Pst Refund
by Julie
(Victoria, B.C.)
BC is Returning to PST + GST on April 1, 2013
We will be paying PST on the materials we purchase. We have to charge our supply only customers PST.
Can we get a refund of the PST we paid on this merchandise?
Hey Julie,
It's unfortunate that when the HST referendum was held, most small business owners did not have a full understanding of how HST worked to their benefit ... and the consumer.
The implementation of HST created an environment where BC had one of the lowest income tax rates in Canada. Unfortunately, I don't see how we can sustain that once we return to PST. I expect our income tax rates to increase over the next year or two. I do hope the government in power will make some concessions to keep capital and jobs in BC. Without that, it makes more sense for capital intensive businesses to locate in Alberta, Ontario or one of the eastern provinces.
PST does not allow for input tax credits like HST did. This means the PST you pay on your materials will be an expense to you; unless your materials and/or industry are PST exempt. Most small business will likely increase their sales prices to absorb the additional 7% expense.
To record your entries, I'll use the example of purchasing $100 of office supplies.
Your entry with HST right now is:
DR. Office supplies $100
DR. GST/HST Payable $12
CR. Cash in Bank $112
Once PST kicks in, your entry will be:
DR. Office supplies $107 ($100 plus $7 PST)
DR. GST/HST Payable $5
CR. Cash in Bank $112
If I haven't answered your question to your satisfaction, please post back using the comments link below.
P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.
Join in and write your own page! It's easy to do. How? Simply click here to return to GST HST.