Doing business in more than one province, presents a challenge when it comes to dealing with multiple sales tax regimes. To add to the difficulty, several provinces — British Columbia, Quebec, Manitoba and Prince Edward Island — recently changed their systems.
Keeping up with the latest changes can be difficult but you should not wait for an audit to find out you’ve fallen behind.
B.C. return to a goods and services and provincial sales tax system on April 1. Instead of the former 12% harmonized sales tax, businesses making taxable sales now must collect 5% GST and 7% PST. You may have to review all your sales to determine their tax status under the new PST. Errors can quickly add up, and if they go undetected until an audit, they can be costly.
If you haven’t registered for the new PST, you may be required to do so if you sell or lease taxable goods, software or services in British Columbia.
Dealing with both federal and provincial tax regimes can mean more work for a business owner, just as it was before HST was introduced. For example, your systems should be collecting the right data to prepare separate returns for GST and PST. Don’t forget your systems should also be correctly handling any returns or exchanges of goods you sold before the changeover.
You’ll have to think about the new provincial tax in other circumstances, too. For example, if you’re purchasing goods or services outside B.C. and importing them or using them in the province, you may be required to self-assess PST on these purchases.
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