The BC HST Rate & When It Goes Into Effect
The Harmonized Sales Tax (HST) replaces the existing provincial sales taxes and the federal goods and services tax in BC beginning July 1, 2010.
The HST will be applied on most supplies of goods and services made in BC at a rate of 12%, consisting of the 5% federal portion and an 7% provincial portion.
Do You Need to Register for HST?
You don't need to register for BC HST if you're already a GST registrant. New businesses will need to register for HST unless they are Small Suppliers and choose not to (see the next section).
The Small Supplier Exception Continues
BC is leaving the Small Supplier exception in place, so if you are operating a small business that makes $30,000 or less annually, you are not required to register for or collect BC HST. However, you may voluntarily register your small business, enabling you to claim Input Tax Credits.
What's Exempt From HST
Consumers will not have to pay HST on items that are currently exempt from PST such as groceries, child care, tutoring, prescription drugs and most financial services.
Nor will consumers have to pay the provincial portion of the HST tax on goods such as books (including audio books), feminine hygiene products, and children's clothing, including footwear.
Charging HST
Generally, whether or not you charge HST on goods or services you provide depends on the place of supply. Specific rules apply to determine whether a supply is made in or outside of a participating province.
While no changes are proposed to the current place of supply rules for supplies of tangible personal property and real property, the current place of supply rules for supplies of intangible personal property and for services will change considerably with the introduction of HST.
Follow these links for details:
Point-of-Sale Rebates
Merchants will provide point-of-sale rebates of the provincial part of the BC HST payable on sales of certain designated items; in BC these items are books (including audio books), children's items, feminine hygiene products, and motor fuels.
Giving a point-of-sale rebate involves automatically crediting the provincial part of the HST and only collecting the 5% federal part of the HST payable on the sale of that item. Point-of-sale rebates will not affect your ability to claim Input Tax Credits on your business inputs.
See the Canada Revenue Agency's Point-of-sale rebates for Ontario and British Columbia (BC) for details.
Invoice Requirements
Just as with the GST, there are particular pieces of information you have to have on your invoices (and your receipts, contracts, or other business papers) to inform your customers how much HST they are being charged and so that they have the documentation they need to claim Input Tax Credits (ITCs). You can review what information is required in my article Invoice Sample With HST or in the Canada Revenue Agency's RC4022: General Information for GST/HST Registrants.
To know the details about how to tell when to charge HST or just GST, the Canada Revenue Agency's Harmonized Sales Tax: Place of supply rules for determining whether a supply is made in a province (GST/HST Technical Bulletin B-103) is especially useful. It explains how to apply HST to tangible and intangible personal property, real property and services and is studded with examples.
And, of course, the Canada Revenue Agency presents a great deal more information about the GST/HST on its main GST/HST hub page.
