BC Businesses Should Buy Equipment Before April 1

bc hst repeal I’m fortunate to have Mike Boven, commodity tax expert from BDO Canada, joining me again to discuss some of the implications of the upcoming BC HST repeal and what it means for business owners in the province of British Columbia. Be sure to check out the other articles in the series to get a full grasp on how you need to prepare before April 1, 2013.

What The BC HST Repeal Means For Expenses

For example’s sake, let’s say you’re the type of business that can claim a full-input tax credit for HST on everything you buy and you require a lot of supplies or things that are subject to tax. I know at BDO, we have to buy a lot of computers, paper and a lot of other supplies. A business like ours, we can recover the HST we pay on those things as an input credit.

However, as of April 1st 2013 any of those items we buy afterwards will be subject to the provincial sales tax and we cannot recover that as an input credit. That is an additional 7% cost to us from purchasing those items. That said, any business like ours should buy all the computers and supplies they can get their hands on prior to April 1st 2013 because it is taxed 7% cheaper.

Buy Your Equipment Now

bc hst repeal

Any businesses like ours, and there’s a myriad of businesses like that should be purchasing things now if you need it. Purchase your computers, equipment and supplies now because there could potentially be a 7% tax hit on those if you wait until after April 1st 2013.

On the flip side, there are businesses that are not entitled to claim full input tax credits. To give you an example, let’s take an insurance office. With an insurance office you need to look for something that is taxable now that may not be taxable after April 1st 2013 and then decide if the purchase can be delayed.

Still in the example of an insurance office, because it’s in the financial services business they can’t claim input credits from HST expenses. They shouldn’t have their accountants do a special project between now and April 1st 2013 because we would have to charge them 12% that they cannot recover in any way. If we were to bill an insurance agency client after the BC HST repeal (April 1st 2013), we only have to bill them a 5% GST. So the cost of our service to them has gone down 5%.

Depending on the type of business you’re in, you may want to either accelerate or delay certain services or projects depending where you fall on that spectrum. Every business is unique hence the need for accountants like BDO (shameless plug).

BC HST Repeal Article Series For Small Business Owners

  1. BC HST Repeal: How We Got Here & Where We Are Headed
  2. What Every Retailer Needs To Know About The BC HST Repeal
  3. BC HST Repeal: Details On Registering For PST
  4. BC Businesses Should Buy Equipment Before April 1st
  5. What Every Small Business Owner Needs To Know About The BC HST Repeal
  6. What The Construction Industry Needs To Know About The BC HST Repeal

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