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Proposed B.C. PST Rebate on Select Machinery and Equipment: What You Need to Know

Proposed B.C. PST Rebate on Select Machinery and Equipment: What You Need to Know
By  Bill S. Maclagan, Q.C., Aideen Brennan and Dirk Van Ommen (Articling Student)
November 18, 2020

The British Columbia government recently proposed to introduce the B.C. PST Rebate on Select Machinery and Equipment (Rebate), which allows incorporated businesses to apply for a 100 per cent rebate of PST paid between September 17, 2020 and September 30, 2021 (Time Period) on purchases or leases of select machinery and equipment. The Rebate is expected to be available to businesses across a broad range of sectors and industries.

ELIGIBILITY

Businesses must be incorporated to be eligible. Crown and government corporations, charities and non-profit corporations, schools and universities, hospitals, health boards and agents of the above are not eligible.
Property eligible for the Rebate (Eligible Property) must be:

  1. Described in capital cost allowance (CCA) classes 8, 10, 12, 16,43, 43.1, 43.2, 46, 50, 53, 54 and 55 (as of September 1, 2020)

  2. Obtained substantially for the purpose of gaining or producing income (i.e., more than 90 per cent)

  3. Not excluded (Excluded Property).

The CCA classes listed above include, but are not limited to, machinery and equipment, tools, appliances and furniture, computer hardware and software, electric vehicle charging stations and zero-emission vehicles. Eligible Property, unless obtained by lease, must be capital assets to be eligible.

Excluded Property consists of vehicles (other than zero-emission vehicles), goods purchased to be installed as an improvement to real property, goods purchased for resale by a small seller, and exclusive products purchased by independent sales contractors (e.g., cosmetics and household products).

TIMING

The PST must be paid during the Time Period. For leases, the PST must relate to a rental period that includes a right to use the Eligible Property between September 17, 2020 and November 30, 2021. All other Eligible Property must be delivered before October 1, 2021 or under a written contract that states that the Eligible Property must be delivered on or before November 30, 2021.

REPAYMENT OF REBATE IN CERTAIN CIRCUMSTANCES

Businesses may be required to repay some or all of the Rebate if they receive a refund or credit in respect of the price of the Eligible property or if they subsequently use the Eligible Property other than substantially for the purpose of gaining or producing income.

APPLICATION

Incorporated businesses can make two Rebate applications: the first application can be made between April 1, 2021 and September 30, 2021. The second application can be made between October 1, 2021 and March 31, 2022, which is six months after the Time Period ends on September 30, 2021. The second application cannot cover expenditures for which the Rebate has previously been claimed.

The Ministry of Finance has not yet released detailed information on the process but will do so before April 1, 2021.

LEGISLATIVE CONTEXT

The Rebate was proposed concurrently with the B.C. Increased Employment Incentive (BCIEI) as part of B.C.’s Economic Recovery Plan. Legislation implementing the proposed Rebate and BCIEI is expected to be tabled in the coming weeks, although there are currently indications that this could be pushed into the New Year.

WHAT BUSINESSES SHOULD DO NEXT

Incorporated businesses should keep all documents evidencing PST payments on purchases or leases of Eligible Property and may wish to consider accelerating the purchase of Eligible Property. Unincorporated businesses may wish to incorporate to take advantage of the Rebate. However, the Rebate only applies to Eligible Property obtained after incorporation.

Businesses should also consider whether they are eligible for the BCIEI. For more information on the BCIEI, please see our October 2020 Blakes Bulletin: Proposed B.C. Increased Employment Incentive: What You Need to Know.

For further information, please contact:

Bill Maclagan                             604-631-3336
Aideen Brennan                         604-631-3337

or any other member of our Tax group.