Provincial Sales Tax Exemption & Refund Regulation, Part 8 - Refunds and Credits for Exclusive Products

Section 140 – Refund Or Credit If Subsequent Sale To Exempt Purchaser

PSTERR - SEC.140/Int.

References:

Act: Section 1 "direct seller", "exclusive product", "independent sales contractor", "purchaser"; Section 99

PSTERR: Section 1 "obtain"; Section 144

Bulletin PST 004

Interpretation (Issued: 2014/02)

Effective April 1, 2013, B.C. Reg. 97/2013 provides under PSTERR section 140 that if a person

(a) is an independent sales contractor of a direct seller,

(b) has obtained an exclusive product from the direct seller or another independent sales contractor of the direct seller,

(c) has paid tax under section 99 [tax on acquisition of exclusive product by independent sales contractor] of the Act in relation to the exclusive product, and

(d) has sold the exclusive product to a purchaser who was not liable to pay tax on that purchase,

the direct seller may, within 180 days of the date on which the person paid the tax under section 99 of the Act, refund or credit to the person the amount of tax paid.

Section 141 – Refund Or Credit If Subsequent Sale For Less Than Suggested Retail Price

PSTERR - SEC.141/Int.

References:

Act: Section 1 "direct seller", "exclusive product", "independent sales contractor", "purchase price", "purchaser"; Section 99

PSTERR: Section 1 "obtain"

Bulletin PST 004

Interpretation (Issued: 2014/02)

Effective April 1, 2013, B.C. Reg. 97/2013 provides under PSTERR section 141 that if

(a) a person

(i) is an independent sales contractor of a direct seller,

(ii) has obtained an exclusive product from the direct seller or another independent sales contractor of the direct seller,

(iii) has paid tax under section 99 [tax on acquisition of exclusive product by independent sales contractor] of the Act in relation to the exclusive product, and

(iv) has sold the exclusive product to a purchaser, and

(b) the purchase price paid by the purchaser is less than the direct seller's suggested retail price,

the direct seller may, within 180 days of the date on which the person paid the tax under section 99 of the Act, refund or credit to the person an amount equal to the amount, if any, by which the amount of tax paid by the person under section 99 of the Act exceeds the amount of tax levied by the person on the purchase price of the exclusive product under section 180 [collection of tax by independent sales contractor] of the Act.

Section 142 – Refund Or Credit If Exclusive Product Used By Independent Sales Contractor Or Provided To Another Person At No Cost

PSTERR - SEC.142/Int.

References:

Act: Section 1 "direct seller", "exclusive product", "independent sales contractor", "use"; Section 37; Part 3 – Division 4; Section 48; Section 99

PSTERR: Section 1 "obtain"

Bulletin PST 004

Interpretation (Issued: 2014/02)

Effective April 1, 2013, B.C. Reg. 97/2013 provides under PSTERR section 142 that a direct seller may, within 180 days of the date tax was paid, refund or credit to an independent sales contractor the difference between the suggested retail price and the independent sales contractor’s cost for an exclusive product if the independent sales contractor originally paid tax to the direct seller on the suggested retail price for the exclusive product and later uses that exclusive product or gives it away.

Subsection 142(1) provides that PSTERR section 142 applies to a person who

(a) is an independent sales contractor of a direct seller,

(b) has obtained an exclusive product from the direct seller or another independent sales contractor of the direct seller,

(c) has paid tax under section 99 [tax on acquisition of exclusive product by independent sales contractor] of the Act in relation to the exclusive product, and

(d) uses or consumes the exclusive product or provides the exclusive product to another person at no cost for use or consumption by that other person.

Subsection 142(2) provides that if PSTERR section 142 applies to a person under PSTERR subsection 142(1), the direct seller may, within 180 days of the date on which the person paid the tax under section 99 of the Act, refund or credit to the person an amount equal to the amount by which the amount of tax paid by the person under section 99 of the Act exceeds the amount of tax that would have been payable by the person in relation to the exclusive product under, as applicable,

(a) section 37 [tax on purchase] of the Act if paragraph 37(2)(c.1) of the Act had not applied, or

(b) Division 4 [Tangible Personal Property Brought into British Columbia] of Part 3 [Taxes in Relation to Tangible Personal Property] of the Act if paragraph 48(a) [application of Division 4] of that Division had not applied.

Section 143 – Refund Or Credit If Exclusive Product Returned To Direct Seller

PSTERR - SEC.143/Int.

References:

Act: Section 1 "direct seller", "exclusive product", "independent sales contractor"; Section 99

PSTERR: Section 1 "obtain"

Bulletin PST 004

Interpretation (Issued: 2014/02)

Effective April 1, 2013, B.C. Reg. 97/2013 provides under PSTERR section 143 that a direct seller may provide to an independent sales contractor a refund or credit of tax paid on an exclusive product obtained from the direct seller if the independent sales contractor returned the exclusive product to the direct seller. The direct seller must provide the refund or credit within 1890 days of the date the tax was paid.

Subsection 143(1) provides that subject to PSTERR subsection 143(2), if

(a) a person

(i) is an independent sales contractor of a direct seller,

(ii) has obtained an exclusive product from the direct seller or another independent sales contractor of the direct seller,

(iii) has paid tax under section 99 [tax on acquisition of exclusive product by independent sales contractor] of the Act in relation to the exclusive product, and

(iv) returns the exclusive product to the direct seller, and

(b) the direct seller refunds or credits to the person all or a portion of the consideration paid by the person for the purchase of the exclusive product,

the direct seller may, at the time the refund or credit of the consideration is paid or allowed, refund or credit to the person the amount of tax paid by the person that is attributable to the amount of the refund or credit of the consideration.

Subsection 143(2) provides that a direct seller may pay or allow a refund or credit to a person under PSTERR subsection 143(1) only if the refund or credit is paid or allowed within 180 days of the date on which the person paid the tax under section 99 of the Act.

Section 144 – Refund By Director If Direct Seller Does Not Provide Refund Or Credit

PSTERR - SEC.144/Int.

References:

Act: Section 1 "direct seller", "director", "exclusive product"

PSTERR: Section 140; Section 141; Section 142; Section 143

Bulletin PST 004

Interpretation (Issued: 2014/02)

Effective April 1, 2013, B.C. Reg. 97/2013 provides under PSTERR section 144 that the director must provide a refund to an independent sales contractor if that independent sales contractor qualified for a refund or credit from a direct seller under any of PSTERR sections 140 – 143 but the direct seller did not provide that refund or credit or the full amount of the refund or credit.

Subsection 144(1) provides that in PSTERR section 144, "relevant provision" means any of the following sections:

• PSTERR section 140 [refund or credit if subsequent sale to exempt purchaser]
• PSTERR section 141 [refund or credit if subsequent sale for less than suggested retail price]
• PSTERR section 142 [refund or credit if exclusive product used by independent sales contractor or provided to another person at no cost]
• PSTERR section 143 [refund or credit if exclusive product returned to direct seller]

Subsection 144(2) provides that if the director is satisfied that

(a) all of the requirements in a relevant provision for the payment of a refund or allowance of a credit to a person have been met, and

(b) the direct seller

(i) did not pay or allow the refund or credit, or

(ii) paid or allowed less than the full amount of the refund or credit,

the director must refund to the person an amount equal to the amount of the refund or credit the direct seller did not pay or allow.

Subsection 144(3) provides that the director may require that a person request a direct seller to pay a refund or allow a credit under a relevant provision in relation to an exclusive product before the person may apply to the director for a refund under this section in respect of that exclusive product.

Section 145 – Refund By Director For Bad Debts

PSTERR - SEC.145/Int.

References:

Act: Section 1 "direct seller", "director", "exclusive product", "independent sales contractor", "purchaser"; Section 99; Section 180

PSTERR: Section 1 "obtain"

Bulletin PST 004

Interpretation (Issued: 2014/02)

Effective April 1, 2013, B.C. Reg. 97/2013 provides under PSTERR section 145 that the director must provide a refund to an independent sales contractor if that independent sales contractor paid tax on an exclusive product to a direct seller, later sold that exclusive product to a purchaser but was not paid full consideration for the transaction, and ultimately wrote off all or part of that sale as a bad debt.

PSTERR section 145 also provides that if the independent sales contractor later receives a payment for that written off sale, the independent sales contractor must repay all or part of the tax refunded based on the amount of the repayment. PSTERR section 145 provides the formulas to calculate the portion to be refunded and amount to be repaid.

Subsection 145(1) provides that in PSTERR section 145, "transaction" means a transaction referred to in PSTERR paragraph 145(2)(d).

Subsection 145(2) provides that PSTERR section 145 section applies to a person in respect of an exclusive product if

(a) the person is an independent sales contractor of a direct seller,

(b) the person has obtained the exclusive product from the direct seller or another independent sales contractor of the direct seller,

(c) the person has paid tax under section 99 [tax on acquisition of exclusive product by independent sales contractor] of the Act in relation to the exclusive product,

(d) the person sells the exclusive product to a purchaser,

(e) the person, in accordance with the Act, has levied the tax required to be levied under subsection 180(1) [collection of tax by independent sales contractor] of the Act for the transaction,

(f) the purchaser does not pay to the person the full amount of the consideration in respect of the transaction, and

(g) the person within 4 years of the date on which the tax referred to in PSTERR paragraph 145(2)(c) was paid, writes off as unrealizable or uncollectable the amount owing by the purchaser.

Subsection 145(3) provides that if the director is satisfied that PSTERR section 145 applies to a person in respect of an exclusive product, the director must refund to the person the portion, determined in accordance with PSTERR subsection 145(4), of the amount of the tax paid by the person under section 99 of the Act in relation to the exclusive product.

Subsection 145(4) provides that for the purposes of PSTERR subsection 145(3), the portion of the amount of the tax paid by a person under section 99 of the Act in relation to an exclusive product must be determined in accordance with the following formula:

portion to be refunded = tax levied x (amount unpaid /total amount payable)

where

tax levied = the amount of tax levied by the person under subsection 180(1) of the Act in relation to the exclusive product;

amount unpaid = the amount written off as unrealizable or uncollectable in respect of the transaction, but not including interest charges;

total amount payable = the full amount of the consideration in respect of the transaction including all applicable taxes, but not including interest charges.

Subsection 145(5) provides that if a person who obtained a refund under PSTERR subsection 145(3) recovers some or all of the amount referred to in PSTERR paragraph 145(2)(g), the person must pay to the government an amount, determined in accordance with PSTERR subsection 145(6), on or before the last day of the month following the month in which the recovery was made.

Subsection 145(6) provides that for the purposes of PSTERR subsection 145(5), the amount a person must pay to the government must be determined in accordance with the following formula:

amount to be paid = tax levied x (amount recovered /total amount payable)

where

tax levied = the amount of tax levied by the person under subsection 180(1) of the Act in relation to the exclusive product;

amount recovered = the amount recovered by the person that gives rise to the obligation under PSTERR subsection 145(5) to pay an amount to the government;

total amount payable = the full amount of the consideration in respect of the transaction including all applicable taxes, but not including interest charges.

Section 146 – Refund By Director If Exclusive Product Not Sold

PSTERR - SEC.146/Int.

References:

Act: Section 1 "direct seller", "director", "exclusive product", "independent sales contractor", "purchaser", "use"; Section 99

PSTERR: Section 1 "obtain"

Bulletin PST 004

Interpretation (Issued: 2014/02)

Effective April 1, 2013, B.C. Reg. 97/2013 provides under PSTERR section 146 that if the director is satisfied that

(a) a person

(i) is an independent sales contractor of a direct seller,

(ii) has obtained an exclusive product from the direct seller or another independent sales contractor of the direct seller,

(iii) has paid tax under section 99 [tax on acquisition of exclusive product by independent sales contractor] of the Act in relation to the exclusive product,

(iv) has not used or consumed and will not use or consume the exclusive product,

(v) has not provided and will not provide the exclusive product to another person at no cost for use or consumption by that other person, and

(vi) has not returned and will not return the exclusive product to the direct seller, and

(b) the exclusive product was not sold and will not be sold to a purchaser,

the director must refund to the person the amount of the tax paid.

Section 147 – No More Than One Refund Or Credit

PSTERR - SEC.147/Int.

References:

Act: Section 1 "direct seller", "exclusive product", "independent sales contractor"; Section 99

Bulletin PST 004

Interpretation (Issued: 2014/02)

Effective April 1, 2013, B.C. Reg. 97/2013 provides under PSTERR section 147 that an independent sales contractor cannot claim or receive a refund twice (i.e., from a direct seller and from the director) in respect of the same tax paid under section 99 of the Act in relation to an exclusive product.

Subsection 147(1) provides that an independent sales contractor of a direct seller who has received or been allowed a refund or credit in respect of tax paid under section 99 [tax on acquisition of exclusive product by independent sales contractor] of the Act in relation to an exclusive product is not entitled to and must not request a refund from the director in respect of the same tax paid under section 99 of the Act in relation to the exclusive product.

Subsection 147(2) provides that an independent sales contractor of a direct seller who has received a refund from the director in respect of tax paid under section 99 of the Act in relation to an exclusive product is not entitled to and must not request a refund or credit from the direct seller in respect of the same tax paid under section 99 of the Act in relation to the exclusive product.