In order to address the impacts of COVID-19 outbreak on businesses, the BC Government added a temporary rebate program to its directory of COVID incentives and introduced a provincial PST rebate program, which allows the refund (rebate) of PST paid during the period September 17th, 2020 and March 31st, 2022 on qualifying machinery and equipment.
Benefits like these may be instrumental in giving the companies not just a short-term recovery, but also a long-term growth in setting up or growing their businesses.
Understanding the framework of the rebate program
- This scheme is a “scheme for all” incorporated businesses, albeit with some exceptions like government corporations, sole-proprietors, NPOs, schools and hospitals.
- Rebate applies on qualifying machinery and equipment, though it covers items beyond just “machinery” and “equipment”. To be eligible, such items should be considered capital assets, meaning thereby that asset may be capitalized for accounting purposes (for example, may be subject to depreciation).
- Determination of qualifying items is made by certain CCA (capital cost allowance) classes as defined under Income Tax Act, preferably including capital assets from Class 8, 10, 12, 16, 38, 43, 43.1, 43.2, 46, 50, 53, 54, and 55 (covers zero-emission vehicles).
- PST paid on leases (both capital or operating leases) of qualifying machinery and equipment also qualifies for the rebate.
- Most non-consumable goods qualify under the rebate provided they are :
- Obtained substantially (more than 90 percent) for the purpose of gaining or producing income
- Purchased or leased in B.C., brought into or received in B.C., brought into B.C. for temporary use, received from a related company, or received as a taxable gift, and
- In the case of software taxed under Part 4 of the Provincial Sales Tax Act (PSTA), purchased for use on or with a device ordinarily situated in B.C.
- To be eligible under the program, PST must be paid on these qualifying items during the period September 17th, 2020 and March 31st, 2022. It may be worthwhile to note that rebate is linked with the payment of PST and not date of purchase/invoicing.
- Due date for submission of rebate application is 30th September 2022.
Outside the scope of Program
While it is important to talk about the coverage of the program, it is equally crucial to keep a check on items which are outside the ambit of the program, which are as follows:
- Boats/Vehicles (excluding zero-emissions vehicles) ;
- Consumables, disposable items, real property ;
- Goods purchased to be installed as an improvement to real property ;
- Goods purchased for resale by a small seller ;
- Exclusive products purchased by independent sales contractors.
The scheme provides a few examples as well to explain and better understand how and when rebate would and would not apply for different businesses.
As this is a time-bound scheme and the final deadline will arrive before you know it, it may require some efforts to identify the eligible items and file the right application at the right time.
At Leyton, we are team of dedicated sales tax experts and have assisted various business in claiming these refunds/rebates from the Government with our end-to-end approach.
If you want to know more about our sales tax services, reach out to our experts today.