at 50% of original cost the next time it crosses the border from AB, regardless of fair market value. And gifts, any gifts from out of province will be self-assessable.
Now all three of these suggestions are very simplistic. I'm not able to provide details about how the regulations will affect anyone, as NO-ONE has seen those yet.
As to how QuickBooks handles PST, it's not doing well as the PST paid doesn't pass through to the Time and BIlling system. I'm working on them, but it isn't going to be a quick solution. I did figure out how to set up the PST using the first button on the Wizard, you should be able to create a BC Sales Tax Code S with the combined rates for PST and GST.
My work-around for PST chargebacks to get reimbursed, is to create a PST that requires reimbursement Item under Non Inventory Parts and record the PST paid that is reimbursable to that Item and select that it's billable.
And of course, we're back to the old argument about why are we charging GST on PST, we are NOT doing that, we are charging GST on landed cost which was PST we were charged and can't pass along as it's an end user tax. So charge GST on the PST and recover your costs. And yes, the GST you charge will be higher by the amount of the GST on the PST. That's OK. I've written an article for Intuit ProAdvisor Newsletter that will explain it, but am waiting for approval and hopefully for them to fix the Time and Billing so it sucks the landed cost of PST in with the cost.
Remember the PST paid isn't recoverable, it's an expense, and that includes adding the cost of PST to expenses, cost of goods sold, and to fixed asset purchases. The PST won't pass through with the cost of Fixed Assets if you use the Fixed Asset Item type to keep a list of your asset costs. Check those calculations carefully to make sure you're adding the PST to the cost because that's a landed cost for tax purposes to add to your UCC schedules. Amend the Fixed Asset sub-ledger to pick up those costs or your register for costs won't reconcile to your fixed asset cost register.
Oh yes, you will still be able to purchase exempt supplies if you re-sell, and you'll need a certificate to do that. The only exemptions will be Federal Gov't and First Nations, and I'm not sure if that includes bands that have a treaty.
First Nations will be able to purchase exempt if they have the products delivered to the reserve, and they have to have a card. They can't buy exempt in your store unless it's on a reserve like the mall in North Van.
The Provincial and Municipal gov'ts will pay the tax, no exemption. Don't give anyone an exemption unless you get a copy of a certificate exempting them.
You'll be required to self-assess if you purchase products that are affixed to property at their cost when you install them, as before, but the timing may have changed. Didn't really understand how this has changed, but it has.
The 15 year old will be able to purchase adult size clothing, but there's no explanation of the documentation requirement yet.
And.. get this, your 6 year old, there's no age exemption as yet, can download games to your iPhone thru iTunes, and you may have to self-assess on the digital product. Personally, same goes for Netflix.
And wholesalers, you don't have to register, BUT if you sell anything to employees, you'll need to register, or stop selling to employees and that includes shareholders/owner/managers.
This is a huge CASH GRAB. And it's not the same PST in BC we knew and hated, it's a whole new game and I've not covered everything there is to know by a long shot.
As you find out stuff, post it here, and let's share what we learn. Hopefully we can avoid those 25% penalties for not complying. and there are some 100% penalties too.
If you haven't yet registered, or your clients haven't registered yet, and think you might have to, please make time to do that soon before their systems get overwhelmed with later registrations.
Registering is not the same as having an account #. You may find you need an account # even if you don't register, in order to self-assess or for some other reason I haven't yet figured out.
Here's the link to subscribe to updates and today's update was about telecommunications. You may not think that applies to you, but the definition of telecommunications includes anything digital, like downloads, Software as a Service (Saas), Norton Anti-Virus software downloads, Netflix, Gaming APPs, all the APPs on your iPhone or books you download on your book-reader, though those may be exempt under books...but only if they meet the criteria...and not sure what that is yet.
http://www.sbr.gov.bc.ca/msbr/whats_new/consumer_taxes/whatsnew.htm
The politicians are debating the 400 amendments to the PST Act in the house this week. If you have concerns with what I"m sharing, contact your MLA and discuss the legislation with them.
Apparently these aren't all of the amendments, and they have the right under the law, which passed last May, so it's not going to die on the floor, to amend retroactively until 2016. I heard there may be as many as 200 more amendments to the Act, and we don't have the regulations yet, we just have press releases and notices that may or may not be the final word.
At the bottom of this webpage (link below) there are contact links and more info and webinars, etc.
http://www.sbr.gov.bc.ca/msbr/whats_new/consumer_taxes/whatsnew.htm
