Proposed British Columbia “Netflix Tax” deferred
In February 2020, the province of British Columbia (BC) announced various provincial sales tax (PST) changes, some of which were proposed to take effect 1 July 2020. Most notable of the changes impacted Canadian sellers of goods and Canadian and foreign sellers of software and telecommunication services, requiring such vendors to register to collect 7% PST if specified BC revenues exceed CA$10,000. Due to COVID-19, the changes will not take effect until a new proposed date of 1 April 2021.
Given the low de minimis threshold, many non-resident vendors of software and telecommunication services (such as Netflix) will be required to register and collect the tax regardless of whether the non-resident historically was not viewed as carrying on business in the province. BC follows the provinces of Quebec and Saskatchewan that previously broadened their tax nets to capture non-resident sales in the provinces.
Other matters of note from BC’s February 2020 budget (note, this is not a comprehensive list):
- Elimination of the PST exemption for carbonated beverages that contain sugar, natural sweeteners, or artificial sweeteners effective 1 April 2021.
- All Canadian sellers of vapour products will be required to register to collect PST if they cause such products to be delivered to BC purchasers effective 1 April 2021. Also effective 1 January 2020, the BC PST rate on vapour products increased to 20%. Note that the 20% PST rate that applies to vapour products is included in the consideration for the purposes of calculating the federal GST.
- Effective 19 February 2020 exemptions for pollution control and waste management machinery and equipment have been amended to remove restrictions regarding the location where the machinery and equipment is used.
- Electric aircraft are exempt from PST effective 19 February 2020.
- Real property contractors who perform value-added work to goods and then install those goods into real property outside BC can apply for refunds of PST paid on those goods effective 19 February 2020.