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2004 Legislative Session: 5th Session, 37th Parliament

FIRST READING

The following electronic version is for

informational purposes only.

The printed version remains the official version.

HONOURABLE GARY COLLINS

MINISTER OF FINANCE

BILL 7 – 2004

SOCIAL SERVICE TAX AMENDMENT ACT, 2004

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of British Columbia, enacts as follows:

Social Service Tax Act

Section 1 of the Social Service Tax Act, R.S.B.C. 1996, c. 431, is amended

(

a) by adding the following definition:

"fair market value" means

(

a) in relation to tangible personal property, other than rights or services deemed to be tangible personal property under

section 39, 45, 52, 60 or 65, the price at which the legal and beneficial interest in the tangible personal property would, if unencumbered, be conveyed by a willing seller acting in good faith to a willing buyer acting in good faith in an arm's length retail sale in the open market, and

(

b) in relation to a parking right or service, including a service under Division 4, 5, 6 or 7 of

Part 2, the price at which the right or service would be provided by a willing seller acting in good faith to a willing buyer acting in good faith in an arm's length retail sale in the open market,

and must be determined in a manner that includes any charges,

costs or expenses referred to in paragraph (a) (

i) or (ii) of the definition

of "purchase price", and for the purposes of

section 11 (4.1), must be determined

in a manner that also includes any costs or expenses referred to in paragraph

(a) (ii) of the definition of "purchase price" that were incurred by the person

who provided the gift; ,

(

b) by adding the following definition:

"manufactured home" means

(

a) a mobile home manufactured to Canadian Standards Association Standard Z240,

(

b) any other mobile home that is similar in design and construction to a mobile home constructed to Canadian Standards Association Standard Z240,

(

c) a modular home manufactured to Canadian Standards Association Standard A277, or

(

d) any other modular home built to a standard required by the National Building Code of Canada and qualifying for Canada Mortgage and Housing Corporation financing,

if the unit or each module is in all essential features

completely constructed prior to delivery from the factory; ,

(

c) in the definition of "newspapers" by striking out

"25%" and substituting "20%" ,

(

d) in paragraph (a) (

i) of the definition of "purchase price"

by adding the following after "or in the seller's books," :

but does not include interest charges on a conditional

sale contract if the amount of those charges is segregated on the invoice or

bill of sale or is billed separately to the purchaser, and is payable over the

term of the contract, ,

(

e) by repealing paragraph (

f) of the definition of "purchase

price" and substituting the following:

(

f) in relation to prescribed tangible personal property that is sold for a single price with tangible personal property or services that, under this Act, are not subject to tax or are exempt from tax, means the total consideration that is accepted by the seller for all the tangible personal property or services sold for the single price;

(f.1) in relation to tangible personal property, other than tangible personal property that is prescribed for the purposes of paragraph (f), that is subject to tax and is sold for a single price with tangible personal property or a service that, under this Act, is not subject to tax or is exempt from tax, means,

(

i) if the fair market value of the taxable tangible personal property is more than 90% of the single price and the single price is less than the prescribed amount, the total consideration that is accepted by the seller for all the tangible personal property or services sold for the single price, or

(ii) in any other case, the fair market value of the

taxable tangible personal property included in the single price, ,

(

f) in the definition of "sale" by repealing paragraph

(

c) and substituting the following:

(

c) the provision, by way of promotional distribution, of tangible personal property,

but does not include the provision of tangible personal

property that, in accordance with the regulations, is merely incidental to a

contract for the provision of services that are not subject to tax under this

Act; , and

(

g) in paragraph (

g) of the definition of "use" by

adding ", other than reusable containers referred to in

section 8,"

after "storing, keeping or retaining of tangible personal property" ,

2 The following

section is added to

Part 1:

Valuation of purchase price, lease price or fair market value

4.1 The commissioner may make a valuation of the purchase price, lease price or fair market value of tangible personal property or a taxable service that

(

a) passes at a sale or lease, or

(

b) is brought or sent into British Columbia, or is delivered in British Columbia,

and the purchase price, lease price or fair market value for the purpose of taxation under this Act is as determined by the commissioner.

Section 6 is amended by adding the following subsections:

(4.1) Despite any other provision of this Division, the tax payable under sections 5 (1), 11 and 16 on a manufactured home is the rate established under subsection (1) of this

section applied to the prescribed percentage of the purchase price of the manufactured home, if the manufactured home

(

a) is a mobile home referred to in paragraph (

a) or (

b) of the definition of "manufactured home" in

section 1, and

(

b) is designed for, and will be used as, a family residential dwelling unit.

(4.2) Despite any other provision of this Division, the tax payable under sections 5 (1), 11 and 16 on a manufactured home is the rate established under subsection (1) of this

section applied to a prescribed percentage of the purchase price of the manufactured home, if the manufactured home

(

a) is a modular home referred to in paragraph (

c) or (

d) of the definition of "manufactured home" in

section 1, and

(

b) is designed for, and will be used as, a family residential dwelling unit.

(4.3) For the purpose of subsections (4.1) and (4.2), "family residential dwelling unit" does not include

(

a) a recreational vehicle or a component such as a travel trailer, including a Park Model travel trailer manufactured to Canada Standards Association Standard Z240, a tent trailer, a motor home, a slide-on camper, a chassis mounted camper or another vehicle or component of the same general classes, or

(

b) a prescribed structure, vehicle or component used for a prescribed purpose.

(4.4) Subsections (4.1) and (4.2) do not apply to the following:

(

a) free standing appliances, free standing furniture and draperies sold with a manufactured home;

(

b) repair parts purchased for a manufactured home;

(

c) taxable services provided in respect of a manufactured home.

(4.5) Despite any other provision of this Division, the tax payable on the purchase of a portable building is at the rate established under subsection (1) applied to the prescribed percentage of the purchase price, or if

section 11 (4.1) applies, the fair market value, of the portable building.

Section 6 (4.1) and (4.2) is amended by substituting, ", or

section 11(4.1) applies, the fair market value," after "purchase

price" .

Section 8 is repealed and the following substituted:

Reusable containers

8 Without limiting sections 5 and 11 but subject to the regulations, a person who

(

a) purchases, or

(

b) brings or sends into British Columbia, or receives delivery of in British Columbia,

containers in which to package or deliver a product the person intends to sell must pay tax in accordance with this Division, if the containers are capable of being returned and reused.

Section 11 is amended

(

a) in subsection (4) by striking out "Subject to subsection

(5)," and substituting "Subject to subsections (4.1) and (5)," ,

(

b) by adding the following subsections:

(4.1) Subject to subsections (4.2) and (5), tax payable under subsection (3) with respect to tangible personal property that is brought or sent into British Columbia by, or is delivered in British Columbia to, a person who received the tangible personal property as a gift must be calculated by multiplying the fair market value of the tangible personal property by the rate in

section 6 on the entry date of the property.

(4.2) Subsection (4.1) does not apply if there is evidence satisfactory to the commissioner that

(

a) the person who provided the gift did not reside or ordinarily reside in British Columbia,

(

b) the person who provided the gift paid tax under this Act or paid a sales tax to another jurisdiction other than Canada, and that person is not eligible for a refund or rebate under this Act or under the law of the other jurisdiction, or

(

c) the gift meets a prescribed circumstance. ,

and

(

c) in subsection (5) by striking out "Subsection (4) does not"

and substituting "Subsections (4) and (4.1) do not" .

7 Sections 17 and 27 are repealed.

Section 20 is amended

(

a) by repealing subsection (2) (

a) and substituting the following:

(

a) means the fair market value of the vehicle,

, and

(

b) by adding the following subsection:

(4) Despite any other provision of this Division, the tax payable on the lease of a portable building is the rate established under subsection (1) (

a) applied to the prescribed percentage of the lease price.

Section 20.1 (2) is repealed and the following substituted:

(2) For the purpose of subsection (1), the reference to "purchase price" in

section 6 means the fair market value on the date the motor vehicle is registered.

Section 28 is amended by repealing the definition of "market value" and substituting the following:

"market value" means the fair market value; .

Section 76 is amended

(

a) in subsection (1) (

c) by striking out "(other than "portable

buildings" as defined in the regulations) ", and

(

b) in subsection (1) by repealing paragraph (

j) and substituting the following:

(

j) software that is used exclusively for one or more of the following purposes:

(

i) incorporating copies of the software into other tangible personal property for retail sale;

(ii) re-licensing copies of the software for retail sale;

(iii) a prescribed purpose,

where

(iv) under the terms of the licence governing the use of the software, the software must be used exclusively for one or more of the purposes referred to in subparagraphs (

i) to (iii), or

(

v) the purchaser of the software has acquired all rights

to the software, and the software is used exclusively for one or more purposes

referred to in subparagraphs (

i) to (iii); , and

(

c) by adding the following subsection:

(7) For the purposes of the exemption under subsection (1) (j), "exclusively" means more than 90%.

Section 87 (2) is repealed.

Section 90.2 (

b) is amended by adding "or (4.1)" after

"section 11 (4)" .

Section 118 (1) (

a) is amended by striking out "or a valuation

of the commissioner under

section 17 or 27," and substituting "or

a valuation of the commissioner under

section 4.1," .

Section 138 (1) is amended by adding the following paragraphs:

(c.1) in relation to the definition of "sale" in

section 1, prescribing the circumstances in which the provision of tangible personal property is merely incidental to a contract for the provision of services;

(c.2) prescribing tangible personal property for the purposes of subsection (

f) of the definition of "purchase price" under

section 1;

(c.3) prescribing the amount of the single price for the purposes of subsection (f.1) (

i) of the definition of "purchase price" under

section 1;

(

t) prescribing the percentage of the purchase or lease price of a portable building that is subject to tax under

section 6 (4.5) or

section 20 (4);

(

u) prescribing structures, vehicles and components and uses of those structures, vehicles and components that are not included under

section 6 (4.3) in the meaning of family residential dwelling unit for the purpose of

section 6 (4.1) and (4.2);

(

v) prescribing the percentage of the fair market value of a manufactured home that is subject to tax under

section 6 (4.1);

(v.1) prescribing the percentage of the fair market value of a manufactured home that is subject to tax under

section 6 (4.2);

(

w) prescribing any matter or other thing required to carry out the intent of

section 6 (4.1), (4.2), (4.3) and (4.4);

(

x) prescribing the circumstances in which tax is not required to be paid in relation to a gift under

section 11 (4.2);

(

y) prescribing the purposes for which software may be used that are eligible for exemption under

section 76 (1) (j);

(

z) prescribing the percentage of the purchase price of a manufactured home that is subject to tax under

section 6 (4.1);

(z.1) prescribing the percentage of the purchase price of a manufactured home that is subject to tax under

section 6 (4.2).

Transitional – manufactured homes sold at retail sales

(1) In this section:

"dealer" means a dealer referred to in

section 3.18 (2) of the Social Service Tax A ct Regulations, B.C. Reg. 84/58, as that

section read immediately before February 18, 2004;

"manufactured home" and "retail sale" have

the same meaning as in the Social Service Tax Act ;

"mobile home" means a home referred to in paragraph

(

a) or (

b) of the definition of "manufactured home" in

section 1 of the Social

Service Tax Act ;

"modular home" means a home referred to in paragraph

(

c) or (

d) of the definition of "manufactured home" in

section 1 of the Social

Service Tax Act .

(2) Any money paid by a dealer to the government before

February 18, 2004 as, and accepted by the government as, full payment of the

tax liability owing under the Social Service Tax Act , as it read before

February 18, 2004 ,

(

a) in respect of a mobile home that was, purchased by the dealer and that was sold by the dealer after January 24, 1977 and before February 18, 2004, or in respect of materials that were purchased by the dealer and used by the dealer in the manufacture of a mobile home that was sold by the dealer after January 24, 1977 and before February 18, 2004, or

(

b) in respect of a modular home that was purchased by the dealer and that was sold by the dealer after May 5, 1977 and before February 18, 2004, or in respect of materials that were purchased by the dealer and used by the dealer in the manufacture of a modular home that was sold by the dealer after May 5, 1977 and before February 18, 2004,

whether or not that money was voluntarily paid, must be

applied against the tax payable under the Social Service Tax Act , as

amended by this Act, by the person who purchased the mobile home or modular

home at a retail sale.

(3) For the purpose of subsection (2),

(

a) the tax payable by the person in respect of the person's purchase of the mobile home or modular home is conclusively deemed to have been paid in full by the person to the dealer,

(

b) the money paid by the dealer to the government is conclusively deemed to have been an amount of tax that was collected by the dealer from the person, and remitted by the dealer to the government, and

(

c) the money is conclusively deemed to have been validly collected by the government.

(4) If this

section or subsections (4.1) to (4.4) of

section 6 of the Social Service Tax Act as enacted by this Act, or any provision of this

section or those subsections, is held to be invalid, the

section or provision must be severed from the remainder of those sections and provisions, and the remainder have the same effect as if they had been originally enacted separately from the

section or provision held to be invalid.

Transitional – refund of tax paid in respect of manufactured homes

(1) In this section:

"commissioner" , "manufactured home" and

"sale" have the same meanings as in the Social Service Tax Act ;

"dealer" means a dealer referred to in

section 3.18 (2) of the Social Service Tax Act Regulations, B.C. Reg. 84/58, as that

section read immediately before February 18, 2004.

(2) If a dealer has paid tax under the Social Service

Tax Act on or in respect of a manufactured home purchased by the dealer

for resale, or on or in respect of the materials necessary for the construction

of a manufactured home for resale, and the manufactured home has not, before

February 18, 2004, been sold at a sale, the commissioner must, on application

made within one year after February 18, 2004 and on receipt of evidence satisfactory

to the commissioner,

(

a) pay a refund to the dealer out of the consolidated revenue fund, or

(

b) credit the amount of the refund against the amount

of any tax that the dealer is required to pay or remit under the Social Service

Tax Act .

(3) Part 4, other than

section 80 (1) (

b) of the Social

Service Tax Ac t applies to this section.

Transitional – retroactive regulations

18 Regulations made under the Social Service

Tax Act before February 18, 2005 may be made retroactive

(

a) to any date on or after January 24, 1977, if

(

i) authorized by

section 70 (

i) or

section 138 (1) (u),

(w), (

z) or (z.1) of the Social Service Tax Act , or

(ii) authorized by

section 77 (

a) of the Social Service

Tax Act and made in relation to portable buildings,

(

b) to February 18, 1998 if authorized by

section 138

(1) (c.4) of the Social Service Tax Act ,

(

c) to April 1, 2000, if authorized by

section 138 (1)

(

m) of the Social Service Tax Act , and

(

d) to February 18, 2004, if authorized by

section 138

(1) (c.1), (c.2), (v), (v.1), (

x) or (

y) of the Social Service Tax Act ,

and if made retroactive are deemed to have come into force on the date specified in the regulations.

Commencement

(1) Sections 1 (a), (d) (

e) and (

f) and 2,

section 3, as it relates to

section 6 (4.4) (

c) of the Social Service Tax Act , sections 4, 6, 7, 8 (a), 9, 10, 11 (

b) and (

c) and 14,

section 15 as it relates to

section 138 (1) (c.1) to (c.3), (v), (v.1), (

x) and (

y) of the Social Service Tax Act , and

section 17, come into force on February 18, 2004 and are retroactive to the extent necessary to give them effect on and after that date.

(2) Section 1 (b), as it relates to paragraphs (

a) and (

b) of the definition of "manufactured home" of the Social Service Tax Act ,

section 3 as it relates to

section 6 (4.1) and (4.3) and paragraphs (

a) and (

b) of

section 6 (4.4) of the Social Service Tax Act ,

section 15 as it relates to

section 138 (1) (u), (w), (

z) and (z.1) of the Social Service Tax Act and

section 16 are deemed to have come into force on January 24, 1977 and are retroactive to the extent necessary to give them effect on and after that date.

(3) Section 1 (b), as it relates to paragraphs (

c) and (

d) of the definition of "manufactured home" of the Social Service Tax Act and

section 3 as it relates to

section 6 (4.2) of the Social Service Tax Act are deemed to have come into force on May 5, 1977 and are retroactive to the extent necessary to give them effect on and after that date.

(4) Section 1 (

c) is deemed to have come into force on December 18, 2003 and is retroactive to the extent necessary to give it effect on and after that date.

(5) Sections 1 (g), 5 and 15, as it relates to

section 138 (1) (c.4) of the Social Service Tax Act are deemed to have come into force on February 18, 1998 and are retroactive to the extent necessary to give them full force and effect on and after that date.

(6) Section 3, as it relates to

section 6 (4.5) of the Social Service Tax Act , sections 8 (b), 11 (

a) and 12 and

section 15 as it relates to

section 138 (1) (

t) of the Social Service Tax Act come into force by regulation of the Lieutenant Governor in Council.

Explanatory Notes

SECTION 1: [Social Service Tax Act,

section 1]

(

a) adds a definition of fair market value for the purposes of the Act,

(

b) transfers the definition of "manufactured home" from the regulations to the Act,

(

c) amends the definition of "newspapers" by reducing the percentage of qualifying content that must be met by a newspaper to qualify for exemption from 25% to 20%,

(

d) amends the definition of purchase price by excluding from the definition interest charges under conditional sales contracts where specified circumstances apply.

(

e) amends the definition of "purchase price" to establish the value on which tax is to be applied where taxable tangible personal property and services are sold with non-taxable property and services for a single price,

(

f) amends the definition of "sale" to exclude an incidental provision of tangible personal property in the course of providing a service that is not subject to tax, and

(

g) amends the definition of use to ensure that the returnable and reusable containers are not exempt from tax under

section 8 of the Act.

SECTION 2: [Social Service Tax Act,

section 4.1] consolidates

provisions to allow the commissioner to determine the purchase price or lease

price of tangible personal property or services that are subject to tax under

the Act and extends the authority to determine fair market value.

SECTION 3: [Social Service Tax Act,

section 6] provides that

tax is payable on a prescribed percentage of the purchase price of mobile and

modular homes that are used as a family residential dwelling and portable buildings.

SECTION 4: [Social Service Tax Act,

section 6] amends

section

6 to ensure that tax is payable on a prescribed percentage of the fair market

value of manufactured homes provided as a gift under

section 11 (4.1).

SECTION 5: [Social Service Tax Act,

section 8] extends the application

of tax to the purchase of containers that are capable of being returned and

reused when they are purchased outside of the province for use in the province.

SECTION 6: [Social Service Tax Act,

section 11] establishes that

where a resident brings a gift into the province that is received from another

resident tax is payable on the fair market value of that gift unless the donor

paid a non-refundable sales tax to British Columbia or another jurisdiction,

other than Canada, on the purchase of that gift.

SECTION 7: [Social Service Tax Act, sections 17 and 27] repeals

provisions that allowed the commissioner to determine the sale or lease price

of tangible personal property that passes at a sale or lease, consequential

to amendments under

section 2 of this Bill.

SECTION 8: [Social Service Tax Act,

section 20]

(

a) reflects the new definition of "fair market value" added by this Bill, and

(

b) provides that tax is payable on a prescribed percentage of the lease price of portable buildings.

SECTION 9: [Social Service Tax Act,

section 20.1] reflects the

new definition of "fair market value" added by this Bill.

SECTION 10: [Social Service Tax Act,

section 28] reflects the

new definition of "fair market value" added by this Bill.

SECTION 11: [Social Service Tax Act,

section 76]

exempts tangible personal property incorporated into portable buildings

for retail sale;

expands the existing exemption for software to include software that is

incorporated in other tangible personal property for retail sale or software

that is relicensed for retail sale.

SECTION 12: [Social Service Tax Act,

section 87] repeals the

refund of tax on materials used to construct portable buildings which are subsequently

delivered by the vendor to a location outside of the province. This provision

is no longer required given the changes in

section 6 with respect to portable

buildings.

SECTION 13: [Social Service Tax Act,

section 90.2] is consequential

section 11 (4.1) added by this Bill.

SECTION 14: [Social Service Tax Act,

section 118] amends the

existing ministerial appeal provisions to allow ministerial appeals against

a valuation made by the commissioner with respect to the purchase price, lease

price or fair market value of tangible personal property or services subject

to tax under the Act, consequential to amendments made by the Bill.

SECTION 15: [Social Service Tax Act,

section 138]

provides regulation making powers;

adds a power to prescribe what constitutes an incidental provision of tangible

personal property for the purpose of the definition of "sale";

provides authority to make regulations exempting containers that are capable

of being returned and reused;

provides the power to prescribe additional circumstances under which software

may be exempt from tax when used for specific purposes;

provides the power to prescribe circumstances in which no tax is payable

on a gift under

section 11;

provides the power to prescribe the purchase or lease price of portable

buildings that are subject to tax;

provides the power to prescribe structures, vehicles and components and

their uses that are excluded from the meaning of "family residential dwelling

unit";

provides the power to prescribe the percentage of the fair market value

or purchase price of a manufactured home that is subject to tax.

SECTION 16: [Transitional – manufactured homes sold at retail sales]

provides that the money paid and accepted as full payment of the tax payable

in relation to a manufactured home sold before February 18, 2004 is to be applied

to, and accepted as payment of, the tax liability applicable to the sale of

that manufactured home under the Social Service Tax Act.

SECTION 17: [Transitional – refund of tax paid in respect of manufactured

homes] provides that any money that, before February 18, 2004, was paid

as tax in relation to a manufactured home that had not, before February 18,

2004, been sold at a sale within the meaning of the Social Service Tax Act

may be refunded on a satisfactory application for the refund being made to the

commissioner within one year after February 18, 2004.

SECTION 18: [Transitional – retroactive regulations] provides

authority to make retroactive regulations.

Copyright (c) 2004: Queen's Printer, Victoria, British Columbia, Canada