Harmonized sales tax britisH columbia - BDO Canada

www.bdo.caMUNICIPALITIESHarmonized sales taxbritish columbiaThere is little doubt that municipalitiesacross the province of British Columbia (BC) areimpacted by the Harmonized Sales Tax (HST) thatcame into effect on July 1, 2010. The purpose ofthis document is to provide you with guidanceregarding the general HST rules and providespecific examples.As a GST/HST Registrant you may havecertain rights and obligation which includethe following:• You are required to charge and collect HST onall taxable supplies of goods and services providedto your customers with some exceptions fortaxable sales of real property;• You can claim an Input Tax Credit (ITC) torecover the HST you paid or owe on purchases andexpenses that you use, consume or supply in yourcommercial activities; and• You may be able to claim a rebate of the HSTpaid or owed on purchases and expenses for whichyou cannot claim an ITC.Taxable Supplies (Goods & Services):The following are examples of supplies of goodsand services that are taxable at a rate of 12%:• Most supplies of real property which wouldinclude banquet facility rentals, public parkingrentals, licenses to use real property, municipalgolf course fees, and commercial property leases;• Most supplies of personal property and capitalpersonal property which would include officefurniture, equipment and computers;• Telecommunication services, hydro-electricityand natural gas;• Municipal services provided on an optional feefor-servicebasis, such as driveway paving; and• Services for testing or certifying that propertymeets a particular standard of quality.Zero–Rated Goods & ServicesThe following are examples of supplies ofgoods and services taxable at 0%:• Medical devices such as wheelchairs,eyeglasses, canes and artificial teeth;• Basic groceries such as fruit, vegetables,meat and flour;• Most agricultural and fishery products;and• Goods and services exported fromCanada.Exempt Supplies of Goods & ServicesThe following are examples of exemptsupplies of goods and services:• Fire protection;• Law enforcement;• Garbage collection, including the collectionand delivery of recyclable materials;• Certain licenses and permits; and• Municipal transit.

MUNICIPALITIESThe following table highlights some goods and services thatare common to municipalities. The table also illustrateswhether or not HST applies to these items:Goods and ServicesHSTRationaleapplicable –YES or NOProperty Taxation revenues NO Not a supply of a good or serviceCemetery fees (plots, interment fees, YESSupply of a good or servicegrave markers, liners)Application fees (Zoning,NOSpecifically exemptedSubdivision)Building permits NO Permits specifically exemptedFines - Parking, Bylaw NO Specifically exemptedCommercial Property Lease/Rent YES Supply of Real PropertyResidential Property Lease/Rent NO Supply of Real Property ; However, exempted due to residential housing componentPhotocopying - Non Municipal YESSupply of a serviceInformationPhotocopying - Zoning Bylaw, NOExempt - Supply of municipal document and/or informationFinancial Plan, Council agendaProperty Tax Certificates NO Supply of municipal document informationWater fees NO Supply of a municipal service on a non-optional basisSewer fees NO Supply of a municipal service on a non-optional basisGarbage Collection NO Specific exemption when provided by a municipality (regardless of how garbage tags aredistributed)Police Services NO Specific exemption when provided by a municipalityFire Protection Services NO Specific exemption when provided by a municipalitySnow Removal - Contracted out YES Service is provided to the municipality rather than by the municipalitySnow Removal - Municipality NO Specific exemption when provided by a municipalityProvincial funding - Cost of utilizing NOSupply of a service to the Province; However, fire protection specifically exemptlocal fire resources (equipment,labour) to fight provincial firesProvincial Funding - A percentagecontribution to commence a capitalproject (such as a new road)NONot a supply of a good or service; construction of a road does not result in a taxable supplyProvincial Funding - Establish aTraining Program to be offered in thecommunityLibrary Services (Library cards andfines related to borrowing privileges)A supply of service of installing,repairing, maintaining or interruptingthe operation of a water, sewerage ordrainage systemMunicipal Transit service provideddirectly to the publicNONONONOLikely NOT a supply to the province, but more in the nature of a grant. However, taxable if asupply of a service is made to the province.Specific exemptionSpecific exemptionSpecific exemptionContinued on the next page.