2013 Legislative Session: Fifth Session, 39th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
official report of
Debates of the Legislative Assembly
(hansard)
Tuesday, February 26, 2013
Morning Sitting
Volume 42, Number 5
ISSN 0709-1281 (Print)
ISSN 1499-2175 (Online)
CONTENTS |
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Page |
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Orders of the Day |
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Committee of the Whole House |
13075 |
Bill 2 — Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 (continued) |
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B. Ralston |
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Hon. M. de Jong |
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TUESDAY, FEBRUARY 26, 2013
The House met at 10:02 a.m.
[Mr. Speaker in the chair.]
Prayers.
Orders of the Day
Hon. M. de Jong: I call continued committee stage debate on Bill 2.
Committee of the Whole House
BILL 2 — PROVINCIAL SALES TAX
TRANSITIONAL PROVISIONS AND
AMENDMENTS ACT, 2013
(continued)
The House in Committee of the Whole on Bill 2; D. Black in the chair.
The committee met at 10:05 a.m.
The Chair: Members, last evening it appears that no vote was taken on section 102.
Section 102 approved.
The Chair: We move now to section 105.
Sections 105 and 106 approved.
On section 107.
B. Ralston: Looking at section 107, it authorizes the Lieutenant-Governor-in-Council to make some regulations respecting applications for a refund in relation to heating and non-motor fuel oil. Is this something that is a new process in terms of an application, or does this merely reinstate something that pre-existed the HST?
Hon. M. de Jong: I am advised that there are substantively no new powers being created in this regulatory reg-making authority.
Sections 107 to 116 inclusive approved.
On section 117.
B. Ralston: This section speaks to the repeal of the Special Accounts Appropriation and Control Act, a couple sections of that, and makes reference in the explanatory note to the innovative clean energy fund special account. Can the minister explain what the purpose is of this particular amendment?
Hon. M. de Jong: With the implementation of the Provincial Sales Tax Act, the 0.4 percent tax on the purchase of energy products, not including electricity, is being reimplemented, and that is purposely to raise revenue for the ICE fund.
Section 117 approved.
On section 118.
B. Ralston: This is an amendment to the Sustainable Environment Fund Act and directs some revenue from tax imposed under the provincial sales tax in respect of disposable diapers designed for babies and young children. Can the minister explain the purpose of this amendment?
Hon. M. de Jong: With, again, the implementation of the Provincial Sales Tax Act, the tax on disposable diapers that previously existed, designed for disposable diapers designed for babies and young children, is being reimplemented, so the tax that was in place will again be in place. I think that's the answer.
Sections 118 to 122 inclusive approved.
On section 123.
B. Ralston: This is an amendment to the Transportation Act, directing revenue to the B.C. Transportation Financing Authority. Can the minister explain the purpose of the amendment?
Hon. M. de Jong: The amendment to the Transportation Act is consequential to the reimplementation of the $1.50-per-day tax on the rental of passenger vehicles that was there and will be again. That money goes to the B.C. Transportation Financing Authority.
Sections 123 and 124 approved.
On section 125.
B. Ralston: These amendments amend some definitions in the New Housing Transition Tax and Rebate Act, which was designed to deal with some of the problems experienced by new-home builders as a result of the introduction and then the phasing out of the HST. Can the minister explain the purpose of these definition amendments?
Hon. M. de Jong: I just want to confirm: is the member's question specific to the definitions? Generally,
[ Page 13076 ]
"completion percentage" — is that…? I see him nodding. I'll just take a moment.
The amendments to subsection 1(1) are made particularly so that when builders determine the completion percentage of a condominium unit as of a particular date for the purpose of receiving a rebate under the act, they can utilize the completion percentage of the whole complex on that date instead of the completion percentage of the individual unit.
B. Ralston: Is that based on advice from the industry? Secondly, is it expected to result in any administrative problems in this particular part of the act?
Obviously, as the minister will be aware, the residential home-building industry has experienced some ups and downs as a result of the implementation of the HST and the reimplementation of the PST. I'm just concerned that there not be a signal or that there be any bumps in the administration as we phase back to a PST.
Hon. M. de Jong: I'm advised that this change was made to create consistency with the Canada Revenue Agency's current administrative practices. Since they are involved in administrating these provisions, it was thought prudent to do so.
Sections 125 to 128 inclusive approved.
On section 129.
B. Ralston: This is an amendment, again, to the New Housing Transition Tax and Rebate Act, section 19. It refers to taxable sales made by a foreign supplier. Can the minister explain the import of this particular section?
Hon. M. de Jong: The provision was added to ensure that there was clarity around obligations. It doesn't change any of the obligations. It adds clarity, though, by making it explicit that a person has to not only file but also remit. One might think that was understood, but for the purpose of clarity, this section was added.
Sections 129 to 135 inclusive approved.
On section 136.
B. Ralston: This initiates a new part, which is amendments to the Provincial Sales Tax Act as it exists in the legislation that was passed by the House in May. There are a number of changes in definition. Since those are often foundational in understanding the operation of the following statute, I do have a number of questions about the definitions.
Given, also, that these definitions were passed relatively recently — May or June, I believe, is when we rose last — I'm interested in pursuing that. Can the minister explain the purpose of amending the definition of "affixed machinery"? As I recall, the discussion at the time was that the definition of affixed machinery was a new one and was intended to be more comprehensive and contemporary than the previous definition.
Hon. M. de Jong: As I think the member knows, affixed machinery is certain equipment, machinery or apparatus that had ceased to be personal property at common law but which remains tangible personal property for the purposes of the PST.
The definition has been amended by the adding of sub (c) to allow for, in the future, further exclusions of equipment, machinery or apparatus by regulation so that such equipment, machinery or apparatus would be treated as real property for the purpose of the PST rather than as tangible personal property.
Having said that, I am advised that there are no further exclusions contemplated at this time that would utilize that mechanism.
B. Ralston: In section (c), there's an amendment of the definition of "collection agent," striking out "the Minister of National Revenue for Canada" and substituting for that "the government of Canada or an agent of the government of Canada." I wasn't aware of any reorganization in Ottawa that would necessitate this. Is this just to have a broader definition in the event of further, I suppose, administrative changes in the government of Canada?
Hon. M. de Jong: An amendment, the result of some of the vagaries of the negotiations that occur and may occur in the future…. The definition of "collection agent" has been expanded to include agents of the government of Canada because the agreement for collection of the PST at the border by the Canada Border Services Agency as of April 1, 2013, may actually be made directly with the Canada Border Services Agency rather than the government of Canada. So the reference to the agent would follow.
B. Ralston: There's a further change in the definition of "electronic device." Again, this definition was relatively recent. It substitutes some wording for the previous definition, and the main definition seems to have deleted what was section (b) in the definition. Can the minister explain the reasoning behind the change in that definition of "electronic device"?
Hon. M. de Jong: The short answer is that we've got this new definition because of changes to the definitions of "telecommunication" and "telecommunication service." Electronic devices would be TVs, radios, telephones, computers and smartphones, but the change derives
[ Page 13077 ]
from the changed definitions to "telecommunication" and "telecommunication service."
B. Ralston: A definition of "eligible charity" is added, and I note that in the previous definition section there was nothing at all. Can the minister explain, perhaps, that omission in the previous definition section?
Hon. M. de Jong: There is a definition within the regulations. It was determined to be appropriate and helpful to add a definition of "eligible charity" to the act, to ensure that the refund provided for in the regulations for medical equipment purchased with funds from registered charities and health care auxiliaries works as intended. It was a pretty specific issue that was identified, and it gave rise to the decision to include the definition within the act itself.
B. Ralston: Looking at the change to the definition of "fair market value," which would be fairly central in any tax regime, there's an amendment which adds references to boats and modified motor vehicles. Any particular reason why this appeared to have been omitted in the first version of the act?
Hon. M. de Jong: Two parts of the section. The first, I can tell the member, simply refers to an oversight that wasn't included in the package last spring. The second relates to modifications to, I believe, motor vehicles. It's just motor vehicles in the second part.
They existed in the regulatory regime, but it was thought prudent to make it clear in the legislation that where modifications are made to facilitate the use of the vehicle by, or in the transportation of, an individual using a wheelchair or equip the vehicle with auxiliary driving controls, that didn't adversely impact an individual with calculating the price. A differential is made for those modifications, as opposed to others. That did exist in a regulatory way. The decision was to embed it statutorily.
B. Ralston: The definition of a "family residential dwelling unit" is repealed, and in the definition section it really defines by saying what it does not include. Can the minister explain why that definition is being repealed? It would perhaps appear to be unnecessary given that it defines only in a negative sense.
Hon. M. de Jong: The short answer is that the phrase is no longer used in the act, so it was not necessary to provide a definition to the term.
B. Ralston: Further change to the definition is a change to the definition of "lessor." This appears to be, judging from the previous definition in the act passed in the spring, a more expanded definition of "lessor." Was there some thought that the previous definition may not have been definitive enough or inclusive enough? I'm not quite sure why the newer definition is required to be more expansive.
Hon. M. de Jong: The motivation for the change in this case, I'm advised, was to ensure there was a definition that provided greater certainty of the activities that constitute leasing tangible personal property to a lessee in British Columbia. I'm further advised that whilst the definition is hoped to provide greater clarity, it's not anticipated that there's any substantive on-the-ground change as a result.
B. Ralston: On the definition of "manufactured home," in the previous definition section, there were definitions of a "manufactured home," a "manufactured mobile home" and a "manufactured modular home." I think we're about to deal with at least the second one, the manufactured mobile home, as well. Can the minister explain the thinking in recasting these definitions?
Hon. M. de Jong: Right. The member is correct. That definition of "manufactured home" is being replaced with a definition of a "manufactured building." That relates to the fact that because of the addition of the definition of "portable building" to the Provincial Sales Tax Act, the term "manufactured building" is being used when referring to all three of the types of products here — manufactured mobile homes, manufactured modular homes and portable buildings. It simply avoids the need to repeat all three in every instance.
B. Ralston: Further on the definition, I'm looking at the definition in section (r). The definition is of a "non-resident." This is an added definition. Is this simply…? It appears to be relatively straightforward, but is this to remedy an omission in the previous version of the bill?
Hon. M. de Jong: I apologize. I had to locate where we were in the act. The member has asked a question about the definitions contained in sub (r), but what I didn't hear was whether there was a particular definition under sub (r) or if it was a more general question.
B. Ralston: Just simply focusing on the definition of "non-resident." At least as I read it, in the previous bill that was passed in the spring, that definition isn't contained in the definitions section. So can the minister explain why it is being added? It seems relatively straightforward, but was it an omission in the previous bill, or is there some other explanation?
Hon. M. de Jong: Apologies to the member. There is, actually, a straightforward reason for the change. The
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definition, while it's not being changed substantively, is being moved from section 52 of the Provincial Sales Tax Act to section 1, the definitions sections, simply because the phrase is now used in more sections of the act than was previously contemplated.
B. Ralston: Now I'm going to turn, in subsection (u), to "portable building." The minister has made reference to that as being the broader, more inclusive definition, including a manufactured mobile home and a manufactured modular home. This is a new definition that I think probably reflects the change in building practice. I just wanted a confirmation that that's why it's being added at this point.
At the same time, perhaps he could deal with the new definition that's added of a "portable floating structure," which would appear to be self-evident in the difference between it and a portable building.
Hon. M. de Jong: The member is correct. The definition of "portable building" is being added to the Provincial Sales Tax Act. It reflects the definition in the regulations under the old act and the administrative interpretation of a portable building. The distinction between a portable building and a manufactured mobile or manufactured modular home is now based entirely on the nature of the building, rather than its use. So that is a noteworthy distinction.
"Portable floating structure" is also now, or will be, a defined term. They are a type of portable building, and the definition is being added as a consequence of the addition of the definition of "portable building."
B. Ralston: I'm focusing on the change here in the definition of "promotional distribution." Again, this is something that was in the act passed in the spring. It's now being amended. Can the minister explain the reason for amending that definition of "promotional distribution"?
Hon. M. de Jong: The definition of "promotional distribution," as the member points out, is being amended to divide the definition into two separate definitions, to separate the act of distribution from the materials that are being distributed. So the amendment is presented to provide clarity around that. A promotion distribution occurs when promotional materials are provided to a person for no cost or for less than the cost of acquiring the materials.
B. Ralston: My question is directed to the definition of "purchaser," again, in the legislation that was passed in the spring. This relates to section (b), which is described as being in relation to software. It's (b)(ii) and (iv) that are being modified, adding an additional phrase to (ii) and an additional phrase to (iv). Can the minister explain the purpose of this amendment?
Hon. M. de Jong: The definition of "purchaser" in relation to software is being amended simply to make the definition internally consistent in its language. I am advised that there are no substantive changes that flow from it.
B. Ralston: Moving now to repealing the definitions of "substantially," "telecommunication" and "telecommunication service." Again, those are found in the act passed in the spring. Can the minister explain…?
Hon. M. de Jong: I think we're on the next section.
B. Ralston: Pardon me. Oh, okay. I've skipped over then. I apologize.
Perhaps, then, those are all the questions I have on section 136.
Section 136 approved.
On section 137.
B. Ralston: This section continues with amendments to the definition section, section 1, although it is a separate section. I was beginning my question on subparagraph (h). There are repeals of the definition of "substantially," "telecommunication" and "telecommunication service."
The change in the definition of "substantially" says it means more than 90 percent, and the previous one means 90 percent or more. I'd be interested in, I suppose as a matter of curiosity, what the difference is intended to be.
But there is a substantive change in the definition of "telecommunication" and "telecommunication service." Can the minister explain those changes?
Hon. M. de Jong: With respect to the definition of "substantially" — interesting. Prior to 2010 the definition was meaning more than 90 percent. In 2010 that changed to be 90 percent or more. With the return to the PST, the definition is returning to its pre-2010 roots of more than 90 percent.
I'll have to take a moment to remind myself of the question around the telecommunications definition.
So the definition of "telecommunication" is being divided into two definitions — "telecommunication" and "telecommunication system" — to differentiate between the concept of content versus how that content is delivered. I am advised there's no substantive change at this point as a result but a delineation between the content and how that content is delivered.
B. Ralston: In paragraphs (i), (j), (k) and (l), there are changes in the definition of "use." Again, this was a def-
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inition that was passed in the spring. It's a fairly extensive definition, and I'm wondering what motivates those changes. They appear to be related to the change in the definition that the minister has just spoken of — the distinction between telecommunication and telecommunication service — but perhaps the minister can confirm that.
Hon. M. de Jong: The definitional changes to the term "use" — the member is correct — are technical. They correct a drafting error, changing "business" to "person." They are also consequential to the amendments we've just discussed to "promotional material," "telecommunication," "telecommunication system" and "telecommunication service." This change flows from those changes.
B. Ralston: Now turning to subsection (n). There's a definition of "user" that's added in relation to a user of accommodation. Was this an omission? It's apparently an omission in the previous definition passed in the spring. Is that an explanation, the purpose, for this amendment?
Hon. M. de Jong: Two reasons for the change in the definition of "user." It's partially consequential to the amendments to promotional material and, also, to add references to a user of accommodation to complete the legislative framework and treat accommodation consistently with other taxable services.
Section 137 approved.
On section 138.
B. Ralston: We're now beginning a long series of amendments of the act that was passed in the spring. This is a proposed amendment to section 9, which refers to the…. I'm working from the bill as it was, which is entitled "Purchase…of tangible personal property."
So can the minister explain the purpose of these amendments, in what is a fairly fundamental definition in the act?
Hon. M. de Jong: I'll go through the series, and if I need to clarify anything, I'm sure the member will alert me to that. The addition of references to section 26, which relates to "purchase price if bundled purchase"; section 16, "purchase price of promotional material acquired or received by promotional distributor"; and to the "modified motor vehicle" are necessary to complete the entire legislative framework.
For modified motor vehicles, paragraph sub (f) provides specifically that the value of certain modifications made to accommodate a person with a disability is not included in the calculation of the purchase price of the vehicle. So that accounts for that.
Finally, where multiple purchase price provisions could apply — for example, a coupon with a bundled purchase — section 9, "Purchase price of tangible personal property" of the Provincial Sales Tax Act, provides the rules of which order to apply the applicable sections.
Section 138 approved.
On section 139.
B. Ralston: This is an amendment to section 10 of the original act passed in the spring. This is a proposed amendment to subsection 10(2). This section is entitled "Original purchase price of tangible personal property" — again, a fairly important and basic definition. Can the minister explain the purpose of the amendments that are proposed in section 139?
Hon. M. de Jong: The changes to subparagraph (f) are necessary, I'm advised, to ensure consistency with section 49 of the Provincial Sales Tax Act, which imposes tax where a B.C. resident brings, sends or receives tangible personal property into British Columbia and some other circumstances where non-residents bring, send or receive tangible personal property into B.C.
The addition of paragraph (f.1) to the Provincial Sales Tax Act, which sets out the purchase price of a boat, is to ensure that it's generally consistent with the definition of "purchase price" in the Consumption Tax Rebate and Transition Act. So those are the two explanations.
Section 139 approved.
On section 140.
B. Ralston: This is an amendment to section 11 of the existing act passed in the spring, and the title of the section is "Purchase price of tangible personal property related to affixed machinery and improvements to real property."
There's a reference that's added to sections 9 and 10, which we have just dealt with.
Is it simply to incorporate those amendments to sections 9 and 10 that we've just dealt with so that these changes would be then consequential to those? Is that the effort that's being undertaken here?
Hon. M. de Jong: Yes, that's correct. The amendments clarify the interrelationship between section 11 and sections 9 and 10 of the Provincial Sales Tax Act. As I think the member knows, section 11 is a stand-alone purchase price provision, and the relationship between it and the other two are clarified in these provisions.
Section 140 approved.
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On section 141.
B. Ralston: This proposed amendment deals with section 12 in the existing act, which refers to the lease price of tangible personal property. There seems to be a change in the definition of what's described as the rental period. Perhaps the minister can clarify…. There are a number of fairly technical amendments here that I think change the definition incrementally. Perhaps he could explain that.
Hon. M. de Jong: A couple of reasons account for the presence of these amendments. Firstly, to remove unnecessary references to rental period makes section 12 of the Provincial Sales Tax Act consistent with other lease provisions under that act. There are some amendments to update the cross-references. They are technical and consequential. Again, we see the amendments for modified motor vehicles, paragraph sub (d), confirming that the value of certain modifications to accommodate persons with a disability are not included in the calculation of the lease price of the vehicle where it's leased for a period of one year or more.
Section 141 approved.
On section 142.
B. Ralston: This proposed amendment deals with section 13 in the act as it is now. It makes reference to the rental period which would be amended by removing reference to that. There's also a reference to a more expanded definition of the lease price. Perhaps the minister could explain why that change was necessary.
Hon. M. de Jong: As the member correctly points out, it's a series of amendments. The amendments to remove references to rental periods are necessary to make section 13 consistent with the other lease provisions under the Provincial Sales Tax Act. It is a move to ensure consistency.
The addition of paragraph sub (g) to sub 13(2) provides, we believe, greater certainty by clearly setting the longstanding interpretation of lease price to include mandatory warranty and maintenance charges which must be paid under the lease.
Sections 142 and 143 approved.
On section 144.
B. Ralston: This is an amendment to section 15(2) of the existing act, which is entitled "Original purchase price of software." Given the ubiquity of software, I'm sure this is of, perhaps, more interest than other amendments. There's a repeal of paragraph (c) and a broader definition apparently included and an addition of paragraph (h), which is not in the act at the present time. Can the minister explain the purpose of those two changes?
Hon. M. de Jong: With respect to sub (c), I'm advised that this was merely an effort to provide a technical change to make these provisions similar in wording with other provisions in other sections and not intended to effect any practical or substantive change.
The addition of paragraph sub (h) is intended to provide greater certainty and clarity by clearly setting out the longstanding interpretation of purchase price to include mandatory warranty and maintenance charges which must be paid to obtain the software.
Sections 144 and 145 approved.
On section 146.
B. Ralston: This amendment proposes changes to section 17, which is "Purchase price of taxable service." It essentially adds a subparagraph (e), which refers to the "purchase price of telecommunication service acquired or received by promotional distribution." Can the minister confirm that that's what the purpose of this amendment is?
Hon. M. de Jong: These, I'm reminded, set out similar provisions as in sections 9 and 12 of the act, which we dealt with earlier, and are purposely intended to specifically reference sections 26 and 16 and the other subsection to set out the rules of which order to apply applicable sections where there are multiple purchase price provisions involved.
Section 146 approved.
On section 147.
B. Ralston: This proposed amendment deals with section 19 in the present act, which is titled "Original purchase price of accommodation." It appears to be simply adding a further definition in subsection (2) that is a bit more expansive and would appear consistent with some of the other amendments that have been made in reference to the purchase price of accommodation. Perhaps the minister can just confirm that that is the purpose of this amendment.
Hon. M. de Jong: I think the member is correct. Section 17(2) is being replaced to add specific references to the value of services rendered. That's to make section 17 consistent with the purchase price provisions of other taxable services. Sub (3) is amended to add a specific reference to a single price and prescribed person to ensure
[ Page 13081 ]
the regulation made under 17(3) actually works the way it is intended to.
Sections 147 and 148 approved.
On section 149.
B. Ralston: This section refers to section 23 in the present act: "Purchase price or lease price if coupon accepted." It appears to modify the section wherever "coupon" appears by adding "rebate offer" before the word "coupon." Can the minister explain the difference between or the reason for adding "rebate offer" to this section? It appears to have a different meaning than "coupon."
Hon. M. de Jong: It's simply to ensure that rebate offers and coupons receive the same tax treatment.
Sections 149 and 150 approved.
On section 151.
B. Ralston: This section refers to what is entitled "Depreciated purchase price of tangible personal property." In the existing section there are a number of references to other sections, so it's a fairly foundational definition. It adds a number of other sections, so I'm taking it that, upon review, these were deemed to be omissions and it was thought prudent to add them to this section. Perhaps the minister can confirm that, in section (a) to begin with.
Hon. I. Chong: I seek leave to make an introduction.
Leave granted.
Introductions by Members
Hon. I. Chong: Visiting in the gallery, I notice has just come in a school group from my area of Oak Bay–Gordon Head — Lansdowne Middle School. I believe it was arranged by Ms. Challies. There are 15 grade 6 students and two adults. I should let them know that what they are watching in the House right now is a rather routine part of business, where we are looking….
Interjection.
Hon. I. Chong: A ripping debate on a piece of legislation on the provincial sales tax. If they were to come in this afternoon and watch question period, it would be much more lively, I would say. But I hope that they will still enjoy this part of the democratic process that we all enjoy. I ask the House to please make them all very welcome.
Debate Continued
Hon. M. de Jong: With respect to the initial provision in the section, the member is correct. It was deemed, upon review, necessary to add the reference that now appears in the amendment.
B. Ralston: In section (2)(a)(vii) there's a substituted definition. There's a reference in all the sections to a prototype or a copy of a prototype. Can the minister explain? What's the purpose of this particular amendment?
The Chair: Member, were you asking the question on 152 or 151?
B. Ralston: It's 151. Pardon me. It's subsection 151(f), which repeals a definition in section 25, as I understand it — in 25(2)(a)(vii).
Hon. M. de Jong: I'm advised that the amendments relate to the fact that, because of the changes that are proposed by the legislation to be made to section 85, it is necessary as a consequence of that to change these provisions — which, as the member has pointed out, refer specifically to section 85.
Section 151 approved.
On section 152.
B. Ralston: This is a wholesale repealing of the existing section 26, passed in the spring. I think it looks to be a more expansive definition being passed. There are an additional three subsections. Can the minister explain the reason for this?
It would appear that, particularly in subsection (4), there's a reference to the fair market value of a taxable component — which, I think, in the previous section was referred to in section (3). Can the minister explain the reason for this substitution of an entirely rewritten section 26?
Hon. M. de Jong: The rationale, I believe, falls into three categories. One, it was deemed preferable and necessary to have clear references to tangible personal property, software and taxable services, which have been added through the definition of "initial price." Secondly, there was a need to adequately integrate the bundled purchase rules for accommodation, which are being incorporated into the PST from the Hotel Room Tax Act regulations.
Thirdly, it was deemed necessary in order to fully prevent tax avoidance by ensuring that non-taxable com-
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ponents must be ordinarily available for sale separately from a taxable component or ordinarily provided separately for a price.
Sections 152 to 154 inclusive approved.
On section 155.
B. Ralston: Section 30 in the existing act refers to when…. It's entitled "When tax is payable in respect of vehicles." The explanatory note speaks of clarifying when tax is payable in respect of a vehicle. That, obviously, is something that is, upon reflection, not clear in the existing section 30. And then there are two further amendments that define when tax must be paid to the Insurance Corporation of British Columbia. Can the minister explain the relationship between the payment of tax for the transfer of a motor vehicle and any obligations that arise to the Insurance Corporation of British Columbia?
Hon. M. de Jong: These amendments to section 30 are intended to, and hopefully do, clarify when tax is payable in respect of a vehicle. If the tax isn't levied by a collector when the consideration is due, the purchaser must either self-assess the tax within a certain period of time — and that's if they don't register the vehicle within that period of time — or the tax must be paid to ICBC at the time of registration. The rule is based on which event occurs first.
Where the tax is self-assessed, because the vehicle hasn't been registered, a PST registrant pays the tax in accordance with their reporting period, and others pay the tax by the last day of the month following the date the tax event occurs — the date of purchase, the date of entry or the date they've received the gift.
When a person is paying tax to ICBC at the time of registration, they must provide the information required, and ICBC is required to collect the tax from any person registered a vehicle who doesn't or isn't in a position to provide the required information to substantiate the non-payment of tax. In that instance, though, there is a refund available from the government if they can subsequently provide the required information. So that, broadly speaking, is the regime that the amendment is attempting to clarify.
B. Ralston: Then flowing from that response, in subsection (f) in this section there are a number of subsections that are added, and so those are to enact the regime that the minister has spoken of. Particularly, there's a reference in subsection (7) to the obligation of the Insurance Corporation of British Columbia to levy and collect the tax unless a declaration is obtained at the time the tax is due or payable. Can the minister just confirm that there is no additional ingredient in subsection (f) other than to bring into existence the scheme that he has spoken of?
Hon. M. de Jong: That's correct.
Sections 155 and 156 approved.
On section 157.
B. Ralston: This makes reference to, I think, what in the spring was discussed. I think, to the surprise and perhaps the consternation of the then minister, it's perhaps a section of the act that is overused. Particularly when a vehicle is transferred, there's an option to describe the transfer as a gift, and it does not attract tax. Is the intention here to, in effect, close that option to some extent or not?
Hon. M. de Jong: Only partially. I'm advised there are other provisions that actually impose the tax itself. However, this section does make it clear when the tax is payable.
B. Ralston: I just want to clarify that. I think, as I recall, the option to describe a transfer, particularly with a vehicle, as a gift was up to the transferor and the transferee, and it was a fairly open and unchallenged self-declaration. This section, then, does not remedy that or change that option in any way?
Hon. M. de Jong: No, the member is correct. This section does not address that point specifically.
B. Ralston: In the time that has been available to me I haven't located a section that would change that or modify that option. Is there one to come in the bill?
Hon. M. de Jong: The section of the Provincial Sales Tax Act that actually imposes the tax, I'm reminded, is section 100. We are yet to come to the provisions I'm endeavouring to identify, and I am told that somewhere in the neighbourhood of section 220 we will be dealing with section 100.
Sections 157 to 161 inclusive approved.
On section 162.
B. Ralston: This is an amendment to section 36 of the existing act. This section is entitled "Rates of tax in relation to gifts." In the explanatory notes the only rate that has changed is the rate "in relation to a gift of a portable building."
Looking through that, other than changing and modifying the definition to match the definitions in relation to "portable building" that we have discussed earlier, there don't appear to be any other substantive changes to that
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section.
Again, as the minister said, we look forward to, in relation to motor vehicles, the exchange that we might have on an amendment to section 100 of the existing act, which is coming. I guess my question is just to confirm that the only rate that's changed here is the rate in relation to a gift of a portable building.
Hon. M. de Jong: I'm advised that's correct.
Section 162 approved.
On section 163.
B. Ralston: This section, section 37, is entitled "Tax on purchase." There are a number of amendments that are set out here. There appears to be an imposition of an obligation on the collector to obtain information and declarations if a person seeks an exemption. Can the minister explain the reason for adding that obligation?
Hon. M. de Jong: Madam Chair, with respect to, I believe, the section the member was focusing on, I can advise him and the committee that the obligation has not changed. What has changed is the enunciation, within the statutory provision itself, of greater detail around what the obligation involves in terms of information and material.
B. Ralston: Perhaps the minister can just briefly explain how that would work. It looks as though, on a reading of this, that if a person makes an assertion about the purpose for which the property is being acquired — for resale, just to use that as an example — the person would have to pay the tax unless the collector obtains a registration number or a declaration.
Can the minister explain the obligation that's placed on the collector to obtain a registration number or a declaration? Further, then, what sort of declaration is being required? Is it something under oath that would require the person or the company to say that they are legitimately entitled to an exemption from the tax? Or is it something else?
Hon. M. de Jong: I am advised that in practice this will be no different than what existed under the original PST, though it is certainly the case that it is now set out in detail in the legislation itself. What's contemplated…. First of all, the registration number is self-evident.
The declaration occurs in the guise of what's called a certificate of exemption. That form is obtainable — I guess, in today's terminology, "downloaded" — right from the ministry's website and is signed by the individual. I don't believe there's a requirement that it be sworn before a commissioner. It is just signed.
Section 163 approved.
On section 164.
B. Ralston: This is a reference to section 39 in the existing act, which is "Tax on leases." There's a paragraph, a relatively brief sentence, that's being repealed and a much more expansive definition, apparently, being substituted. Can the minister explain the reason for that, given that we dealt with this not too long ago?
Hon. M. de Jong: The intention here is to provide greater certainty on the activities with respect to leased tangible personal property that are going to be subject to the PST. There is no intention to effect change at a substantive level — merely to create greater certainty around the activities that will attract the PST with respect to leased tangible personal property.
Section 164 approved.
On section 165.
B. Ralston: This section is entitled "Tax if leased property used in and outside British Columbia during rental period" and in the existing section includes a formula to calculate the percentage of lease, presumably for where tax is due on that portion of the use which takes place in British Columbia. These appear to be relatively technical amendments. Is there anything further that's intended other than, I think, making a more precise definition of lease price? Other than that, it appears to be fairly straightforward.
Hon. M. de Jong: I think the member is correct in his analysis. There is a desire to provide additional clarity in the amendments between section 39 and section 41 of the act — greater clarity in the formula itself.
Section 165 approved.
On section 166.
B. Ralston: This refers to an amendment to the existing section 42, which is entitled "Tax if balance of lease price becomes due on breach of lease." That will be of interest to some, I'm sure. There's a complete repeal of the existing sections (1) and (2) and an addition of a section (2.1). Can the minister explain the purpose of that proposed amendment?
Hon. M. de Jong: The member's question, I believe, refers to the addition of (2.1). That has been added to clarify what happens, in circumstances when a tax must be paid by a PST registrant, if the tax is not levied and
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collected by the lessor, because a PST registrant will self-assess the tax on the return for the reporting period — that reporting period that includes the date the payment becomes due under the lease. So a very specific circumstance when a tax must be paid by the PST registrant.
Section 166 approved.
On section 167.
B. Ralston: This section in the existing act is the section 44 exemptions in relation to leases. There is a repealing of section (1)(b), which is a substantial new provision there. Can the minister explain the purpose of that, particularly as it relates to exemptions?
Hon. M. de Jong: The amendments that the member is referring to, which pertain to section 44 in the act, are designed to ensure that the exemption that is dealt with in these provisions, dealing with the lease payments, has the same scope as the previous exemption under the old PST and recognizes tax previously paid on the initial purchase under the Consumption Tax Rebate and Transition Act.
Sections 167 and 168 approved.
On section 169.
B. Ralston: This section, 169, refers to section 48 of the act, "Application of this Division." Those would appear to be consequential amendments following the amendments that we've just debated. Can the minister confirm that?
Hon. M. de Jong: That is correct.
Section 169 approved.
On section 170.
B. Ralston: Section 170 refers to a proposed amendment to section 49, which is entitled "Tax if tangible personal property brought into British Columbia for use." There are a few amendments that are in sequence here.
Perhaps I can begin by dealing with the first, (a) and (b). There's an exemption made for tangible personal property that's received as a gift, and then there's a paragraph that's added to subsection (1) which refers to the definition of a B.C. resident. Can the minister explain those two proposed amendments?
Hon. M. de Jong: I think the specific answer to the member's question is that the amendment is included to ensure that the tax is imposed on the same gifts as were previously subject to the tax under the old PST and to make sure that that is clear.
B. Ralston: Later in this proposed amendment, there's a proposal to repeal subsections (7), (9) and (10) and to make a fairly substantial substitution of the provisions that were in the act passed in the spring. Can the minister explain the purposes of the repeal of those existing subsections?
Hon. M. de Jong: I think the sections that the member has referred the committee to…. The clarification of the amendments is intended to clarify and relate to trade-ins to ensure that the same trade-in rule for motor vehicles that existed under the old PST continues under the new PST. The thinking is that these amendments do that better and clarify that the same rules will apply now as were previously the case.
B. Ralston: In addition to substituting the subsections that we've just spoken of, there's a proposal to add two subsections, sub (11) and sub (12), which don't exist in the present act passed in the spring. Can the minister explain the purpose of adding those two subsections?
Hon. M. de Jong: These amendments are added for the following reasons: first, to clarify that a person who is alleging that they are purchasing for resale or eligible for an exemption from PST must, at or before the time of the sale, provide documentation to substantiate the non-payment of PST; and also, again, to specifically enunciate that if that person does not provide the required documentation, they are required to pay the PST, and the seller who causes delivery into British Columbia is required to levy and collect the PST in the manner we've discussed in the past. Again, similar provisions, but thought appropriate to enumerate them specifically with respect to this section and this type of transaction.
Section 170 approved.
On section 171.
B. Ralston: This is an amendment to section 50, which is "Tax on registration of vehicle brought into British Columbia." It appears to create an exemption for a travel trailer, which is defined as being pulled on the highway.
This would, I suppose, encompass a situation where, for example, someone who is a hunter coming from, say, Saskatchewan heads to northern British Columbia. That particular trailer, if pulled and used as a residence, as accommodation, during the hunting season, wouldn't be taxed. Perhaps the minister can confirm that that's the intention, to exempt something like that.
Hon. M. de Jong: I'm not sure this section and the
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amendments would pertain or capture precisely the scenario that the member has described.
This is adding an exemption to ensure that non-residents who bring, send or receive delivery of a travel trailer solely for non-business purposes receive the same tax treatment whether or not the travel trailer is registered for use in British Columbia. Non-resident, in this context, means a person who owns real property in B.C. or leases real property in B.C. for a term of at least five years.
Sections 171 and 172 approved.
On section 173.
B. Ralston: Section 173 that's proposed proposes to add a section to section 51, as I read it — which is a new section, 51.1 — which refers to tax of tangible personal property brought into British Columbia for temporary use. It appears to set a time limit of three years if it's converted to something other than temporary use.
Perhaps the minister can just clarify the purpose of this amendment.
Hon. M. de Jong: An added provision to make clear and ensure that the remaining tax payable under section 49, which relates to circumstances in which tangible personal property is brought into the province, allows for a payment in stages of the taxes calculated to be owing.
This makes clear that the remaining tax payable under that section 49 must be paid immediately upon the tangible personal property ceasing to be in British Columbia for temporary use — if the tangible personal property ceases to be in British Columbia for temporary use within three years of the initial entry date.
Sections 173 to 175 inclusive approved.
On section 176.
B. Ralston: This is an amendment to section 55 of the existing act: "Tax if property brought into British Columbia from outside Canada." It substitutes, in subsection (c), a number of tax rates. It repeals subsection (3) and sets out a number of rates.
Can the minister, first of all, confirm whether those rates are changed, either reduced or increased, or do they reflect the previous rate under the previous PST regime?
Hon. M. de Jong: The rates will be the same.
Sections 176 and 177 approved.
On section 178.
B. Ralston: This appears to be a minor amendment. It adds a subsection. This is one of these sections…. It calculates B.C. usage as a percentage of total usage. Can the minister explain the nature of the clarification that's intended here?
Hon. M. de Jong: The addition of sub (4) is intended to codify a practice that was taking place under the PST previously. The general rule is the tax must be paid on or before the last day of the month following the month of purchase. But for PST registrants, previously they were permitted to pay with their return for the reporting period that includes the month of the purchase. This codifies that practice going forward.
Section 178 approved.
On section 179.
B. Ralston: This existing section 61 is entitled "Tax if sale and lease-back of conveyance." The proposed amendment includes some new definitions of B.C. usage, lease ratio, purchase ratio and total usage.
Can the minister confirm that these are intended to codify existing administrative practice? I believe there is a calculation in the existing section 61 of those definitions as well. Is it simply a change in the order in which they appear in this section? Is it a codification of administrative practice, or are these new definitions?
Hon. M. de Jong: I'm advised that under the previous PST regime there was a similar formula which used, if not precisely the same terms, similar ones. The objective being sought here is to replicate both in practice and in law the formula that applied then and will apply going forward.
Sections 179 and 180 approved.
On section 181.
B. Ralston: This refers to section 62 in the existing act, which is entitled "Tax if conveyance leased in British Columbia." In that section there is a formula calculating B.C. usage as a percentage of total usage. It appears to mirror some of the changes we've just discussed in the previous section. There's an addition of subsections (6) and (7), which don't exist in the present section. Can the minister just confirm the purpose for these amendments in relation to this section?
Hon. M. de Jong: The member is correct about the formula itself. The additional provisions, including the exemption for leases under a sale and immediate leaseback arrangement where certain taxes were paid on the initial purchase, have been added, quite frankly, to avoid
[ Page 13086 ]
double taxation, because under these taxes, tax was payable on 100 percent of the purchase price on the initial purchase.
Section 181 approved.
On section 182.
B. Ralston: The proposed amendment here replicates language that was contained in the amendment to section 179. Given that the language is identical, I am assuming that the purpose is identical as well.
Hon. M. de Jong: I'm advised that's correct.
Sections 182 to 185 inclusive approved.
On section 186.
B. Ralston: This section is in the division entitled "Multijurisdictional Vehicles." This is section 68, a proposed amendment. It adds a definition of "bus." That is b-u-s, not the other, b-u-s-s. Can the minister just confirm why it was felt necessary to add a fairly self-evident definition? Perhaps that's an omission from before.
There's a further amendment that alters the definition of "vehicle taxable value." Can the minister explain that as well?
Hon. M. de Jong: The rationale behind the addition of the definition of "bus" was to move provisions which provided a reduced rate of tax for multi-jurisdictional buses through a whole complex set of partial refunds in the regulations under the old PST and to move that into the Provincial Sales Tax Act by just providing reduced tax rates — so to avoid the need for refunds by simply providing reduced tax rates.
I'll take a moment to review the material relating to the second part of the question.
With respect to the multi-jurisdictional dimension to this, the addition, I am advised, is purely to add clarity around the calculation of fair market value on the date of acquisition, at the time the vehicle was purchased.
B. Ralston: I move the committee rise, report progress and seek leave to sit again.
Motion approved.
The committee rose at 11:56 a.m.
The House resumed; Mr. Speaker in the chair.
The Committee of the Whole, having reported progress, was granted leave to sit again.
Hon. I. Chong moved adjournment of the House.
Motion approved.
Mr. Speaker: This House stands adjourned until 1:30 this afternoon.
The House adjourned at 11:56 a.m.
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