B.C.'s old provincial sales tax (PST) did not apply to digital downloads, notes Vancouver tax analyst and lawyer Terry Barnett, but that will change when the new PST replaces the harmonized sales tax (HST) on April 1. The new PST taxes purchases from iTunes, Netflix and similar digital content providers under the guise of the old tax on telecommunication services. The new definition of that term encompasses not only traditional communication services (e.g. telephone services) but the accessing, downloading or viewing of "audio books, audio programs, music, ring tones, a television program, motion picture or other videos," said Barnett, the partner in charge of GST/HST and Commodity Taxes at Thorsteinssons LLP.
Other changes are more subtle but nonetheless expand the tax base, he notes. The old PST applied to taxable services which meant services "to install, assemble, dismantle, repair, adjust, restore, recondition, refinish or maintain tangible personal property (i.e. physical goods of any kind). The new law contains a tax on related services, which means "any service provided to tangible personal property".
Barnett adds that major areas of the tax are to be covered by regulations which have not been released. For example, the exemptions for equipment used in manufacturing, mining and the oil and gas industries. "As a result, with less than three months remaining before the implementation of the new PST, BC's manufacturers and their suppliers do not know whether the exemption will be reinstated as it read before HST, or whether it will be narrowed to resolve the outstanding issues still being litigated under the old PST," Barnett writes in the February issue of Western Investor.
