BC Government Clarifies PST Rules but Offers no Relief on Deadline As members are aware, the Govern
As members are aware, the Government of British Columbia in late February announced dramatic changes to the Provincial Sales Tax in the Province affecting HVAC equipment. Effective April 1, 2022, the PST rate on the purchase or lease price of fossil fuel combustion systems will increase from 7% to 12%. Also effective April 1, 2022, heat pumps will be exempt from PST.
Not only were these tax changes introduced abruptly and without any warning to industry, but they did not reflect any consultation with industry on impacts and implications. The extremely tight timeline to come into compliance is causing a major disruption in the industry.
In early March, HRAI sent a letter to Minister of Finance Selina Robinson requesting a six-month extension on the implementation deadline. Other industry associations (CIPH, TECA) have made similar appeals for consideration. The industry also expressed frustration and confusion about how the new tax rules would be applied under a variety of scenarios.
Last week, the BC Government issued a new notice (2022-003) offering some clarifications on a number of questions that were raised by industry, including how parts or components that may be sold into both fossil fuel combustion systems and heat pump systems should be treated. The notice states that “if parts or components are sold at the same time as the fossil fuel combustion unit, but sold separately, and are not included with the fossil fuel combustion unit (such as when it comes from the manufacturer), the applicable PST rate on those parts and components is 7%.”
Here is the full link to the notice: https://www2.gov.bc.ca/assets/gov/taxes/sales-taxes/publications/notice-2022-003-provincial-sales-tax-on-fossil-fuel-combustion-systems-and-heat-pumps.pdf
HRAI is following up daily with key contacts in the BC government to appeal for an extension to the April 1st deadline, or at least some consideration for a “grace period,” as vendors in the province continue to work on updating their systems.
For more information, contact Victoria Cross at 778-808-8674 or email victoria@twowestgroup.com.
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