Vol. 145, No. 13 — June 22, 2011

Registration

SOR/2011-121 June 9, 2011

EXCISE TAX ACT

ARCHIVED — British Columbia HST Regulations

P.C. 2011-614 June 9, 2011

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 277 (see footnote a) and 277.1 (see footnote b) of the Excise Tax Act (see footnote c), hereby makes the annexed British Columbia HST Regulations.

BRITISH COLUMBIA HST REGULATIONS

INTERPRETATION

Definitions

1. The following definitions apply in these Regulations.

“Act”
« Loi »

“Act” means the Excise Tax Act.

“harmonized sales tax in British Columbia”
« taxe de vente harmonisée en Colombie-Britannique »

“harmonized sales tax in British Columbia” means the new harmonized value-added tax system as it applies in respect of British Columbia.

TAX RATE

Tax rate for British Columbia — 2012

2. For the purposes of paragraph (a) of the definition “tax rate” in subsection 123(1) of the Act, if the result of the referendum conducted under the HST (Harmonized Sales Tax) Referendum Regulation, B.C. Reg. 68/2011, is not in favour of extinguishing the harmonized sales tax in British Columbia, the prescribed rate for British Columbia is 6%.

AMENDMENT TO THESE REGULATIONS

3. Section 2 of these Regulations is replaced by the following:

Tax rate for British Columbia — 2014

2. For the purposes of paragraph (a) of the definition “tax rate” in subsection 123(1) of the Act, if the result of the referendum conducted under the HST (Harmonized Sales Tax) Referendum Regulation, B.C. Reg. 68/2011, is not in favour of extinguishing the harmonized sales tax in British Columbia, the prescribed rate for British Columbia is 5%.

APPLICATION

July 1, 2012

4. (1) Section 2 comes into force on July 1, 2012.

July 1, 2014

(2) Section 3 comes into force on July 1, 2014.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

On May 25, 2011, British Columbia announced its intention that the provincial component of the Harmonized Sales Tax (HST) be reduced if the result of the referendum (the Referendum) conducted under British Columbia’s HST (Harmonized Sales Tax) Referendum Regulation is not in favour of extinguishing the provincial component of the HST in British Columbia. In that case, the provincial component of the HST would be reduced from 7% to 6%, effective July 1, 2012, and from 6% to 5%, effective July 1, 2014.

Under the Comprehensive Integrated Tax Co-ordination Agreement (CITCA) between the Government of Canada and the Government of British Columbia, British Columbia is entitled to some elements of provincial tax policy flexibility, such as establishing the rate of the provincial component of the HST, limited point-of-sale rebates for the provincial component of the HST and the rate of some targeted rebates. The CITCA is the federal-provincial agreement that details the parameters agreed upon between Canada and British Columbia to govern the imposition of the HST under federal legislation and administration, on the same tax base as the federal Goods and Services Tax (GST). The British Columbia HST Regulations (the Regulations) formalize and give legal force to the announced rate reductions, subject to the result of the Referendum.

Description and rationale

If the result of the Referendum is not in favour of extinguishing the provincial component of the HST in British Columbia, the Regulations provide that the rate of the provincial component of the HST for British Columbia will be 6%, effective July 1, 2012, and the rate of the provincial component of the HST for British Columbia will be 5%, effective July 1, 2014. Also, additional regulations containing transitional rules necessary to address particular transactions that straddle the July 1, 2012, and July 1, 2014, implementation dates will be brought forward in the near future. If the result of the Referendum is in favour of extinguishing the provincial component of the HST in British Columbia, the Regulations will not have the effect of reducing the rate of the provincial component of the HST for British Columbia.

Parliament has approved the mechanisms to facilitate a change in the provincial component of the HST by way of regulations with the passage of the Provincial Choice Tax Framework Act on December 15, 2009. The Regulations are therefore necessary to implement British Columbia’s tax policy flexibility.

Consultation

The Regulations were developed in consultation with the Government of British Columbia and the Canada Revenue Agency and are designed to reflect the announcement by British Columbia on May 25, 2011.

Contacts

Rob Ives
Sales Tax Division
Department of Finance
L’Esplanade Laurier
140 O’Connor Street
Ottawa, Ontario
K1A 0G5
Telephone: 613-943-0619

Costa Dimitrakopoulos
Excise and GST/HST Rulings Directorate
Canada Revenue Agency
320 Queen Street
Ottawa, Ontario
K1A 0L5
Telephone: 613-954-7959

Footnote a
S.C. 1993, c. 27, s. 125(1)

Footnote b
S.C. 2009, c. 32, s. 37(1)

Footnote c
R.S., c. E-15