Transcript KPMG Talkbook Full-page

INDIRECT TAX
B.C. Harmonization
Golf Club Operators Association
B.C. Chapter
KPMG LLP
November 11, 2009
B.C. Harmonization
Agenda
• HST Overview
• Application to Golf Club Operations
• Transition Rules
• Planning / Implementation
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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HST Overview
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Overview
• Effective July 1, 2010, proposed 12% HST
• 5% federal component and 7% provincial component
• NOT a new tax
• Same general rules and tax base as GST
• Some differences
• Federally administered
• One return/one administration/one audit
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Overview
• Consequential sales tax changes
• Social Service Tax (PST)
-
7% PST on TPP, certain services, telecom, parking eliminated
-
$5 tire and battery levy eliminated
.4% ICE levy eliminated
$1.50 per day vehicle rental eliminated
-
8% HRT eliminated
2% tax collected for eligible municipalities retained to July 1,
2011
• PST on private sales of used vehicles, aircraft and boats retained
• Hotel Room Tax
• Liquor Markups
-
Adjusted to ensure no revenue loss
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Overview
• Differences between B.C. HST and GST:
• Point-of-sale rebates
• Residential energy rebates
• Input tax credit (ITC) restrictions
• No B.C. HST collected on commercial imports
• Public service body (PSB) rebates calculated at different
rates
• New housing rebates calculated on different amounts
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Overview
• Point-of-sale rebates for B.C. HST on purchases by
consumers:
• Books
• Children’s clothing and footwear
• Children’s car seats and car booster seats
• Diapers and feminine hygiene products
• Gasoline, diesel fuel, marine diesel fuel and aviation fuel
including bio-fuel components for motor vehicles, boats
and aircraft
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Overview
• Residential energy rebate
• Provincially administered rebate for energy (e.g., natural
gas, electricity) acquired for residential use
• Mechanics of rebate not yet determined
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
B.C. Harmonization
Overview
• Temporary ITC restrictions for Large Businesses (over
$10M taxable sales) and financial institutions (FIs)
• As per MOA, full denial up to 5 years with 3-year phaseout, subject to acceleration by B.C.
• ITCs denied for provincial portion of B.C. HST for the
following:
• Energy, except where purchased by farmers or used to produce
goods for sale
• Telecommunications services other than internet access and tollfree numbers
• Road vehicles weighing less than 3,000 kilograms (and parts and
certain services)
• Meals, beverages and entertainment
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Overview
• Generally reduced costs for businesses given no more
unrecoverable PST (subject to ITC restrictions):
• Reduced compliance:
• No exemption certificates
• No dealing with PST complexities
- Scope of exemptions
- Goods for own use
- Self-assessment
• One return and one audit
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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Harmonization – Impact by Sector
• Export
-
Positive (subject to cash flow concerns)
-
Generally positive
-
Mixed – goods positive, services negative (at least in short term)
-
Negative, costly and complex
-
Negative to some components (at least in short term)
-
Mixed – commercial positive, residential negative
-
Mixed
• ENR / Manufacturing / Wholesale
• Retail
• Financial Services
• Hospitality
• Real Estate
• Public sector
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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Application to Golf Club Operations
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Golf Club Revenues
• Any revenues currently subject to 5% GST will now be
subject to 12% HST
• Green fees
• Lessons
• Club dues
• Equipment rentals
• Pro shop sales
- Children’s clothing?
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Golf Club Expenditures
• Will cease paying PST on any expenditures currently
subject to PST
- Materials and equipment
- Equipment Repair and Maintenance Costs
- Telecommunications
- Energy (electricity / natural gas)
- Legal services
• Will pay HST on all expenditures currently subject to GST
• Can claim ITC for all HST unless revenues over $10M in which case
restricted from claiming on energy and telcom
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
B.C. Harmonization
Golf Club Impact
• Some reduction in costs but likely not significant
• 7% cost increase in cost to consumer (except on items
currently subject to PST – cart rentals, pro shop sales)
• Will consumers accept increase?
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
Transitional Rules
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Transitional Rules (Other Than Residential Housing)
• Important dates:
Announcement
date
October 14,
2009
Specified preimplementation
date
Harmonization
May 1,
2010
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
July 1,
2010
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B.C. Harmonization
Transitional Rules – General
GST (and PST where applicable) apply to property and services
supplied prior to July 2010
HST applies to property and services supplied after June 2010
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Transitional Rules - Prepayments
• Club Dues
• HST applicable to club dues payable after April 2010 to the extent period
covered is post June 2010
-
E.g. – annual payment on May 1, 2010 – HST collectible on 10/12’s of payment
E.g. – quarterly payment on June 1, 2010 – HST collectible on 2/3 of payment
E.g. – annual payment on April 1, 2010 – no HST
• Memberships
• Same rules as club dues except lifetime memberships
-
Where consideration for lifetime membership is payable after October 14, 2009 and before
July 2010 and that consideration exceeds 25% of total consideration for membership the
amount in excess of 25% is subject to HST.
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Transitional Rules – Prepayments
• Lesson Packages
- HST applies where package sold after April 2010 to the extent lessons
will take place after June 2010 unless 90% or more take place prior to
July 2010
• E.g. – 10 lesson package sold June 1 for 5 lessons each in June and July, HST applies to
50%
• Power Cart Rental Packages
- HST applies where package sold after April 2010 to the extent rentals
will be after June 2010 – issue how to apply given timing uncertain
• Charge GST/PST and reallocate based on actual use?
• Allocate based on time covered?
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Transitional Rules – Prepayments
• Green Fee Packages
• HST applies where package sold after April 2010 to the extent package
covers post June 2010 period
-
Charge based on time period covered?
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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Planning/Implementation
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Are You Ready?
• Have you considered the following? (in no particular order)
How much
will it cost?
B.C.
Announcement
July 23, 2009
What are the
differences
between GST
and HST?
Will our
IT
systems
be
ready?
Will we need to
hire and budget
for external
resources?
What is our
implementation
strategy?
How will
our cash
flow be
affected?
What about tax
saving
opportunities?
Should we
develop a
detailed
implementation
plan?
Should we
provide GST
refresher
training?
How will the
transitional
rules apply?
B.C. HST
July 1, 2010
Do we need an
internal
implementation
committee?
Can our software
handle the
required changes?
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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B.C. Harmonization
Planning Considerations
• Defer purchases of PST-taxable items
• e.g., new mowing machinces
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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Presenter’s contact details
Mark Worrall
KPMG LLP
(604) 691-3106
[email protected]
www.kpmg.ca
Information is current to October 15, 2009. The information contained herein is of a general nature and is not intended to
address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely
information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to
be accurate in the future. No one should act on such information without appropriate professional advice after a thorough
examination of the particular situation.
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.
KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. © 2009 KPMG LLP, a Canadian limited liability partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
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