Provincial Tax: Introduction of HST – B.C. Transitional Rules

July 1, 2010

Effective July 1, 2010, a Harmonized Sales Tax (HST) will apply to payments for the supply of goods and services in British Columbia at a rate of 12% (5% federal component and 7% provincial component).

On April 29, 2010, the Consumption Tax Rebate and Transitions Act was passed in the B.C. legislature, which will eliminate the Provincial Sales Tax (PST) after the introduction of the new HST system.

Transitional Rules

On October 14, 2009, the B.C. Government released general transitional rules designed to assist businesses and consumers in transitioning over to the HST.  The transitional rules address whether HST applies to transactions that straddle the July 1, 2010 implementation date, and prevent the imposition of PST on goods and services subject to HST.

The following are key dates under the transitional rules:

  • July 1, 2010, the implementation date for the HST;
  • May 1, 2010, the HST applies to consideration that becomes due or is paid for goods and services provided on or after the implementation date; 1 and
  • October 14, 2009, the HST will not apply to consideration due on or before this date with certain exceptions. 2

Sale of Tangible Goods

Generally, the sale of tangible goods will attract HST where the goods are delivered, and ownership is transferred on or after July 1, 2010.  HST will apply to payments that become due or are prepaid on or after July 1, 2010.

If a payment becomes due or a prepayment is made on or after May 1, 2010, but before July 1, 2010, the sale will still attract HST to the extent the goods are delivered and ownership is transferred after July 1, 2010.

Provision of Services

HST will apply to the payment for services performed on or after July 1, 2010 that become due or are prepaid on or after July 1, 2010.  However, if 90% or more of the service is performed before July 2010, HST will not apply.

The HST will also apply to services provided on or after July 1, 2010 for which payment becomes due or is prepaid, on or after May 1, 2010 and before July 2010.

Preparing for the HST

At present, the following steps can be taken in anticipation of the implementation of the HST:

  • Identify opportunities to maximize savings;
  • Carefully review contracts straddling the implementation of HST to determine the effect, if any, of the transitional rules;
  • Determine whether you can vary the timing of expenditures or invoicing to avoid any negative tax consequences resulting from the HST;
  • Determine whether your organization’s internal systems can adequately accommodate HST and meet your organization’s reporting obligations;
  • Determine the financial repercussions and effects on cash flow resulting from HST and plan accordingly; and
  • If dealing with other provinces, carefully review the changes to the place of supply rules.

Further Information

The current transitional rules also deal with leases and licenses, intangible personal property, real property (other than residential property), imported goods and imported taxable supplies.  These areas will be the subject matter of future newsletters.

The B.C. Government has continued to develop transitional rules and we will be issuing further newsletters to address these rules.  As of the date in which this article was written regulations to the Consumption Tax Rebate and Transitions Act had not been drafted.


1 In such circumstances, the supplier of goods is required to account for the B.C. component of the HST in the GST/HST reporting period of the supplier that includes July 1, 2010.  The recipient of the goods is able to claim applicable input tax credits in respect of the B.C. component of the HST in their GST/HST reporting period that includes July 1, 2010.
2 Non-consumers (e.g. businesses and public services bodies) may be required to self-assess the B.C. component of the HST on consideration paid or prepaid after October 14, 2009 and before May 2010 for the sale of goods to be delivered and ownership transferred on or after July 1, 2010.


This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

Miller Thomson LLP uses your contact information to send you information electronically on legal topics, seminars, and firm events that may be of interest to you. If you have any questions about our information practices or obligations under Canada’s anti-spam laws, please contact us at

© Miller Thomson LLP. This publication may be reproduced and distributed in its entirety provided no alterations are made to the form or content. Any other form of reproduction or distribution requires the prior written consent of Miller Thomson LLP which may be requested by contacting