October 15, 2009
TRANSITION RULES GIVE CLARITY TO BUSINESSES, CONSUMERS

VICTORIA - The Government of B.C. has released proposed general transitional
rules to help guide businesses and consumers in a smooth changeover to the
proposed Harmonized Sales Tax (HST), Finance Minister Colin Hansen announced
today.

"B.C. is working to provide businesses and consumers with the technical
guidelines to ensure the smoothest possible transition to a single harmonized
sales tax on July 1, 2010," said Hansen. "The clarity provided by the
transitional rules will ensure that taxpayers are properly prepared in the
lead-up to harmonization."

The proposed transitional rules explain:
* How the HST applies in the case of transactions that straddle July 1, 2010.
* How the PST applies in the case of transactions that straddle July 1, 2010.
* The special transitional rules that will apply.

Generally, the HST will apply to goods and services purchased on or after
July 1, 2010. In addition, consistent with the approach used in the Atlantic
provinces and Quebec, the HST will generally apply to prepayments starting on
May 1, 2010, for goods or services provided on or after July 1, 2010. This
will create a level playing field for consumers and provides certainty and
clarity for businesses in B.C.

The transitional rules include some key measures such as:
* Subscriptions to newspapers, magazines and other periodical publications -
The HST will not apply to subscriptions paid before July 1, 2010.
* Passenger Transportation Services - The HST will generally not apply to
round-trip tickets commenced before July 1, 2010.
* Funeral services - The HST will generally not apply to funeral services
where the contract is entered into before July 1, 2010.
* Transitional PST inventory rebate for residential contracts - A rebate will
be available for PST embedded in construction materials purchased before July
1, 2010, and used in residential property contracts that are subject to the
HST.

The general transitional rules do not include transitional rules for new
residential real property. The Province is currently finalizing these
transitional rules and will be releasing them in the coming months.

"The HST builds on numerous tax cuts introduced over the past eight years to
enhance the competitiveness of the provincial tax system" said Hansen. "Since
2001, the government has embarked on a range of strategic tax cuts - more
than 120 in all - providing significant tax relief for individuals, families
and small businesses ensuring that B.C. is one of the best-positioned
provinces to emerge even stronger from the current global recession."

For more information on the proposed transitional rules visit
www.gov.bc.ca/hst.

QUICK FACTS

Introducing a Harmonized Sales Tax (HST) in B.C. is the single biggest thing
government can do to strengthen the provincial economy. The HST will lower
costs for job-creating industries, make B.C. more attractive to new
investment and enhance economic growth in key sectors such as forestry and
other resource industries. When those industries and the economy are strong,
they support other community based industries such as the retail and service
sectors.

In total the HST will remove about $2 billion in costs from B.C. business
which will enhance competitiveness, encourage investment and ultimately
create more jobs.

Under the proposed HST, a number of products will be exempt from the seven
per cent provincial portion of the B.C. HST including gasoline, and diesel
fuel when used in motor vehicles, books, children's-sized clothing and
footwear, children's car seats and car booster seats, diapers and feminine
hygiene products.

The B.C. government has also proposed a provincially-administered point-of-
sale rebate for residential energy.

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BACKGROUNDER

GENERAL TRANSITIONAL RULES FOR HST IMPLEMENTATION

The transitional rules set out which tax applies - the current Provincial
Sales Tax (PST) or the B.C. portion of the HST - for transactions that
straddle July 1, 2010. These rules are described in more detail in the
Information Notice, "General Transitional Rules for British Columbia HST".

Key dates:
* July 1, 2010 - Implementation of the HST in B.C.
* May 1, 2010 - The HST will apply to amounts that are paid or payable on or
after this date for goods or services provided on or after July 1, 2010.
* October 14, 2010 - Certain businesses and public service bodies may be
required to self-assess the B.C. component of the HST on amounts paid or
payable after this date and before May 2010 for goods or services provided on
or after July 1, 2010.

GOODS AND SERVICES
The PST will apply to the taxable sale of goods when the goods are delivered,
or ownership of the goods is transferred, to the purchaser before July 1,
2010. The HST will generally apply to goods when the goods are delivered, and
ownership is transferred, to the purchaser on or after July 1, 2010.

The PST will apply to the portion of taxable services performed before July
1, 2010. The HST will generally apply to the portion of services performed on
or after July 1, 2010. The HST will not apply, however, to a service where
substantially all (90 per cent or more) of the service is performed before
July 2010 - in which case the PST will continue to apply where applicable.

The Information Notice also describes specific transitional rules for funeral
and cemetery services, passenger transportation services, freight
transportation services, and prepaid subscriptions to newspapers, magazines
and other periodicals.

LEASES AND LICENCES
The PST will generally apply to a supply of taxable goods by way of lease,
licence or similar  arrangement for the part of a lease interval that occurs
before July 1, 2010. The HST will generally apply to a supply of property -
including certain goods and non-residential real property - for the part of a
lease interval that occurs on or after July 1, 2010.

However, the PST will continue to apply, and the HST will not apply, to a
lease interval that begins before July 2010 and ends before July 31, 2010.

Commercial parking will be treated as a lease under the transitional
rules.

Short term accommodation rentals (e.g., those currently subject to hotel room
tax) will be treated as a lease under the transitional rules.

INTANGIBLE PERSONAL PROPERTY
The HST will generally apply to consideration that is due or paid on or after
July 1, 2010, for a supply of intangible personal property (e.g.,
intellectual property) by way of sale. However, in some cases the
transitional rules for leases and licences may apply. The Information Notice
also describes specific transitional rules for memberships, admissions and
passenger transportation passes.

OTHER TRANSITIONAL RULES
Specific transitional rules are proposed for certain other circumstances,
including those in respect of direct sellers, continuous supplies, budget
payment arrangements, combined supplies, progress payments, goods brought
into B.C., imports, and returns and exchanges. The details can be
found in the Information Notice.

WIND DOWN OF PST
On July 1, 2010, the existing PST will generally cease to apply.

Final PST returns will generally need to be filed by July 23, 2010. In
addition, if a PST amount is collected or becomes payable after June 2010,
the vendor will be required to account for that amount in a supplemental PST
return to be filed on or before the 23rd day of the following month.

Information will be provided at a later date on the wind down of the existing
assessment, objection, appeal, enforcement and refund provisions under the
PST legislation.

TRANSITIONAL PST INVENTORY REBATE FOR RESIDENTIAL REAL PROPERTY CONTRACTS
A rebate will be available for PST embedded in construction materials that
are used in residential real property contracts where the HST applies. The
rebate application will need to be filed on or before December 31, 2010 and
certain other conditions will apply.

More detailed information is available at www.gov.bc.ca/hst.

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