BC PST. Say that six times fast. We bet you can’t. But any ways, BC PST is a term you may have heard thrown around a lot as of late. What does it mean though? Well in a nutshell, the province of British Columbia is reverting back to Provincial Sales Tax (PST) from HST, which is currently in place. This change will be effective April 1, 2013. Odds are, if you own a small business in BC, then you already know about the impending tax change but what you might not know is how it will affect your small business.
Like any new legislation, there is going to be a period of adjustment. Most businesses will need to register for their PST number and have all the new systems such as reporting and remitting in place before April 1, 2013. This also applies to any businesses outside of BC but are who are doing business in BC (you now only tax the PST vs taxing HST). You can go to www.sbr.gov.bc and find out about the registration process and any other information. The Government has said these systems will be less costly and efficient and they will be keeping everybody informed of any changes.
HST did make things more simple when it came to the books. Now that you are applying both GST and PST, businesses should be prepared to possibly pay higher administration costs as a few added steps will be necessary when bookkeeping. This could be a good time to look at outsourcing. Capital purchases for example, let’s say office equipment, only the GST will be deducted vs the full HST. The production of goods and services will also become more expensive as PST is now added to the cost. However, a lot of PST exemptions will be re-implemented. For instance, food, restaurant meals and personal services such as getting your hair cut will be exempt from the PST of 7% – only paying the GST of 5%.
To make a long story short, have yourself prepared and keep yourself up to date with what is happening. Updating your books to apply the new tax ahead of time will allow for a smooth transition for you and your business when the time comes.
If you have any questions regarding BC PST, please leave them in the comments below and we will be happy to help.