The introduction of the harmonized sales tax is an essential step to make B.C. businesses more competitive, encourage new investment, improve productivity, and reduce administrative costs for B.C. taxpayers and businesses. Most importantly, harmonization will generate economic growth and, over time, create jobs and generate more revenue to sustain and improve crucial public services.
The government of British Columbia implemented a Harmonized Sales Tax (HST) on July 1, 2010.
A 7 per cent B.C. rate has been added to the 5 per cent federal Goods and Services Tax (GST). This combined 12 per cent tax is called the HST.
B.C.’s 7 per cent Provincial Sales Tax (PST) and 8 per cent Hotel Room Tax (HRT) have been eliminated.
As of July 1, 2010, there is no PST, HRT or GST in British Columbia – only the HST.
In response to input from British Columbians from around the province, the Government has committed to make significant changes to the HST. The provincial portion of the tax will be lowered by one point, to 6 per cent, in 2012. In 2014, the rate will be lowered by another point, bringing the overall HST rate to 10%.
B.C. provides the following HST rebates and credits:
- Point-of-Sale Rebates for motor fuels, books, children-sized clothing and footwear, children’s car seats and car booster seats, children’s diapers and feminine hygiene products
- Rebates for public bodies such as, Municipalities, School Authorities, Universities and Public Colleges, Hospital Authorities, Registered Charities and Qualifying Non-Profit Organizations
- New Housing Rebate
- Residential Energy Credit
- B.C. HST Credit for low and modest income British Columbians
B.C.’s HST rate is 12 per cent and applies to the same goods and services that were taxable under the GST unless a provincial point-of-sale rebate applies. The rate will fall to 11 percent in 2012 and 10 per cent on July 1, 2014.
If there was no GST on a product or service before July 1, 2010 there is no HST today.
If there was 5 per cent GST on a good or service before July 1, 2010 there is 12 per cent HST unless the item is eligible for a provincial point-of-sale rebate or provincial credit.
There is only 5 per cent HST (the federal part) on point-of-sale rebate items (motor fuels, books, etc.) – there is no 7 per cent provincial HST.
B.C. provides a provincial credit for residential energy. The credit is equal to the provincial portion of the HST so it is like there is only 5 per cent HST on residential energy.
More Information
The HST is imposed under federal legislation, the Excise Tax Act (Canada), and is administered by the Canada Revenue Agency (CRA).
The government of British Columbia and the federal government signed a harmonization agreement, the Comprehensive Integrated Tax Coordination Agreement (CITCA), in November 2009.
While the federal government administers and collects the HST, the provincial government retains the authority to establish set some of the the basic parameters of the HST:
- The Province is able to set its own provincial rate (the 7% provincial portion).BC initially set the provincial rate at 7%, for a combined HST rate in BC of 12%. Under the sales tax harmonization agreement with the federal government the rate cannot be changed until July 1, 2012. After July 1, 2012, the Province can change the tax rate once a year with written notice under the Agreement.
- The Province is able to exempt goods and service from the HST as long as those exemptions do not exceed five per cent of GST revenue in B.C.
- BC can set its own rebate rates for new housing, municipalities, schools, universities, public colleges, hospitals, charities, and qualifying non-profit organizations.
Yes, there is additional information for businesses about the general transitional rules, temporary input tax credit restriction, invoicing requirements, selling to government, and other issues under FAQs.
More general information can be found in our Running a Business section.
Information about the administration of the HST in British Columbia is available on the Canada Revenue Agency’s website.