TEI files letters proposing administrative and revenue-related changes to British Columbia's provincial sales tax and carbon tax.

• Position: TECHNICAL SUBMISSIONS

TEI has filed two letters with British Columbia's Ministry of Finance proposing changes to British Columbia's provincial sales tax and carbon tax. TEI's August 31, 2015, letter, below, filed with the Tax Programs Branch, proposes several changes to the provincial sales tax designed to streamline tax administration for businesses and the Ministry. TEI's September 1, 2015, letter, which follows this letter, filed with the Tax Policy Branch, proposes several revenue-related changes to the provincial sales tax and carbon tax to be considered in conjunction with the Ministry's annual budget process. The letters build on earlier comments made to the Ministry in letters and meetings with Ministry officials. The letters were prepared under the aegis of TEI's Canadian Commodity Tax Committee, whose chair is Richard Taylor. Canadian Commodity Tax Committee member Brian Moul and Pilar Mata, of TEI's legal staff, coordinated the development of the Institute's comments.

On April 20, 2015, several members of Tax Executives Institute, Inc.'s (TEI) Canadian Commodity Tax Committee met with representatives from the British Columbia Ministry of Finance (the Ministry) Tax Programs Branch. In that meeting, Ministry staff informed TEI that "revenue-related" changes to the Provincial Sales Tax Act (PSTA), Motor Fuel Tax Act (MFTA), Carbon Tax Act (CTA), and their regulations are made during the provincial budget process beginning in September of each year. If required, "administrative" changes to the PSTA, MFTA, CTA, and their regulations not affecting tax revenues are made throughout the year.

This letter contains TEI's "administrative" comments and proposed changes to the PSTA and MFTA. TEI is concurrently submitting a separate letter to the Ministry's Tax Policy Branch outlining its revenue-related comments and proposed changes to the PSTA and CTA for the Ministry's annual budget process (copy attached).

The comments and proposed changes in this letter are not listed in order of importance. Many have been included in previous written correspondence from TEI and discussed with Ministry staff. TEI welcomes the opportunity to meet with Ministry staff to discuss these matters further.

About Tax Executives Institute, Inc.

TEI is the preeminent association of in-house tax professionals worldwide. Our approximately 7,000 members represent more than 2,800 of the leading corporations in North and South America, Europe, and Asia. TEI has over 850 members resident in Canada, which belong to chapters in Vancouver, Calgary, Montreal, and Toronto, and constitute approximately 12 percent of TEI's membership. TEI's Canadian members contend daily with the planning and compliance aspects of Canada's business tax laws. In addition, many of TEI's members resident outside of Canada work for companies with substantial activities in British Columbia and Canada. The comments in this letter reflect the views of TEI as a whole but, more particularly, those of our Canadian constituency.

1. Assessments for Invalid PST Exemption/Exception Requests

   The PSTA generally places responsibility for collecting and remitting Provincial Sales Tax (PST) upon vendors that are collectors. Vendors do not have to collect PST if a purchaser provides a PST registration number, declaration form, exemption certificate, or proof of status as a farmer, Indian, agency of the Federal Government, or some other exempt person. The PSTA and its regulations identify the documentation or records that vendors must keep to support the non-collection of PST. The PSTA does not require vendors to verify the PST number or validate the declaration on the exemption certificate or its equivalent.

   Subsection 203(1.1) of the PSTA provides that the Director may assess collectors for PST if the Director determines a collector "had reason to believe" a purchaser did not qualify for an exemption or exception. Subsection 199(1) of the PSTA provides that the Director may assess purchasers for PST if a purchaser "has not paid the taxes the person is liable to pay."

   TEI understands that the Director only intends to issue assessments under subsection 203(1.1) of the PSTA if a collector granted a purchaser an exemption but the declaration or PST number provided by the purchaser includes clearly false information. Collectors are concerned that the Director could interpret subsection 203(1.1) more broadly and seek to collect PST from collectors rather than assessing purchasers under subsection 199(1). This would force vendors to remit the tax to the Ministry and seek a reimbursement from purchasers. Locating and collecting unpaid PST from purchasers can be difficult and would create an additional expense for...