Everything British Columbians wanted to know about eliminating HST

At tax time, Canada Revenue Agency (CRA) releases a steady stream of bulletin and notices to help taxpayers. Recently, the publication T4060 CRA Collections Policies ó Individual Income Tax (T1) and Notice 270 concering elimination of the HST in British Columbia in 2013  appeared on the CRA website.

There are few changes to report in T4060, which sets out the procedures for taxpayer remittance and CRA collection of taxes. But worth noting is the Frivolity Penalty, found in section 179.1 of the Income Tax Act. If you are planning on appealing a CRA assessment or reassessment, make sure your appeal has legs. The Frivolity Penalty allows the CRA to impose a penalty of 10% of tax owing if your appeal proves to be frivolous or groundless and you launched an appeal only to defer paying taxes.

Notice 270 is a meatier document detailing the ramifications of the April 1, 2013, elimination of the 12% HST. As of that date, HST will no longer apply on taxable supplies or services made in B.C. or to taxable property or services imported to B.C. As of that date, B.C. reverts to the 5% GST.

The key date, then, is April 1, 2013. Consider the following CRA example:

In December 2012, a consumer buys a refrigerator on a layaway plan. According to the written agreement, the consumer must make six equal, monthly payments starting in January. Possession and ownership of the refrigerator will be transferred to the consumer after the final payment is made in June 2013. HST at the rate of 12% applies to the monthly payments made before April 1, 2013. Payments made on or after April 1, 2013, are subject to GST at the rate of 5%.

As you can see, the CRA intends to draw the line at April 1, 2013, so that any payment obligation arising on or after that date will be a GST payment obligation, notwithstanding contractual relations that take into account taxes payable.