RCC Submission
February 7, 2006
Issues — Miscellaneous Issues
TAX REMITTANCE DATES:
Background:
Collectors of PST in British Columbia are required to remit tax on the 15th of the month following their reporting period.
The Problem:
Two weeks is a very tight time frame for retailers to run the numbers, analyze, review for possible errors and make corrections if necessary.
It is very instructive to note that BC allows the least amount of time for remittances to be calculated and submitted. In Ontario, it is the 23rd of the month, while in Quebec it is the end of the month.
Recommendation:
- The Ministry extend the remittance date deadline from the 15th of the month to at least the 20th.
CLASSIFICATION OF ASSESSMENTS AS "PENALTIES":
Background:
If a B.C. taxpayer is assessed PST for tax not properly collected on a transaction with a customer, the PST assessment is considered, under the Social Service Tax Act as a "penalty, equal to the tax liability."
The Problem:
Because B.C. designates an assessment of non-reported sales taxes as a penalty, by virtue of section 67.6 of the Income Tax Act, the amount paid on the assessment in considered by the Canada Revenue Agency to be non-deductible for corporate tax purposes. It therefore becomes a kind of double fine. Whereas, in other provinces where it is defined as an "assessment of sales tax" it is a deductible expense.
Recommendation:
- Change definition of assessment from "penalty" to "assessment of sales tax."
PST PAID ON ITEMS FOR USE IN OTHER PROVINCES:
Background:
Some B.C.-based retailers with operations in other provinces coordinate purchasing and inventory of store supplies through head office, shipping them to stores out of Province as and when required.
The Problem:
The Ministry maintains that the Social Service Tax Act requires these businesses to pay PST when the supplies are purchased, apply for a refund when they are shipped for use out of Province, and then pay the applicable PST to the province where the supplies will be consumed.
Far from being streamlined, this requires a major accounting effort (with additional cost) to properly prepare the refund request with all the necessary supporting documentation, and impacts on cash flow as PST is essentially being paid twice (once in BC and again in the destination Province) until the BC government remits the refund.
The Act provides an exemption from tax at the time of purchase for goods purchased for resale, but not for goods to be shipped and consumed out of province.
Recommendation:
- That the Ministry provide an exemption for goods purchased for own use if those goods will subsequently be shipped out of Province.
Respectfully submitted,
Kevin Evans
Vice-President, Western Canada
Retail Council of Canada