Tax Interpretation Manual: Consumption Tax Rebate and Transition Act - Sections

Part 1 – Definition And Interpretation

Section 1 - Definitions

CTRT - SEC.1/Assessment/Int.

Assessment

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “assessment” was introduced under the Consumption Tax Rebate and Transition Act, 2010. The definition clarifies that assessment includes re-assessment for the purposes of the imposition of tax on designated property. The definition provides the Branch with a clear legislative basis for the long-standing administrative practice of issuing an adjusted assessment when new information is received that shows that the actual tax liability is greater than or less than the amount originally assessed.

CTRT - SEC.1/Boat/Int.

Boat

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “boat” was added as part of that amendment.

In relation to a sale of designated property that is a boat, tax applies to the purchase price of the boat. For the application of tax to items sold with and attached to, stored in or used in connection with the operation of the boat (e.g., life jackets, oars, engines), see CTRT/SEC. 1/PURCHASE PRICE/Int.

CTRT - SEC.1/Consideration/Int.

Consideration

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “consideration” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition establishes that consideration has the same meaning as in Part IX [Goods and Services Tax] of the Excise Tax Act (Canada). The reference to the federal act ensures that the residential energy program, which is a credit or rebate of the provincial portion of the harmonized sales tax (HST), is consistent with the HST.

Effective July 1, 2010, the definition was amended to clarify its meaning in relation to the imposition of the tax on designated property effected on July 1, 2010 under the Consumption Tax Rebate and Transition Act.

CTRT - SEC.1/Designated Property/Int.

Designated Property

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “designated property” was added as part of that amendment.

Refer also to the definitions of “boat” (CTRT/SEC.1/BOAT/Int.) and “vehicle” (CTRT/SEC.1/VEHICLE/Int.).

CTRT - SEC.1/Director/Int.

Director

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “director” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition establishes that director means the person appointed by the Minister of Finance to administer that Act.

CTRT - SEC.1/Energy Allowance/Int.

Energy Allowance

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “energy allowance” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition applies to both the residential energy credit provided by energy suppliers (see CTRT/SEC.9/Int.) and the residential energy rebate provided by the director (see CTRT/SEC.10/Int.).

CTRT - SEC.1/Energy Credit/Int.

Energy Credit

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “energy credit” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition is required for the residential energy program and is the credit provided to eligible persons by suppliers at the time the harmonized sales tax is collected by the supplier (see CTRT/SEC.9/Int.).

CTRT - SEC.1/Energy Product/Int.

Energy Product

Reference: CTRT/REG.2(2)/DEFINITIONS/HEAT/Int.

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “energy product” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition is required for the residential energy program and is the list of products which qualify for the program.

Effective July 1, 2010, the definition was amended by repealing paragraph (d) of the definition of “energy product” and substituting the following:

(d) heating oil, as defined in the Motor Fuel Tax Act, that is coloured in accordance with section 14 of that Act.

The purpose of this amendment was to replace the reference to, and definition of, “light fuel oil” with a new reference to, and definition of, “heating oil” to coincide with legislative amendments to the Motor Fuel Tax Act effected on July 1, 2010.

CTRT - SEC.1/Energy Rebate/Int.

Energy Rebate

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “energy rebate” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition is required for the residential energy program and is the rebate provided by the director to purchasers who do not qualify for the credit from suppliers (see CTRT/SEC.10/Int.).

CTRT - SEC.1/Entry Date/Int.

Entry Date

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition tax on designated property effective July 1, 2010. The definition of “entry date” was added as part of that amendment.

The definition is used in sections of the Act pertaining to payment of tax on designated property brought into the province. The entry date is the day, or part thereof, on which the designated property first entered the province.

CTRT - SEC.1/Exempt Use/Int.

Exempt Use

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “exempt use” was added as part of that amendment.

Designated property that is brought or sent into or delivered in the province for the sole purpose of (a) subsequently transporting it outside of British Columbia for use outside of British Columbia, or (b) being repaired and, after repair, being transported outside of British Columbia for use outside of British Columbia, is exempt from the tax on designated property.

Designated property purchased for resale is not subject to tax because it is not acquired for the consumption or use of the purchaser.

CTRT - SEC.1/Fair Market Value/Int.

Fair Market Value

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “fair market value” was added as part of that amendment.

Fair market value means the price at which the legal and beneficial interest in the designated property would, if unencumbered, be conveyed by a willing seller acting in good faith to a willing buyer acting in good faith in an arm's length retail sale in the open market. See also CTRT/SEC.1/PURCHASE PRICE/Int.

In most cases, the fair market value is the price at which the designated property is purchased. Where that price is unknown, such as with a gift, the fair market value is the price for which the item is normally sold at retail. If the item has been used, the fair market value is the depreciated value, or the price at which it would generally be sold at a retail sale.

CTRT - SEC.1/Federal Act/Int.

Federal Act

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “federal Act” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition was included in the Act for purposes of clarity and readability due to the multiple references in the legislation to the Excise Tax Act (Canada).

CTRT - SEC.1/Purchase Price/Int. - R.2

Purchase Price

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “purchase price” was added as part of that amendment.

Under this definition, the purchase price on which tax applies is the total consideration accepted as the price or on account of the price by a seller on a sale of designated property. The definition clarifies the phrase with respect to other charges, including consideration for property sold with the designated property, and charges for transportation, delivery, interest, finance, service, customs and excise in relation to the designated property.

R.1 Transfers of Designated Property that Includes a Warranty (Issued 2011/1)

If a non-harmonized sales tax (HST) registrant sells designated property and the original manufacturer's warranties are transferred to the new owner, then the sale is considered a single item of commerce (i.e., a single supply of designated property) and all the consideration paid by the purchaser is subject to tax on designated property (TDP) as part of the purchase price.

For example, John purchased a new Honda vehicle from a dealer in November 2010 for $20,000. The Honda came with a standard 3 year warranty. John also purchased an extended 2 year warranty for $1,500. Both warranties are transferable. John is not registered for HST. In March 2011, John sells the Honda to Jane for $15,000 and transfers both warranties to her. TDP is due on the $15,000.

If a non-HST registrant sells designated property and offers an optional warranty, then the sale is considered two separate items of commerce and any additional amount paid for the warranty is not subject to TDP.

For example, Jack sells his car to Jill for $15,000 and offers her the option of paying an additional $200 for which he will fix any problems that occur in the next two months. TDP is due only on the $15,000.

For the purposes of valuation for the provincial portion of the HST, if a person acquires a vehicle from an HST registrant and brings the vehicle into British Columbia, the vehicle and any warranty that comes with the vehicle is a single supply. Any additional or extended warranties are separate items of commerce.

For example, Harry (a BC resident) purchased a new Toyota vehicle from an Alberta dealer on October 15, 2010 for $20,000. The Toyota came with a standard 3 year warranty. Harry also purchased an extended 2 year warranty for the Toyota for $1,500. On October 16, 2010, Harry brings the vehicle into British Columbia. The $20,000 is part of the purchase price, but not the $1,500.

R.2 Assigning Financing Contracts (Issued 2011/03)

If a financing contract for the purchase of designated property is assigned to another person, TDP applies to the total amount paid to the previous owner for his equity in the designated property and to the outstanding amount due to the financing company.

For example, on January 2, 2011, Customer A who is not a harmonized sales tax (HST) registrant purchases a motor vehicle from a dealership for $20,000 and finances the entire $20,000 through Finance Co. On April 1, 2012, the fair market value of the motor vehicle is $15,000 and Customer A owes $10,000 on the motor vehicle to Finance Co. Customer B wants to purchase the motor vehicle from Customer A by paying Customer A $5,000 and assuming the finance contract. Customer B must pay TDP (because Customer A is not an HST registrant) at the rate of 12 percent to the Insurance Corporation of British Columbia when they register the vehicle on the total of $5,000 (Customer A's equity) and $10,000 (the outstanding debt to Finance Co.) for a total tax liability for Customer B of $1,800.

CTRT - SEC.1/Purchaser/Int.

Purchaser

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “purchaser” was added as part of that amendment.

This section defines purchaser with respect to identifying who is liable for the tax on designated property. In general, the purchaser is the person who pays for, or is obliged to pay for, the designated property being purchased:

• for their own consumption, benefit, or use; or
• for another person's consumption, benefit, or use,
• including purchases by an agent on behalf of that person.

CTRT - SEC.1/Registrant/Int.

Registrant

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “registrant" was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition establishes that consideration has the same meaning as in Part IX [Goods and Services Tax] of the Excise Tax Act (Canada), as follows:

“registrant” – means a person who is registered, or is required to be registered, under Subdivision d of Division V [of Part IX of the federal Act];

The definition of registrant is required for the point-of-sale rebates administered by the Canada Revenue Agency [see Part 3 of the Act] and the residential energy credit and rebate program [see Part 4 of the Act]. For the residential energy credit and rebate program, only a supplier who is actually registered under the Excise Tax Act (Canada) is included in the program.

CTRT - SEC.1/Residential Dwelling/Int.

Residential Dwelling

Reference: Regulation 2(3)

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “residential dwelling” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition is required for the residential energy credit and rebate program under Part 4 of the Act, and is included in the regulations (see CTRT/SEC.2(3)/RESIDENTIAL DWELLING/Int.).

The definition of residential dwelling is consistent with the definition of “residential dwelling unit” under the Social Service Tax Act, which provides an exemption of provincial sales tax in relation to fuel, energy and conservation for use in a residential dwelling unit (see SSTA/REG.3.22).

For the purposes of the residential credit and rebate program, residential dwelling includes boats, campers and similar recreational vehicles provided they are used for a residential non-commercial purpose.

CTRT - SEC.1/Residential Use/Int.

Residential Use

Interpretation (Issued: 2010/10)

 Effective May 1, 2010, a definition of “residential use” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition is required for the residential energy credit and rebate program under Part 4 of the Act, and is included in the regulations (see CTRT/SEC.2(3)/RESIDENTIAL USE/Int.).

The definition of residential dwelling provides clarity that a residential dwelling, or a part of a residential dwelling, used for a business, commercial or industrial use does not qualify as residential use.

CTRT - SEC.1/Sale/Int.

Sale

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “sale” was added as part of that amendment.

In relation to designated property, a sale requires a price or other consideration.

R.1 Amalgamations (Issued: 2010/11)

Under the Act, tax is imposed on a sale of designated property. "Sale" includes a transfer of title or possession of designated property for a price or other consideration.

However, if designated property is transferred from a predecessor company to an amalgamated company, then the transfer is not a "sale" for the purposes of the Act if the amalgamation:

1. is formed under Canadian legislation such as the British Columbia Business Corporations Act or the federal Canada Business Corporations Act (only amalgamations formed under a Canadian statute are eligible); and
2. meets continuation requirements.

This tax application includes amalgamations formed under a plan of arrangement.

An amalgamation, however, does not absolve any liability for unpaid taxes, which may exist prior to the amalgamation, and an audit of an amalgamated company must consider any unpaid taxes of the parties to the amalgamation prior to the amalgamation.

Continuation requirements

For corporate amalgamations, continuation is determined on the basis of the corporate law of the jurisdiction in which the predecessor corporations are amalgamated. If the corporate law provides that the predecessor corporations involved in the amalgamation are not continued, the resulting corporation will not be entitled to the exemption.

To show continuation, the predecessor corporations that held title or registered rights to use or occupy the designated property must continue into the amalgamated corporation and all of the property, interests, rights, and liabilities of the predecessor corporations must become those of the amalgamated corporation.

The taxpayer must be able to provide evidence that the predecessor corporations continue into the amalgamated corporation. Where this criterion is not met, regardless of whether or not there was a change in the economic interest, or that the transactions were exempt from income tax, the tax on designated property will apply to the transfer of designated property to the amalgamated corporation.

The taxpayer must be able to produce some or all of the following:

1. the amalgamation agreement,
2. the articles of amalgamation,
3. any court order approving the amalgamation,
4. a Certificate of Amalgamation issued by the applicable corporate registry, or
5. other relevant documents.

R.2 Transfers of Designated Property as Part of a Winding Up, Dissolution, or Liquidation of a Business (Issued 2011/11)

Under the Act, tax is imposed on a sale of designated property. "Sale" includes a transfer of title or possession of designated property for a price or other consideration.

If title to designated property is transferred:

1. to a shareholder from a corporation as part of the winding up, dissolution, or liquidation of the corporation; and
2. the shares of the shareholder are reduced in value or cancelled as a result of the transfer,

then consideration has been paid for the transfer of the designated property.

Therefore, a sale has occurred within the meaning of the Act and the shareholder is required to pay tax on the value of the designated property transferred.

R.3 Designated property sold to a co-owner (Issued: 2010/12)

Designated property (a vehicle, boat or aircraft) may be owned by more than one person. Under the Act, "sale" includes a transfer of title or possession of designated property for a price or other consideration. When one owner transfers title to, or possession of, the property to another owner for consideration, a sale of designated property occurs.

For example, a vehicle is owned jointly by two friends; each friend owns 50 percent of the vehicle. The vehicle is valued at $6,000. One friend sells her ½ interest in the vehicle to the other friend for $3,000. As a result, tax on designated property at the rate of 12 percent is due on the ½ interest of the designated property calculated on a value of $3,000. The tax payable by the purchaser is $360.

In the case where the seller is a non-registrant and the purchaser is an HST registrant, tax on designated property is payable per the above example.

In the case where the seller is an HST registrant and the purchaser is a non-registrant, the sale is a taxable supply by the registrant under Part IX of the Excise Tax Act (Canada). Accordingly, tax on designated property does not apply. The harmonized sales tax (HST) applies to the proportional interest in the vehicle, calculated on the value of the consideration for the purchase.

CTRT - SEC.1/Sales Tax Agreement/Int.

Sales Tax Agreement

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “sales tax agreement” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition is required for the point-of-sale rebates administered by the Canada Revenue Agency [see Part 3 of the Act] and refers to the Comprehensive Integrated Tax Coordination Agreement.

CTRT - SEC.1/Supply/Int.

Supply

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “supply” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition is required for the point-of-sale rebates administered by the Canada Revenue Agency [Part 3 of the Act] and the residential energy credit and rebate program [ Part 4 of the Act] and ensures that both are coordinated with the harmonized sales tax.

The definition establishes that supply has the same meaning as in Part IX [Goods and Services Tax] of the Excise Tax Act (Canada), as follows:

“supply” – means, subject to sections 133 and 134 [of the federal Act], the provision of property or a service in any manner, including sale, transfer, barter, exchange, licence, rental, lease, gift or disposition.

CTRT - SEC.1/Tax/Int.

Tax

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “tax” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The Act defines tax to include all penalties and interest that are or may be added to tax under the Act.

The definition is consistent with the definition of tax in provincial consumption tax statutes (see SSTA/SEC.1/TAXES/Int.-R.1).

CTRT - SEC.1/Taxable Supply/Int.

Taxable Supply

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “taxable supply” was introduced under Bill 9, Consumption Tax Rebate and Transition Act, 2010. The definition is required for the point-of-sale rebates administered by the Canada Revenue Agency [Part 3 of the Act] and the residential energy credit and rebate program [ Part 4 of the Act] and ensures that both are coordinated with the harmonized sales tax.

The definition establishes that taxable supply has the same meaning as in Part IX [Goods and Services Tax] of the Excise Tax Act (Canada), as follows:

“taxable supply” – means a supply that is made in the course of a commercial activity.

CTRT - SEC.1/Taxable Value/Int.

Taxable Value

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “taxable value” was added as part of that amendment.

In relation to designated property, taxable value means the purchase price of the designated property unless the designated property is subject to Section 24 [taxable value if depreciation] or Section 25 [taxable value if trade-in allowed on purchase].

CTRT - SEC.1/Use/Int.

Use

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “use” was added as part of that amendment.

In relation to designated property, all items acquired for use, as defined, are subject to tax. Designated property acquired for an “exempt use”, as defined in the Act (see CTRT/SEC.1/EXEMPT USE/Int.), does not constitute taxable use.

CTRT - SEC.1/Vehicle/Int.

Vehicle

Interpretation (Issued: 2010/10)

Bill 9, Consumption Tax Rebate and Transition Act, 2010, amended the Consumption Tax Rebate and Transition Act to consolidate provisions and clarify the imposition of tax on designated property effective July 1, 2010. The definition of “vehicle” was added as part of that amendment.

This definition of vehicle, except for paragraph (d), is consistent with the definition of “vehicle” both in the Social Service Tax Act (see SSTA/SEC.1/VEHICLE/Int.) and Motor Vehicle Act.

Paragraph (d) of the definition of vehicle in the Act excludes mobility aids as defined in the Motor Vehicle Act Regulations (s 44.1), as follows:

"mobility aid" – means a device, including a manual wheelchair, electric wheelchair and scooter, that is used to facilitate the transport, in a normally seated orientation, of a person with a physical disability.

Accordingly, mobility aids as described are not subject to the tax on designated property.

Section 2 – Taxable Supply Made In British Columbia

CTRT - SEC. 2/Int.

Supply Made In British Columbia

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision applies the federal place of supply rules to the Act for the purposes of the point-of-sale rebates administered by the Canada Revenue Agency [Part 3 of the Act] and the residential energy credit and rebate program [Part 4 of the Act].

Section 144.1 [supply in a province] of the Excise Tax Act (Canada) is as follows:

For the purposes of this Part, a supply is deemed to be made in a province if it is made in Canada and is, under the rules set out in Schedule IX, made in the province, but is deemed to be made outside the province in any other case and a supply made in Canada that is not made in any participating province is deemed to be made in a non-participating province.

Part 2 - Repeal Of The Social Service Tax Act

Section 3 – Repeal

CTRT - SEC.3/Int.

Social Service Tax Act

Interpretation (Issued: 2010/10)

Effective July 1, 2014, this provision repeals the Social Service Tax Act. The provision is not currently in force.

With the implementation of the harmonized sales tax, the provincial sales tax ceased to apply to goods and services purchased on or after July 1, 2010 as well as goods and services brought into British Columbia on or after July 1, 2010. The Social Service Tax Act will remain in force until 2014 to allow for audits, assessments and appeals to be completed in an orderly manner.

The date of repeal is July 1, 2014 because the standard assessment period is four years.

Part 3 - Point-Of-Sale Rebates

Part 3 - General

CTRT - SEC.4-8/R.1

History Of The Part

Reference: Regulations 15-16; Tax Information Notice HST Notice #2

Interpretation (Issued: 2010/10)

Sections 5 to 8 of the Consumption Tax Rebate and Transition Act authorize the point-of-sale rebates administered by the Canada Revenue Agency (CRA) as required by the Comprehensive Integrated Tax Coordination Agreement (CITCA). The CITCA contains the terms and conditions under which British Columbia participates in the harmonized sales tax (HST) with the federal government.

The CITCA allows British Columbia to provide point-of-sale rebates of the provincial portion of the HST on designated items (i.e., “qualifying property”, see CTRT/SEC.4(1)/Int.) that in total are valued up to five percent of the federal goods and services tax base in British Columbia. The CITCA requires that the province provide legislative authority for these rebates even though the rebates are administered by the CRA.

Section 4 – Definitions And Interpretation For This Part

CTRT - SEC.4(1)/Int.

Federal Minister

Reference: Regulations 15-16; Tax Information Notice HST Notice #2

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “federal minister” was introduced under the Consumption Tax Rebate and Transition Act for the purpose of the point-of-sale rebates administered by the Canada Revenue Agency.

“Federal minister” is the minister of the Government of Canada responsible for the administration and enforcement of the harmonized sales tax.

CTRT - SEC.4(1)/Int.

Qualifying Property

Reference: Regulations 15-16; Tax Information Notice HST Notice #2

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “qualifying property” was introduced under the Consumption Tax Rebate and Transition Act for the purpose of the point-of-sale rebates administered by the Canada Revenue Agency.

Qualifying property is the list of items that are eligible for the point-of-sale rebate of the provincial portion of the harmonized sales tax (HST). Those items, subject to meeting the definitions and circumstances prescribed under Regulation 15 and Regulation 16, are:

(a) books,

(b) children’s clothing and footwear,

(c) children’s diapers,

(d) children’s car seats and car booster seats,

(e) feminine hygiene products, and

(f) motor fuels.

The point-of-sale rebate of the seven percent British Columbia component of the HST for items (b), (c) regarding cloth diapers, (d), (e) and (f) is similar to the previous sales tax treatment for those items under the Social Service Tax Act.

The point-of-sale rebate of the seven percent British Columbia component of the HST for item (a) is similar to the provincial point-of-sale rebate in the other HST participating provinces (Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador) for that item.

CTRT - SEC.4(1)/Int.

Supplier

Reference: Regulations 15-16; Tax Information Notice HST Notice #2; Section 123 Excise Tax Act (Canada)

Interpretation (Issued: 2010/10)

Effective May 1, 2010, a definition of “supplier” was introduced under the Consumption Tax Rebate and Transition Act for the purpose of the point-of-sale rebates administered by the Canada Revenue Agency.

The definition establishes that supplier has the same meaning as in Part IX [Goods and Services Tax] of the Excise Tax Act (Canada), as follows:

“supplier” – in respect of a supply, means the person making the supply.

CTRT - SEC.4(2)/Int.

Resident In British Columbia

Reference: Regulations 15-16; Tax Information Notice HST Notice #2; Section 132.1 Excise Tax Act (Canada)

Interpretation (Issued: 2010/10)

For the purposes of the point-of-sale rebates, subsection (2) adopts the federal rules with respect to when a person is deemed to be a resident in British Columbia.

If the conditions under s. 132.1 [person resident in a province] of the Excise Tax Act (Canada) are met, the person is deemed to be a resident of British Columbia and is captured by the rebate provisions of Sections 4 to 8 of the Consumption Tax Rebate and Transition Act.

Section 132.1 of the Excise Tax Act (Canada) is as follows:

(1) For the purposes of this Part, other than determining the place of residence of an individual in the individual’s capacity as a consumer, a person is deemed to be resident in a province if the person is resident in Canada and

(a) in the case of a corporation, the corporation is incorporated or continued under the laws of that province and not continued elsewhere;

(b) in the case of a partnership, an unincorporated society, a club, an association or an organization, or a branch thereof, the member, or a majority of the members, having management and control thereof is or are resident in that province;

(c) in the case of a labour union, it is carrying on activities as such in that province and has a local union or branch in that province; or

(d) in any case, the person has a permanent establishment in that province.

(2) In this section and Schedule IX, “permanent establishment” of a person means

(a) in the case of an individual, the estate of a deceased individual or a trust that carries on a business (within the meaning assigned by subsection 248(1) of the Income Tax Act), a permanent establishment (as defined for the purposes of Part XXVI of the Income Tax Regulations) of the person;

(b) in the case of a corporation that carries on a business (within the meaning assigned by subsection 248(1) of that Act), a permanent establishment (as defined for the purposes of Part IV of those Regulations) of the person;

(c) in the case of a particular partnership

(i) a permanent establishment (as defined for the purposes of Part XXVI of those Regulations) of a member that is an individual, the estate of a deceased individual or a trust where the establishment relates to a business (within the meaning assigned by subsection 248(1) of that Act) carried on through the partnership,

(ii) a permanent establishment (as defined for the purposes of Part IV of those Regulations) of a member that is a corporation where the establishment relates to a business (within the meaning assigned by subsection 248(1) of that Act) carried on by the particular partnership, or

(iii) a permanent establishment (within the meaning of this subsection) of a member that is a partnership where the establishment relates to a business (within the meaning assigned by subsection 248(1) of that Act) carried on by the particular partnership; and

(d) in any other case, a place that would be a permanent establishment (as defined for the purposes of Part IV of those Regulations) of the person if the person were a corporation and its activities were a business for purposes of that Act.

(3) A prescribed person, or a person of a prescribed class, is deemed, under prescribed circumstances and for prescribed purposes, to have a permanent establishment in a prescribed province.

Section 5 – Rebate For Supply Made In British Columbia Of Qualifying Property

CTRT - SEC.5/Int.

Rebate For Supply Made In British Columbia

Reference: Section 4(1) “Qualifying property”; Regulations 15-16; Tax Information Notice HST Notice #2; Section 165(2) Excise Tax Act (Canada)

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision provides the point-of-sale rebates on qualifying purchases made in British Columbia. The rebates are provided by the supplier at the point-of-sale, i.e., the retailer credits the seven percent British Columbia component of the harmonized sales tax (HST) and collects the five percent federal component of the HST on the item. Crediting purchasers in this manner does not affect a retailer’s ability to claim input tax credits on its business inputs. Also, there is no requirement for the retailer to indicate the point-of-sale rebate on its invoices or to indicate the point-of-sale rebate amounts credited to the purchaser on its GST/HST form.

In the event that a purchaser does pay the British Columbia component of the HST on the purchase of a designated item, the purchaser is entitled to apply to the Canada Revenue Agency, in that agency’s required form and manner, within four years of the day that the tax became payable, for a rebate of the British Columbia component of the HST paid.

The point-of-sale rebate of the British Columbia component of the HST is available on any supply of a designated item where the British Columbia component of the HST applies. Accordingly, the rebate is available to purchasers:

• at retail establishments located in British Columbia;
• on Internet purchases of designated items;
• on supplies of designated items made at any point in the distribution chain, including supplies made by producers, wholesalers and distributors.

Section 6 – Rebate On Imported Qualifying Property

CTRT - SEC.6/Int.

Rebate On Imported Qualifying Property

Reference: Section 4(1) “Qualifying property”; Regulations 15-16; Tax Information Notice HST Notice #2; Section 212.1 Excise Tax Act (Canada)

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this section provides the point-of-sale rebates on imports of qualifying property (see CTRT/SEC.4(1)/Int.) into British Columbia.

A person importing a designated item into British Columbia is not required to pay the British Columbia component of the harmonized sales tax (HST) in respect of the importation. The current goods and services tax treatment continues to apply for the five percent federal component of the HST in respect of an importation.

Section 7 – Rebate On Qualifying Property Brought Into British Columbia

CTRT - SEC.7/Int.

Rebate On Qualifying Property Brought Into British Columbia

Reference: Section 4(1) “Qualifying property”; Regulations 15-16; Tax Information Notice HST Notice #2; Section 218.1 and Division IV.1 of Part IX of the Excise Tax Act (Canada)

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this section provides the point-of-sale rebate on qualifying property (see CTRT/SEC.4(1)/Int.) brought into British Columbia in the circumstances set out in paragraphs (a) to (d).

A person bringing a designated item into British Columbia from another province is not required to pay the British Columbia component of the harmonized sales tax in respect of the bringing in.

Section 8 – Deduction Of Payments

CTRT - SEC.8 (1) And (2)/Int.

Deduction Of Payments

Reference: Section 4(1) “Qualifying property”; Tax Information Notice HST Notice #2

Interpretation (Issued: 2010/10)

This provision provides that amount of point-of-sale rebates provided by the province is deducted from the amount payable to the province of British Columbia under the Comprehensive Integrated Tax Coordination Agreement.

Part 4 - Residential Energy Credit And Rebate

Part 4 – General

CTRT - SEC.9-18/R.1

History Of The Part

Reference: Regulations 2-12; Bulletin HST Notice #5, Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Sections 9 to 18 of the Consumption Tax Rebate and Transition Act authorize the residential energy credit and rebate program administered by government of British Columbia.

Effective May 1, 2010, the government is providing a provincially administered energy allowance of the British Columbia component of the harmonized sales tax (HST) on residential energy, including electricity, natural gas, heating fuel, heat, steam, kerosene, propane, firewood and pellets purchased for residential use. The energy allowance is equal to the provincial component of the HST (12 percent) paid or payable on residential energy, excluding service, administration and other prescribed charges.

For most residential consumers, the energy allowance is provided as an energy credit directly by energy suppliers on their utility bills. Residential consumers who purchase energy for both residential and non–residential use (e.g., mixed use) that is not separately metered, or energy that is not delivered by their energy supplier to the residence, will not receive the energy credit on their utility bills but may apply to the provincial government for a rebate.

The residential energy credit and rebate program parallels the previous exemption of provincial sales tax (PST) on purchases of electricity, natural gas, fuel oil, wood, steam heat and heat used for heating a residential dwelling under Sections 74(b) and Section 74(c) of the Social Service Tax Act and Sections 3.7, Section 3.32 and Section 3.32.1 of the Social Service Tax Act Regulations. The acquisition of an eligible energy product for a purpose other than residential use in a residential dwelling is subject to tax.

Section 9 – Point-Of-Sale Energy Credit

CTRT - SEC.9(1)/Int. - R.2

(1) Provision Of Energy Credit

Reference: Section 1 energy credit, energy product, federal act, registrant, residential dwelling, residential use, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5

Interpretation (Issued: 2010/10)

Effective May 1, 2010, suppliers of energy products are required, in certain circumstances, to provide a credit of the provincial portion of the harmonized sales tax (HST) (7 percent), as calculated under the regulations (see Regulation 6), to persons purchasing energy products for residential use in a residential dwelling. Those circumstances are:

• the energy supplier is an HST registrant;
• the supply occurs in British Columbia and is subject to HST;
• the purchaser is required to pay HST on the purchase;
• the purchaser is acquiring the energy product for residential use in a residential dwelling (see Regulation 2 for definitions of ‘residential use’ and ‘residential dwelling’); and
• the energy supplier delivers or provides the energy product to the residential dwelling (see also Regulation 3).

The energy credit is provided only on an energy product to be used entirely (i.e., 100 percent) for residential purposes in the residential dwelling.

The time at which the credit must be provided is set out in Section 9(2).

The circumstances in which the credit must not be provided by suppliers are set out in Section 9(3) and Regulation 3. Those circumstances include

• the energy product is wood or pelletized fuel, and
• the energy product is not delivered or provided to the residential dwelling.

The requirement to provide the credit does not relieve the energy supplier from the obligation to account for the full 12 percent HST on their federal GST/HST returns. Accordingly, the province will reimburse energy suppliers for the total amount of eligible credits they provide (see Section 14).

R.1 Separate Delivery Charges (Issued: 2011/03)

In some cases, residential customers in large strata complexes purchase an energy product such as natural gas from one energy supplier while another energy supplier delivers the energy product to the strata complex. The customers receive a separate invoice for the delivery of the energy product. The energy supplier delivering the energy product in this circumstance must provide the residential energy credit on the delivery charges for the energy product to the residential customers.

Section 9(1)(b) of the Consumption Tax Rebate and Transition Act states "a registrant, on behalf of the government, must provide a credit to a person in respect of a taxable supply in the amount determined in accordance with the regulations" if among other things " the taxable supply is a supply of an energy product other than wood or pelletized fuel." Supply means the provision of property or a service in any manner under Section 1 of the Act. The provision of delivery charges for the energy is considered to be a supply for the purpose of an energy supplier providing the residential energy credit.

Regulation 6 describes the residential energy credit and rebate as equal to the provincial component of the harmonized sales tax (HST) paid on eligible consideration. Eligible consideration is the amount payable for the purchase of an energy product for residential use in a residential dwelling other than amounts payable for certain specified charges. Eligible consideration includes delivery charges.

R. 2 Societies (Issued: 2011/03)

Purchasers eligible for the residential energy credit from an energy supplier include any person purchasing energy products, other than wood or pelletized fuel, solely for residential use in a residential dwelling including homeowners, residential tenants, landlords, condominium corporations, or operators of residential care facilities.

However, there may be circumstances where an energy product is purchased by a non-profit society in which the society redistributes that energy product to residential dwellings. In this case, the society may receive an energy credit directly from the energy supplier instead of the residents applying for a rebate from the ministry.

These non-profit societies are similar to strata corporations that purchase energy on behalf of residential customers and pass on the cost to residential customers. In this instance, the ministry allows the credit to be provided to an account in the name of these types of strata corporations where the energy being purchased is solely for residential use.

Often a society is established as there would be no other means of receiving the energy. As a result, residential customers do not have an opportunity to choose to purchase their energy from a GST/HST registered supplier and receive the credit directly. Consequently, a society is not acting as a commercial reseller of energy in direct competition with other suppliers of the same energy.

An energy supplier is to provide a residential energy credit to a society under the following circumstances:

• The society must be an incorporated society under the Society Act of British Columbia.
• One of the primary purposes of the society must be the redistribution of energy to residential dwellings.
• The society must own their distribution system (e.g., poles, cables, conduits, meters, etc).
• The energy must be only provided to 100% residential dwellings by the society (no mixed use dwellings).
• The society must receive compensation for the energy product from the owners or tenants of the residential dwellings.
• The society must not be a GST/HST registrant. If the society becomes a registrant, they will be consider an energy supplier for the purposes of Section 9 of the Act and will not be able to receive the residential energy credit.

CTRT - SEC.9(2)/Int.

(2) Provision Of Energy Credit

Reference: Section 1 energy credit, energy product, federal act, registrant, residential dwelling, residential use, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5

Interpretation (Issued: 2010/10)

Effective May 1, 2010, the energy credit must be provided by the supplier at the time the harmonized sales tax is payable by the purchaser on the supply of the energy product.

For most residential consumers, the energy credit will be provided by energy suppliers on consumers’ utility bills.

CTRT - SEC.9(3)/Int.

(3) Energy Credit Not To Be Provided

Reference: Section 1 energy credit, energy product, federal act, registrant, residential dwelling, residential use, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5

Interpretation (Issued: 2010/10)

Effective May 1, 2010, in certain circumstances, suppliers of energy products must not provide a credit of the provincial portion of the harmonized sales tax (HST) to persons purchasing energy products for residential use in a residential dwelling.

Those circumstances are:

(1) the purchaser may claim an input tax credit under Part IX [Goods and Services Tax] of the Excise Tax Act (Canada) with respect to the purchase; or

(2) the purchaser may be paid a rebate under section 259 of the Excise Tax Act with respect to the purchase.

The above two circumstances are in addition to those listed under Section 9(1).

In item (1) above, “input tax credit” means a credit that GST/HST registrants can claim to recover the GST/HST they paid or payable for goods and services they acquired, imported into Canada, or brought into a participated province for use, consumption, or supply in the course of their commercial activities.

In item (2) above, “a rebate under section 259 of the Excise Tax Act” means a rebate of the Goods and Services Tax (GST) or federal part of the HST, or a rebate of the provincial part of the HST, paid on eligible purchases and expenses. Purchasers eligible for a rebate under section 259 of the Excise Tax Act are: public service bodies (including municipalities and other eligible local government entities); eligible school authorities, universities, public colleges, and hospital authorities; and eligible registered charities and qualifying non–profit organizations.

Section 10 – Energy Rebate Paid By Director

CTRT - SEC.10(1)/Int.

(1) (A) To (D) – PERSONS ELIGIBILE FOR A REBATE

Reference: Section 1 director, energy credit, energy product, energy rebate, federal act, residential dwelling, residential use, tax, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, in certain circumstances, the director will pay a rebate of the provincial portion of the harmonized sales tax (HST), as calculated under the regulations (see Regulation 6), to persons purchasing energy products for residential use in a residential dwelling.

Those circumstances are:

(1) the person is the recipient of a taxable supply;

(2) a portion of the energy product is for residential use in a residential dwelling;

(3) the supply occurs in British Columbia and is subject to HST;

(4) the person has paid HST on the purchase; and

(5) the person has not received a credit from the supplier.

In item (1) above, “recipient” is defined in section 123(1) of the Excise Tax Act (Canada), and means the person liable to pay the consideration under an agreement or the person whom the supply is made.

In item (2) above, “residential use” and “residential dwelling” are defined in Regulation 2(3).

In item (3) above, “taxable supply” is defined in section 123(1) of the Excise Tax Act, and means a supply that is made in the course of a commercial activity.

In item (4) above, the HST paid on the purchase means the tax payable under section 165(2) [Tax in participating province] of the Excise Tax Act, as follows:

Subject to this Part [Part IX: Goods and Services Tax], every recipient of a taxable supply made in a participating province shall pay to Her Majesty in right of Canada, in addition to the tax imposed by subsection (1) [imposition of goods and services tax], tax in respect of the supply calculated at the tax rate for that province on the value of the consideration for the supply.

In item (5) above, “credit” means the point-of-sale energy credit under section 9 of the Consumption Tax Rebate and Transition Act.

Diplomats, members of the consular corps and members of visiting forces are not eligible for the residential energy rebate as they are entitled to claim a rebate from the Canada Revenue Agency for any HST paid (see Regulation 3(d)).

The director will not provide an energy rebate where an energy product was or is being used for an unlawful activity.

CTRT - SEC.10(2)/Int.

Director Must Fund Energy Rebate

Reference: Section 1 director, energy credit, energy product, energy rebate, federal act, residential dwelling, residential use, tax, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, an energy rebate in an amount determined in accordance with the regulations (see Regulation 6) must be paid out of the consolidated revenue fund to a person entitled to a rebate under this section.

CTRT - SEC.10(3)/Int.

(3) Application To Claim The Energy Rebate

Reference: Section 1 director, energy credit, energy product, energy rebate, federal act, residential dwelling, residential use, tax, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision sets out the process for a person to apply for a residential energy rebate from the director, as well as the information and records required with the application to satisfy the director that the applicant is entitled to the rebate.

The rebate application must be signed by the person who paid the harmonized sales tax on the energy product purchased.

CTRT - SEC.10(4)/Int.

(4) Application For Rebate – Corporation

Reference: Section 1 director, energy credit, energy product, energy rebate, federal act, residential dwelling, residential use, tax, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, where an applicant for an energy rebate is a corporation, the rebate application must be signed by a director or authorized employee of that corporation.

CTRT - SEC.10(5)/Int.

(5) – Energy Rebate Paid By Director

Reference: Section 1 director, energy credit, energy product, energy rebate, federal act, residential dwelling, residential use, tax, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision sets out the minimum rebate amount in an application for reimbursement.

The minimum rebate amount to a person claiming a rebate is $10 per rebate claim (i.e., not per item claim). This minimum parallels the $10 minimum reimbursement provided under the Consumption Tax Rebate and Transition Act to energy suppliers applying for a reimbursement of energy credits provided by the supplier (see Section 15), and the minimum tax refund under the Hotel Room Tax Act, Motor Fuel Tax Act, Carbon Tax and Tobacco Tax Act.

CTRT - SEC.10(6)/Int.

(6) (A) To (C) – Energy Rebate Not To Be Paid

Reference: Section 1 director, energy credit, energy product, energy rebate, federal act, residential dwelling, residential use, tax, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, the provision establishes that no energy rebate is payable by the director

(1) to the extent that the purchaser may claim an input tax credit under Part IX [Goods and Services Tax] of the Excise Tax Act (Canada) with respect to the purchase;

(2) to the extent that the purchaser may be paid a rebate under section 259 of the Excise Tax Act with respect to the purchase; or

(3) if the application for the rebate is made more than two years after the date on which the harmonized sales tax (HST) was paid with respect to the purchase.

In item (1) above, “input tax credit” means a credit that GST/HST registrants can claim to recover the GST/HST they paid or payable for goods and services they acquired, imported into Canada, or brought into a participated province for use, consumption, or supply in the course of their commercial activities.

In item (2) above, “a rebate under section 259 of the Excise Tax Act” means a rebate of the GST or federal part of the HST, or a rebate of the provincial part of the HST, paid on eligible purchases and expenses. Purchasers eligible for a rebate under section 259 of the Excise Tax Act are: public service bodies (including municipalities and other eligible local government entities); eligible school authorities, universities, public colleges, and hospital authorities; and eligible registered charities and qualifying non–profit organizations.

Section 11 – Repayment Of Energy Allowance If Change In Use

CTRT - SEC.11(1) And (2)/Int.

(1) And (2) – Repayment Of Energy Allowance If Change In Use

Reference: Section 1 energy allowance, energy product, residential dwelling, residential use, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision sets out the requirement that a person must repay to the province some or all of an amount of energy credit provided by a supplier or an energy rebate paid by the director if the person uses some or all of the energy on which they received the credit or rebate for a purpose other than for residential use in a residential dwelling.

“Residential use” and “residential dwelling” are defined in Regulation 2(3).

The time limit in which a person must repay an amount to the government under subsection 11(2) is set out under Regulation 7(1).

The section ensures that a person who receives a credit or rebate on energy products purchased for residential use in a residential dwelling does not retain the benefit if the energy is used for another purpose.

Section 12 – Adjustment Of Energy Allowance If Consideration Reduced

CTRT - SEC.12(1) To (3)/Int.

(1) To (3) – Adjustment Of Energy Allowance If Consideration Reduced

Reference: Section 1 consideration, energy credit, energy product, energy rebate, registrant, residential dwelling, residential use, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision requires suppliers of energy products to adjust the amount of an energy credit provided to purchasers if the consideration for the energy product is reduced subsequently. Consideration may be reduced resulting from a coupon, voucher or rebate offered or acquired by the purchaser on the energy product, or a retroactive rate change provided on the energy product by the supplier.

Similarly, if a person has been paid an energy rebate by the director and the consideration for the energy product is reduced subsequently, the person must repay to the province the portion of the rebate attributable to the reduction in consideration. The director has the authority to deduct from the amount of an energy rebate payable to a person the portion of the rebate attributable to the reduction in consideration.

As the harmonized sales tax (HST) is payable on the consideration, if the consideration is reduced then the HST payable is also reduced. This provision ensures that a person does not receive a credit or rebate in excess of the amount they are entitled to receive as a result of the consideration for an energy product being reduced by the supplier.

The time limit in which a person must repay an amount to the government under subsection 12(2)(b) of the Act is set out under Regulation 7(2).

Section 13 – Reimbursement Of Energy Credit

CTRT - SEC.13(1) And (2)/Int.

(1) And (2) – Reimbursement Of Energy Credit

Reference: Section 1 director, energy credit, registrant, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision provides for the reimbursement by the government to energy suppliers who provide an energy credit to purchasers of energy products under Section 9 of the Consumption Tax Rebate and Transition Act (Act). The reimbursement is equal to the amount of credits provided by the supplier to persons entitled to the credits.

A supplier must claim the reimbursement in accordance with Sections 14 and 15 of the Act and Regulation 5.

This provision also provides for the additional reimbursement of energy suppliers with respect to recoveries to which section 231(3) of the Excise Tax Act (Canada) applies. Under that federal provision, an energy supplier who made a deduction for a bad debt, and subsequently makes a recovery of the bad debt, must remit to the Canada Revenue Agency the harmonized sales tax (HST) applicable to that recovery. Upon remitting that recovered HST, the supplier may claim reimbursement of the amount from the ministry.

The formula to calculate the amount of reimbursement to which an energy supplier is entitled in respect of a taxable supply for the purposes of subsection 13(2) of the Act is set out under Regulation 8.

Under the Excise Tax Act, energy suppliers are required to remit 100 per cent of the HST payable on supplies of energy products including the provincial portion of the HST. This provision ensures that energy suppliers are not out of pocket as a result of providing the energy credit on behalf of government.

Section 14 – Claim For Reimbursement

CTRT - SEC.14/Int.

Claim For Reimbursement

Reference: Section 1 director, energy credit, registrant; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision sets out the administrative process for energy suppliers to claim reimbursement for providing energy credits on behalf of the province. Suppliers must claim reimbursements by submitting a written and signed application to the director and providing information sufficient for the director to verify the supplier is entitled to the reimbursement.

Where a claim for a reimbursement is a corporation, the reimbursement application must be signed by a director or authorized employee of that corporation.

Section 15 – Reimbursement Limits

CTRT - SEC.15(1) And (2)/Int.

(1) And (2) – Reimbursement Limits

Reference: Section 1 energy credit; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision sets out the minimum reimbursement amount and the limitation period for claiming reimbursement.

The minimum reimbursement amount of an energy supplier is $10 per reimbursement claim (i.e., not per item claim). This minimum parallels the $10 minimum rebate provided under the Consumption Tax Rebate and Transition Act to persons applying for an energy rebate (see CTRT/SEC.10(5)/Int.), and the minimum tax refund under the Hotel Room Tax Act, Motor Fuel Tax Act, Carbon Tax Act and Tobacco Tax Act.

The limitation period for claiming reimbursement or actions for reimbursement is four years from the date the credit was provided by the energy supplier.

Section 16 – Repayment Of Reimbursement By Registrant

CTRT - SEC.16(1) To (3)/Int.

(1) To (3) – Repayment Of Reimbursement By Energy Supplier

Reference: Section 1 director, energy credit, federal act, registrant, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5

Interpretation (Issued: 2010/10)

Effective May 1, 2010, under this provision, energy suppliers must repay to the government, or the director may deduct from a subsequent reimbursement, the following amounts:

(1) if the energy supplier receives an amount as reimbursement that exceeds the amount of credit the supplier provided;

(2) if the energy supplier receives an amount as reimbursement for an amount of credit the supplier should not have provided; or

(3) if the energy supplier receives an amount as reimbursement but reduces the amount of harmonized sales tax (HST) they remit to the Canada Revenue Agency as a result of a bad debt.

Regarding the above item (3), under section 231(1) of the Excise Tax Act (Canada), an energy supplier may deduct from their HST remittances amounts written off as bad debts. Those amounts are calculated in accordance with that section of the Excise Tax Act. When an energy supplier writes off the provincial portion of the HST applicable to that bad debt, they must subtract that amount from their claim for reimbursement.

The time limit in which an energy supplier must repay an amount to the government under subsection 16(2) of the Act is set out under Regulation 9(1).

The formula to calculate the amount of reimbursement that an energy supplier must repay to the government under subsection 16(2)(c) of the Act is set out under Regulation 9(2).

This provision prevents energy suppliers from being reimbursed an amount that exceeds the amount of credits they did provide or ought to have provided.

Section 17 – Recovery Of Amount By Registrant

CTRT - SEC.17/Int.

Recovery Of Amount By Registrant

Reference: Section 1 director, energy credit, registrant, taxable supply; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision permits energy suppliers to sue customers to recover the amount of energy credits that the customer was not entitled and for which the energy suppler was not reimbursed.

The provision provides energy suppliers a mechanism to recover ineligible credits for which the supplier will not be reimbursed, resulting in the energy supplier being out of pocket.

Energy suppliers may choose to include in their energy supply contracts that ineligible energy credits may be added to subsequent customer invoices so that court action will not be necessary to recover amounts of credits for which that customer was not entitled and for which the supplier was not reimbursed.

Section 18 – Director May Determine Attribution Of Amount

CTRT - SEC.18/Int.

Director’s Power Of Attribution

Reference: Section 1 director, energy allowance; Sections 9-18; Regulation Part 2; Bulletin HST Notice #5; Bulletin HST Notice #10

Interpretation (Issued: 2010/10)

Effective May 1, 2010, this provision permits the director to attribute the portion of energy used for residential use and the portion of energy used for another purpose if a person is required to repay some of all of an energy credit or rebate because some or all of the energy is used for a purpose other than for residential use in a residential dwelling (see CTRT/SEC.11/Int.). “Residential use” and “residential dwelling” are defined in Regulation 2(3).

In addition, the provision permits the director to attribute the amount by which an energy credit or rebate must be reduced if there is a reduction in the consideration payable on the supply of the energy product (see CTRT/SEC.12/Int.).

This section is intended as an anti-avoidance measure which allows the director to make an attribution when the attribution made by the person is not reasonable or there is insufficient evidence to suppler the person’s attribution to ensure a person does not receive a credit or rebate in excess of the amount they are entitled to receive.

Part 5 - Tax On Designated Property

Part 5 – General

CTRT - SEC.19-28/R.1

History Of The Part

Reference: Regulations 17-41; Bulletin CTR #001

Interpretation (Issued: 2010/10)

Sections 19 to 28 of the Consumption Tax Rebate and Transition Act authorize the tax on designated property program administered by government of British Columbia.

Effective July 1, 2010, tax applies to the private sales of vehicles, boats, and aircraft (“designated property”) at a rate of 12 percent in British Columbia. The tax provides comparable treatment between private sales of vehicles, boats and aircraft, and sales by registrants under the Excise Tax Act (Canada) that accordingly are subject to the harmonized sales tax (HST).

Section 19 – Tax On Designated Property Acquired In British Columbia

CTRT - SEC.19/Int.

Tax On Purchaser

Reference: Section.1; subsection.19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001; Notice 2010-011 Notice to Boat Vendors

Interpretation (Issued: 2010/10)

Effective July 1, 2010, this provision imposes tax when designated property (i.e., a vehicle, boat or aircraft) is purchased at a private sale in British Columbia.

“Private sale” is not defined in the Act or regulations, but means a sale by a person who is not a registrant under Part IX [Goods and Services Tax] of the Excise Tax Act (Canada) (see CTRT/SEC.1/REGISTRANT/Int.).

For designated property that is a vehicle that will be registered or licensed subsequent to the purchase, the tax must be paid to the Insurance Corporation of British Columbia. For all other vehicles and boats and aircraft, the tax payable must be self assessed by the purchaser. See Regulation 17 and Regulation 18.

Section 20 – Tax On Designated Property Brought Into British Columbia

CTRT - SEC.20/Int.

Designated Property Brought Into British Columbia

Reference: Section.1; subsection.19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001

Interpretation (Issued: 2010/10)

Effective July 1, 2010, this provision imposes tax when designated property (i.e., a vehicle, boat and aircraft) is brought or sent into British Columbia, or a delivery of designated property is received in British Columbia, by:

• a resident or a person who ordinarily resides or carries on business in British Columbia;
• a person who enters British Columbia with the intention of residing or carrying on business in the province; or
• a non-resident who

(i) owns real property in British Columbia, or

(ii) leases real property in British Columbia for at least five years (including the cumulative total of all lease options and renewals).

In the absence of evidence to the contrary, persons who claim to be residents of British Columbia so that they may obtain a grant under the Home Owner Grant Act, or medical coverage under the Medical Services Plan of British Columbia, are residents of British Columbia for the purposes of this section. This means that such persons are subject to the tax imposed under the Act on residents who acquire designated property outside of the province and bring it into the province for use.

A person is deemed to be carrying on business in British Columbia if an employee or other representative of that person carries on activities on that person’s behalf for the purpose of promoting the sale or use of that person’s products or services. This deeming provision is consistent with Section 11 [tax if property brought into B.C. for use] of the Social Service Tax Act.

Non-residents who have a real property interest in British Columbia are required to pay tax on designated property they bring into the province if that property is to be used primarily in British Columbia. Accordingly, non-residents who maintain seasonal dwellings or recreational sites in the province are not able to avoid payment of tax by purchasing a vehicle, for example, in another province and then transporting it into British Columbia for permanent use in this province.

In the situation where a non-resident does not have a real property interest in British Columbia and brings, sends or receives delivery of designated property for use by another person at the non-resident’s expense, the other person is deemed to have received the delivery in British Columbia. If that other person is a person listed above, that person is liable for the tax.

Although this section imposes tax on designated property that is a boat or aircraft when brought or sent into British Columbia, or delivery is received in British Columbia, designated property that is a boat or aircraft is exempt from tax under this section by Regulation 27.

The rate of tax payable under this section is 12 percent of the taxable value of the vehicle as of the entry date (see CTRT/SEC.23/Int.).

Tax is not payable under this section in respect of a vehicle if tax is payable under section 21 (see CTRT/SEC.21/Int.) in respect of the vehicle.

This provision combines the existing Sections 11 and 16 of the Social Service Tax Act and imposes tax on the bringing in, sending, or receipt of vehicles, boats and aircraft by persons (resident and non-resident) who have a substantial connection to British Columbia.

The provision also includes a new anti-avoidance rule for circumstances where non-residents bring, send or receive delivery of designated property for the use of residents or those with a substantial connection to British Columbia, to ensure the tax is paid as intended.

Section 21 – Tax On Registration Of Vehicle Brought Into British Columbia

CTRT - SEC.21/Int. - R.1

Tax On Vehicles

Reference: Section.1; subsection. 19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001;BC PUB - Notice 2010-011

Interpretation (Issued: 2010/10)

Effective July 1, 2010, this provision imposes tax on vehicles brought, sent or delivered into British Columbia which are registered under the Commercial Transport Act, Motor Vehicle Act or Motor Vehicle (All Terrain) Act.

Tax is not payable under this section if tax is payable under section 20 (see CTRT/SEC.20/Int.).

This provision applies primarily to non-residents who register vehicles in British Columbia.

The intent of the provision is to ensure the tax applies to vehicles that are brought, sent or delivered into British Columbia which will be used primarily in the province as evidenced by the registration of the vehicle in British Columbia.

R.1 Transition Rule (Issued 2011/03)

Under section 21 of the Act, two events must occur for the tax on designated property to be triggered:

1. A person brings or sends a vehicle into British Columbia for use by the person, another person at the first person's expense, another person for whom the first person acts as agent, or another person at the expense of a principal for whom the first person acts as agent; and
2. Any of the persons referred to above registers the vehicle under the Commercial Transport Act, Motor Vehicle Act, or Motor Vehicle (All Terrain) Act.

However, section 21 does not apply where, before July 1, 2010, a person brought or sent a vehicle into British Columbia and then, on or after July 1, 2010, the person registered the vehicle in British Columbia. Section 21 does not apply in this situation because section 21 became effective on July 1, 2010 and to apply section 21 to an event (i.e., the bringing in) that occurred before July 1, 2010, would be applying section 21 to a time when the section was of no force or effect.

Please note: where a resident or a person who carried on business in British Columbia brought or sent a vehicle into British Columbia before July 1, 2010 and then after July 1, 2010 registers the vehicle, they will not be captured by section 21 of the CTRTA, but they are captured by provincial sales tax under the Social Service Tax Act. However, unless an exemption applies, these people are required to pay PST regardless of whether they register the vehicle or not.

Section 22 – Tax If Use Of Designated Property Changes

CTRT - SEC.22/Int.

Taxable Use

Reference: Section.1; subsection.19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001

Interpretation (Issued: 2010/10)

Effective July 1, 2010, this provision requires a person who obtained an exemption or who received a refund to pay the tax imposed on designated property if the person subsequently uses the vehicle, boat or aircraft for a use other than the use which entitled the person to the exemption or refund of tax.

The intent of the provision is to ensure that a person does not retain an exemption or refund of tax if the person ceases to use the vehicle, boat or aircraft for the purpose which entitled the person to the exemption or refund.

As examples, the provision clarifies that the following persons are subject to the tax on designated property:

• New residents who bring designated property into the province for their personal use (i.e., new residents’ effects) (see CTRT/REG.34/Int.) when they move to British Columbia, but later use the vehicle, boat or aircraft for a business purpose (e.g., a pleasure boat transferred to business use as a charter boat);
• Persons who purchase designated property exempt of tax for the sole purpose of resale (see CTRT/SEC.1/EXEMPT USE/Int.), but use the vehicle, boat or aircraft themselves.

The provision is consistent with the previous section 9 of the Social Service Tax Act (repealed on July 1, 2010).

Section 23 – Rate Of Tax

CTRT - SEC.23/Int.

Tax On Designated Property

Reference: Section.1; subsection. 19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001

Interpretation (Issued: 2010/10)

Effective July 1, 2010, the tax rate is 12 percent of the taxable value on

(a) the purchase of a vehicle, boat or aircraft in British Columbia, and

(b) a vehicle, boat or aircraft that is brought or sent into British Columbia or delivered into British Columbia.

For purchases in British Columbia (see CTRT/SEC.19/Int.), the taxable value is the purchase price, subject to any trade-in credit.

For designated property brought, sent or delivered into British Columbia (see CTRT/SEC.20/Int.), the taxable value is the greater of: (a) the depreciated value as of the entry date, and (b) 50 percent of the purchase price.

For vehicles, boats or aircraft taxable due to a change in use (see CTRT/SEC.22/Int.), the taxable value is the greater of: (a) the depreciated value as of the date of the change in use, and (b) 50 percent of the purchase price.

Tax on Designated Property - Rates

July 1, 2010 to present 12%

Section 24 – Taxable Value If Depreciation

CTRT - SEC.24/Int.

Taxable Value If Depreciation

Reference: Section.1; subsection.19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001

Interpretation (Issued: 2010/10)

Effective July 1, 2010, for the purposes of paragraph (b) of the definition of “taxable value” (see CTRT/SEC.1/TAXABLE VALUE/Int.), this provision determines the taxable value of designated property brought, sent or delivered into British Columbia when the designated property is subject to depreciation.

For vehicles brought, sent or delivered into British Columbia, the taxable value is the greater of: (a) the depreciated value of the designated property on the entry date, or (b) 50% percent of the purchase price of the designated property.

Designated property that is a boat or aircraft is exempt from tax imposed under Section 20 by Regulation 27.

For vehicles, boats or aircraft taxable due to a change in use (see CTRT/SEC.22/Int.), the taxable value is the greater of: (a) the depreciated value of the designated property on the date of the change in use, or (b) 50 percent of the purchase price of the designated property.

The calculation to determine the depreciated value of the designated property, for the purposes of paragraph (a) of this section, is set out under Regulation 20.

This provision is necessary to determine the taxable value when there may be a delay between the date of acquisition of the designated property and the date of entry or the date of change in use.

Section 25 – Taxable Value If Trade-In Allowed On Purchase

CTRT - SEC.25/Int. - R.1

Trade-In Credit

Reference: Section.1; subsection.19-28 [Tax on Designated Property]; Regulations 17- 41;Bulletin CTR #001, Notice 2010-011 Notice to Boat Vendors

Interpretation (Issued: 2010/10)

Effective July 1, 2010, for the purposes of paragraph (c) of the definition of “taxable value” (see CTRT/SEC.1/TAXABLE VALUE/Int.), this provision allows the purchase price of designated property (i.e., a vehicle, boat or aircraft) purchased in British Columbia to be reduced by an amount equal to the fair market value of an item of designated property accepted by the seller at the time of the sale.

The trade-in credit is permitted only when a vehicle, boat or aircraft is traded at the time of the sale on the purchase of a vehicle, boat or aircraft.

R.1 Trade-in to Dealer Registered for Harmonized Sales Tax (Issued 2011/03)

Where a person not registered for the harmonized sales tax (HST) trades their designated property in on the purchase of other designated property to a person who is registered for HST (most often a motor vehicle dealer), two separate transactions have taken place:

• The trade-in designated property has been sold to the registrant, and
• The new designated property has been purchased from the registrant.

The sale of the new designated property to the non-registrant is an HST transaction and therefore administered by the Canada Revenue Agency. However, the transfer of the trade-in designated property from the non-registrant to the registrant is a tax on designated property (TDP) transaction because the registrant is acquiring the designated property at a sale that is not a taxable transaction for the purposes of HST.

Although the transaction is covered by the Consumption Tax Rebate and Transition Act, the registrant most often has no TDP liability because:

• the registrant is acquiring the trade-in vehicle for the sole purpose of resale; or
• section 25 operates to reduce the taxable value of the trade-in designated property to zero.

Either one of these reasons is enough to result in no TDP being payable by the registrant.

However, if the trade-in credit is greater than the purchase price for the new property being purchased and the registrant acquires the designate property for their own use (i.e. not for resale), the registrant who accepted the trade-in must pay TDP on the difference between the higher trade-in credit and the price of the item sold. The transaction is treated as an uneven trade, and the registrant is liable for the additional TDP on the trade-in.

For example, individual (X) wants to down size from their luxury car valued at $30,000 to a new economy car valued at $20,000. X takes the luxury car to a dealer and the dealer trades a new economy car plus $10,000 for the luxury car. The dealer likes the luxury car so much that they intended to use it as a company vehicle and not for resale. In such cases, the dealer must pay TDP on the $10,000.

Section 26 – Exempt From Tax

CTRT - SEC.26/Int.

Exemption From Tax

Reference: Section.1; subsection.19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001

Interpretation (Issued: 2010/10)

Effective July 1, 2010, this provision provides an exemption from the tax on designated property on a vehicle, boat and aircraft brought, sent or delivered into British Columbia that:

• qualifies as a taxable supply (see CTRT/SEC.1/TAXABLE SUPPLY/Int.) by a registrant (see CTRT/SEC.1/REGISTRANT/Int.) under the Excise Tax Act (Canada) and as a result is subject to the harmonized sales tax (HST);
• qualifies as an exempt supply under Part I [Real Property] of Schedule V [Exempt Supplies] of the Excise Tax Act; or
• is imported from outside Canada.

The intent of the provision is to ensure that the tax on designated property is not payable on any vehicle, boat or aircraft that is subject also to the HST, to avoid double taxation.

This provision also provides an exemption for vehicles which are treated as real property under Part I of Schedule V of the Excise Tax Act. This exemption is consistent with the exemption provided by Ontario upon that province’s implementation of the HST on July 1, 2010.

Section 27 – Deemed Purchase Price

CTRT - SEC.27/Int.

Deemed Purchase Price

Reference: Section.1; subsection.19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001

Interpretation (Issued: 2010/10)

Effective July 1, 2010, this provision allows the director to determine the fair market value of designated property (i.e., a vehicle, boat or aircraft) and set that value as the purchase price if, in the opinion of the director, the declared purchase price does not represent the fair market value of the designated property.

This provision is an anti-avoidance measure to ensure tax is paid as intended and not artificially reduced.

Section 28 – Calculation Of Tax

CTRT - SEC.28/Int.

Calculation Of Tax

Reference: Section.1; subsection.19-28 [Tax on Designated Property]; Regulations 17- 41; Bulletin CTR #001

Interpretation (Issued: 2010/10)

Effective July 1, 2010, this provision sets out administrative rules for the calculation of the tax on designated property to ensure the tax payable is calculated correctly.