Guest Blog by Joni Burchett of Avalara
Back in the summer of 2011, British Columbians had a unique opportunity to participate in a providence-wide referendum on the harmonized sales tax (HST). Despite the efforts of those who advocated keeping the HST for economic growth, the general public rose together and voted in favor of eliminating the HST in August of 2011. At that time, the decision was made to revert back to the former system, a split between the provincial sales tax (PST) of 7% and the federal goods and services tax (GST) of 5%.
So, you may be asking yourself how this will affect you. Starting April 1, 2013, the new tax requirements will go into effect and you can expect some of the following changes:
UNCHANGED: The following items will still be taxed at 12% but with the 7% PST and 5% GST:
- Household items such as cars, furniture, electronics, and appliances.
- Almost all clothing, footwear and beauty products.
CHANGED: The following items will no longer be taxed at 12% and will only be taxed at the 5% GST:
- Routine items such as: restaurant meals and snacks; hair and nail services; movies and gym memberships; some maintenance and repair services; bicycles; tobacco products; and professional services.
- Non routine items such as: newly built homes; realtor commissions, structural home renovations and home repairs.
While this change will likely provide an immediate benefit for many consumers, it may be a hard hit for many businesses. It is estimated that businesses will pay 730 million more in taxes with the blended PST/GST system, and will no longer get a break on production costs such as electricity, heating fuel, computers, and vehicles. This may cause a lull in production, as well as overall sales and exports. Additionally, businesses can expect more administrative costs, since they now will be required to register for the tax, file and remit their taxes to BC, and manage two tax rates instead of one. Based on an independent study made up of a panelist of four (an economist, a former BC auditor general, a banker and former Alberta finance minister), it was estimated that small and large businesses could see an additional $150 million in administrative costs.
BAASS Business Solutions has also teamed up with Avalara, the creator of Sage Sales Tax to offer you an affordable cloud-based sales tax automation solution that works seamlessly with Sage 300 ERP to help with the transition. Sage Sales Tax can take the hassle out of manual sales tax compliance and help you to calculate, file, and remit your PST and GST taxes, as well as any taxes that you might have to collect in the states.
For more information on Sage Sales Tax for Sage 300 ERP Click here. Both BAASS Business Solutions and Avalara will also be at annual TPAC conference in Richmond, BC, it would be great to have you join us!