They will only have to charge the 5 per cent GST after April 1, not the 7 per cent PST that was part of the old HST
January 22, 2013 by Steve Payne
By David Godkin
The CEO of the Greater Vancouver Home Builders Association is hoping for a boost in residential construction now that the provincial government has set April 1 for a return to the provincial sales tax from the HST that was unexpectedly introduced in 2010. In the 16 months since a province-wide referendum overturned implementation of the HST renovators have seen a dip in construction activity which they blame on continued uncertainty around the tax. Bob de Wit says new taxation rules will now be a little clearer prior to and after the return to the PST.
“They have clarified the rules around application of the HST to new sales during the transition period and they’ve also been clear about the application of PST on labour. But they still have not released the full regulations relating to implementation of the PST which obviously we would like to see.”
The good news is that as of April 1 home buyers will no longer pay 7 per cent on new home purchases, while renovation contractors will only charge 5 per cent GST instead of the 12% HST for their services (e.g., carpentry, plumbing, electrical wiring). The same will apply to thermal insulation, weather stripping and caulking products. The only tax change for paint, lumber, concrete mix and nails is what the tax will be called: contractors and their clients will still pay 5% GST and 7% PST on those products, which is equal to the previous 12% HST. Nonetheless, Jeff Bain, President of Vancouver-based JKB Construction, says a return to the original PST from the HST will encourage more home owners to commit to renovations which they had been putting off until now.
“Absolutely. That’s what the whole referendum was about. The HST was a sneaky tax the way it came in and it was a lot more tax you were paying on every dollar you spent. Everything’s going to help.”
What will not help, says Rob Currie, co-owner of Basement Systems Vancouver, is the provincial government’s continued refusal to implement a renovation tax credit. He believes it’s now up to the federal government to return a portion of the tax paid for renovation services and products to homeowners in every province. “That should be done at all times to give the average hard working person who wants to a bit of renovation the opportunity to get a little money back.” To its credit, BC’s government does provide seniors with a 10 per cent home renovation tax credit, with no lifetime maximum; But Currie wants everyone to receive renovation tax credits, along with prorated thresholds based on the amount home owners spend.
Meantime, B.C. Contractors have complained about a lack of information about the transition from the HST to the PST. In response, the Province has rolled out a comprehensive information campaign that includes in-person and on-line seminars covering the general principles of the PST, one-on-one consultations with tax specialists, and web-based videos. Information is also available by calling 1-877-388-4440 or by visiting http://www.pstinbc.ca.