Tax alert

NDP and Liberals propose BC sales tax incentives

With the BC election near and in light of COVID-19, both the NDP and Liberal parties have proposed new Provincial Sales Tax (PST) and Speculation and Vacancy Tax initiatives.

On September 17, 2020, the Government of BC announced a Provincial Sales Tax (PST) Rebate for select machinery and equipment.

When an incorporated business purchases or leases certain machinery and equipment between September 17, 2020 and September 30, 2021, they may be eligible for a rebate of 100 percent of BC PST paid. Certain entities are excluded from eligibility, such as crown corporations, charities, schools, and hospitals.

The machinery and equipment that qualify for the rebate must be:

  1. Certain CCA classes found in Schedule II to the federal Income Tax Regulations;
  2. Obtained substantially (90 percent plus) for the purpose of gaining or producing income; and
  3. Not excluded (see below).

The following goods are excluded from the rebate:

  1. Vehicles, with the exception of zero-emissions vehicles;
  2. Goods that will be installed as an improvement to real property;
  3. Goods purchased for resale by a small seller; and
  4. Exclusive products purchased by independent sales contractors.

Software and goods, other than goods obtained by lease, must be capital assets for the rebate to apply.

CCA classes covered by the rebate include, but are not limited to:

  • Machinery and equipment, tools, appliances and furniture;
  • Computer hardware and software;
  • Electric vehicle charging stations; and
  • Zero-emission vehicles.

Incorporated businesses may make up to two PST rebate applications: the first application can be made between April 1, 2021 and September 30, 2021. The second application can be made starting October 1, 2021. The last day applications will be accepted is March 31, 2022, which is six months after the rebate period ends on September 30, 2021.

On September 28, 2020, the Liberals proposed if they are elected, they will eliminate BC PST for one year and instead, PST would be reintroduced in the second year at a reduced rate of 3 percent (compared to the current rate of 7 percent).

The Liberals have also proposed eliminating the BC Speculation and Vacancy Tax entirely. This tax was introduced in November 2018.

***Important note: None of the above proposed incentives have passed any Legislative approvals and are not currently law. These incentives could be adjusted or not pursued at all once presented in the legislative assembly***