British Columbia Order in Council — Order under Social Service Tax Retroactive to July 31, 2001, B (O.C. 915/2001)

O.C. 915/2001

British Columbia — Orders in Council

r esiding Member of the Executive Council Ministero•fr finance PROVINCE OF BRITISH COLUMBIA ORDER OF THE LIEUTENANT GOVERNOR IN COUNCIL Order in Council No. 915 , Approved and Ordered OCT 1 5 2001 Lieutenant GOV-W —Cor Executive Council Chambers, Victoria On the recommendation of the undersigned, the Lieutenant Governor, by and with the advice and consent of the Executive Council, orders that retroactive to July 31, 2001, the Social Service Tax Act Regulations, B.C. Reg. 84/58, is amended as set out in the attached Schedule. (This

part is for administrative purposes only and is not part of the Order.) Authority under which Order is made: Act and section:- Social Service Tax Act, RSBC 1996, c. 431,

section 138 (1) (

q) and

(3) Other (specify):- 0/C 1388/48 September 25, 2001 I 145/200137

SCHEDULE 1

Section 2.36 of the Social Service Tax Act Regulations, B.C. Reg. 84/58, is amended by striking out "drill bits,". 2

Section 2.50 is repealed. 3

Section 3.29 (1) is amended (

a) by repealing paragraph (b) (i), and (

b) by repealing paragraphs (

c) and (1) and substituting the following: (0 any vehicle on which seismic recording equipment or well logging equipment is permanently mounted. 4 The following Division is added: Division 13 — Exemptions for Production Machinery or Equipment

Definitions and

interpretation 13.1

(1) In this Division: "custom software" means modifications to software, modified software and custom software referred to in paragraphs (a), (

b) and (

c) of the definition of "software" in

section 1 of the Act; "exclusively" means more than 90%; "logging" means (

a) felling or bucking trees, (

b) skidding or otherwise moving trees or logs to a landing or other first point of accumulation, or (

c) loading, unloading, sorting, storing or processing trees or logs at landings, log dumps, sort yards, dry land sorts, booming grounds or mill yards, but does not include (

d) construction or maintenance of landings, log haul roads or other roads, or (

e) silviculture; "machinery or equipment" includes apparatus; "manufactured cost" means the manufacturer's (

a) direct cost of materials, (

b) direct cost of labour, and (

c) manufacturing overhead, but does not include federal goods and services tax; "manufacturer" means a person who fabricates, manufactures, processes or produces a particular class of tangible personal property 1 of 8

(

a) for sale, if there is a reasonable expectation that the total value of sales of that class of tangible personal property will exceed $30 000 per year, (

b) for lease or for the person's own business use, if there is a reasonable expectation that the total manufactured cost of that class of tangible personal property will exceed $30 000 per year, or (

c) for a purpose referred to in both paragraphs (

a) and (b), if the total value of sales is $30 000 or less and there is a reasonable expectation that the total manufactured cost of that class of tangible personal property will exceed $30 000 per year, but does not include persons excluded under

section 13.10; "marketable product" means petroleum or natural gas, whether it occurs naturally or results from the refining or processing of petroleum or natural gas, that is (

a) available for sale for direct consumption as a domestic, commercial or industrial fuel or as an industrial raw material, or (

b) delivered to a storage facility; "mineral" includes building and construction stone, marble, shale, clay, sand and gravel; "primarily" means more than 50%; "qualifying tangible personal property" means the particular class of tangible personal property referred to in the definition of manufacturer; "tangible personal property" includes custom software

(2) In this Division (

a) a reference to "fabricate, manufacture, process or produce" includes the development of software and custom software but does not include (

i) growing, harvesting or producing agriculture or aquaculture products or raising livestock, (ii) logging, (iii) the production of television programs, radio programs, motion pictures, commercials, master films, master video tapes, or any similar product in electronic format, (iv) the provision of a service, or (

v) blending, combining, grading, grouping, mixing, packaging, re- packaging, sorting or testing tangible personal property unless such activities are one step in, or occur immediately after, the fabrication, manufacture, processing or production of tangible personal property and occur at the manufacturing (

b) a reference to "use" in relation to "exclusively" lnd "primarily" does not include storing, keeping or retaining, (

c) a reference to tangible personal property in paragraphs (a), (

b) and (

c) of the definition of "manufacturer" means tangible personal property that is fabricated, manufactured, processed or produced in British Columbia, and 2 of 8

(

d) a reference to "purchased or leased" with respect to machinery or equipment includes machinery or equipment that is brought or sent into British Columbia or the delivery of which is received in British Columbia.

(3) In this Division, the use of machinery or equipment in the construction of buildings, site preparation or the construction or maintenance of roads is not a use that qualifies machinery or equipment for exemption. Manufacturers 13.2

(1) For the purposes of

section 76 (1) (

k) of the Act and subject to subsections (2) to (4), the following are exempt from tax if purchased or leased by a manufac- turer: (

a) machinery or equipment for use primarily and directly in the manufacture of qualifying tangible personal property; (

b) machinery or equipment for use primarily and directly in the manufacture of tangible personal property for use in the manufacture of qualifying tangible personal property.

(2) Subject to sections 13.9 and 13.10, if the machinery or equipment is for use in relation to a manufacturing operation other than an operation referred to in subsections (3) and (4), the exemption applies only in respect of machinery or equipment that is used at the manufacturing site from the point at which the raw material is received to the point at which the finished product is first stored or first placed on a vehicle, railway rolling stock, vessel, aircraft or other conveyance for removal from the manufacturing site, whichever occurs first.

(3) Subject to sections 13.9 and 13.10, it' the machinery or equipment is for use in relation to the operation of a mineral mine, the exemption applies only in respect of the machinery or equipment that is for use at the mine site from the point at which the raw material is extracted from the ground to the point at which the finished product is placed on a vehicle, railway rolling stock, vessel, aircraft or other conveyance for removal from the mine lite.

(4) Subject to sections 13.9 and 13.10, if the machinery or equipment is for use in relation to the processing of petroleum or natural gas, the exemption applies only in respect of the machinery or equipment that is for use at the well head, or at a processing plant or refinery up to the point at which the petroleum or natural gas has become a marketable product, including (

a) generators located at the well head, and (

b) pipes, regulators, compressors and other related equipment dedicated to the transmission of waste gas, composed primarily of hydrogen sulphide and carbon dioxide, within a gas processing plant or from a gas processing plant to a disposal well for the sole purpose of injecting waste gas into the disposal well for permanent disposal. Logging 13.3 For the purposes of

section 76 (1) (

k) of the Act aad subject to sections 13.9 and 13.10, machinery or equipment is exempt from tax if purchased or leased by a person who, 3 of 8

for commercial purposes, regularly engages in logging and that machinery or equipment is for use in logging exclusively (

a) for felling trees, (

b) for the removal of logs from the stump and their deposit in a landing or other first accumulation point, or (

c) for loading, unloading, sorting, storing or processing trees or logs at landings, log dumps, sort yards, dry land sorts, booming grounds or mill yards. Exploration for, discovery of or development of petroleum or natural gas 13.4 For the purposes of

section 76 (1) (

k) of the Act and subject to sections 13.9 and 13.10, the following machinery or equipment is exempt from tax if purchased or leased by a person who, for commercial purposes, regularly engages in the exploration for, discovery of or development of petroleum or natural gas if that machinery or equipment is for use exclusively in the exploration for, discovery of or development of petroleum or natural gas: (

a) drilling rigs, including derricks, substructures, support mats and founda- tions, circulating systems, pumps, cement equipment and engines or power plants that are part of a drilling rig, but not including automotive units on which the drilling rig is transported, cementing trucks or fracturing trucks; (

b) truck mounted service rigs; (

c) hardware for use during the drilling process, including drill bits, drill collars, drill pipes, blowout preventors, casing, tubing, fittings, couplings and thread protectors; (

d) equipment for use in well logging and drill stem testing, including instru- mentation; (

e) machinery or equipment for use during the production testing phase, including separator vessels, dehydrators and heaters, pressure piping systems and appurtenances, flare stacks, pumps and motors. Exploration for minerals or development of mines 13.5

(1) For the purposes of

section 76 (1) (

k) of the Act and subject to sections 13.9 and 13.10, machinery or equipment is exempt from tax if purchased or leased by a person who, for commercial purposes, regularly engages in exploration for minerals or the development of mines and that machinery or equipment is for use exclusively in the exploration for minerals or the development of mines.

(2) The exemption under subsection (1) includes the following machinery or equipment: (

a) drilling rigs, drills, drill bits and rock saws; (

b) mucking machines, slushers, mine cars and rails, trammers, hoists and skips; (

c) bulldozers, backhoes and excavators; (

d) pickaxes and shovels; (

e) safety equipment, pumps, ventilating equipment and compressors; 4 of 8

(

t) generators or motors used to operate exempt equipment; (

g) haulage equipment; (

h) assay equipment; (

i) wire rope and seismic shot-hole casing; (

j) casing guides and cement equipment but not including cement trucks. Geophysical surveying 13.6 For the purposes of

section 76 (1) (

k) of the Act and subject to sections 13.9 and 13.10, the following machinery or equipment is exempt from tax if purchased or leased by a person who, for commercial purposes, regularly engages in exploration for petroleum, natural gas or minerals or the development of petroleum, natural gas or mineral deposits and that machinery or equipment is for use exclusively in exploration for or development of petroleum, natural gas or minerals: (

a) magnetometers, gradiometers and magnetic susceptibility meters; (

b) gravity meters and other instruments designed to measure the elements, variations and distortions of the natural gravitational force; (

c) field potentiometers, meggers, non-polarizing electrodes and electrical equipment for making measurements in drill holes; (

d) equipment for electrical or electromagnetic surveying including self- potential meters, resistivity survey equipment, time and frequency domain induced polarization equipment and time and frequency electromagnetic surveying equipment and inductive conductivity probes; (

e) ground penetrating radar equipment and side looking aperture radar; (

f) equipment for remote sensing including ultraviolet lamps and reflectance, infrared and hyperspectral spectrometers; (

g) instruments or equipment for seismic prospecting including the recording system, seismic instrumentation, geophones, cables, data processing units, global positioning and navigation systems, recorder box, blasting system, blaster and controller, seismic drilling equipment, heli-drills, enviro-drills, vibrators and integrated navigation systems; (

h) scintillometers, spectral gamma-gamma density and geiger muller counters, gamma-ray spectrometers, potassium gradiometers and other instruments for radioactive methods of geophysical prospecting; (

i) acoustical survey equipment including sonar, side scanning sonar and full wave form sonic loggers; (

j) electrical and electronic amplifying devices and electrical thermostats designed for use with any of the machinery or equipment described in paragraphs (

a) to (i). Pollution control 13.7 For the purposes of

section 76 (1) (

k) of the Act and subject to sections 13.9 and 13.10, machinery or equipment for use exclusively and directly in the detection, prevention, measurement, treatment, reduction or removal of pollutants in water, soil or air is exempt from tax if 5 of 8

(

a) the pollutants are attributable to the manufacture of tangible personal property, and (

b) the machinery or equipment is located at a manufacturing site, mine site, well head, natural gas processing plant or petroleum refinery referred to in

section 13.2. Waste management 13.8 For the purposes of

section 76 (1) (

k) of the Act and subject to sections 13.9 and 13.10, machinery or equipment for use exclusively and directly in carrying refuse or waste from the machinery or equipment referred to in

section 13.2, or for use exclusively and directly for exhausting dust or noxious fumes from the machinery or equipment referred to in

section 13.2, is exempt from tax. Exclusions from exemption under

section 76 (1) (

k) of the Act 13.9 Despite anything in sections 13.2 to 13.8, the exemption under

section 76 (1) (

k) of the Act does not apply to the following: (

a) buildings, furnishings, camp equipment, or machinery or equipment related to the use of a building as a building; (

b) logging trucks, well servicing trucks or any vehicles designed so that they can be used on a public highway, unless exempted under

section 13.4 (

b) or 13.5 (2) (c); (

c) vessels, railway rolling stock, locomotive engines and non-turbine aircraft; (

d) electric generators and electric alternators that are portable or mobile, including drive motors for them, generator and alternator sets that are portable or mobile, stand-by electric generators and stand-by electric alter- nators, including drive motors, and standby-by generator and stand-by alternator sets unless exempted under

section 13.2 (4) (

a) or 13.5 (2) (1); (

e) machinery or equipment, including transformers, pipes, valves and regulators, for use in the transmission or distribution of tangible personal property unless the machinery or equipment is for use within a manufac- turing site, at a mine site or at a well head, natural gas processing plant or petroleum refinery; (

f) pipes, valves, fittings, pumps, compressor. , regulators and equipment ancillary to any machinery or equipment that is for use in transporting or distributing petroleum or natural gas from the well head to the processing plant or refinery or between processing plants, or for use in transporting a marketable product, unless exempted under

section 13.2 (4) (b); (

g) bases and foundations that become a part of realty; (

h) scaffolding, walkways, catwalks and similar items unless such items are an integral part of machinery or equipment that is exempt under this Division and the items are sold or leased as a part of that machmery or equipment. Persons excluded from exemption under

section 76 (1) (

k) of the Act 13.10 The exemption under

section 76 (1) (

k) of the Act does not apply to the following: (

a) a caterer; 6 of 8

(

b) a restaurateur or other person who prepares food products for retail sale on the premises where the food is prepared unless the retail sales of those food products comprise less than 10% of that person's total sales; (

c) the government and its agents, including agencies, boards and commis- sions, but excluding the British Columbia Hydro and Power Authority, the British Columbia Railway Company, the Columbia Power Corporation and the Insurance Corporation of British Columbia; (

d) a local government body as defined in

Schedule 1 of the Freedom of InlOrtnation and Protection of Privacy Act; (

e) a corporation whose taxable income, determined for the purposes of the Income Tax Act (Canada), is exempt from income tax under

section 149 (1) (

d) to (d.6) of that Act, but excluding the British Columbia Hydro and Power Authority, the British Columbia Railway Company, the Columbia Power Corporation and the Insurance Corporation of British Columbia; (

f) schools, school boards and universities, including business, trade and vocational schools; (

g) hospitals; (

h) regional health boards and community health councils designated under the Health Authorities Act. Certification 13.11

(1) A person who claims an exemption under this Division in respect of machinery or equipment or taxable services must provide the vendor or lessor with a certifi- cation, in a form satisfactory to the commissioner, certifying that the person is eligible for the exemption and that the machinery or equipment being purchased or leased, or for which taxable services are being purchased, qualifies for the exemption. A vendor or lessor must not make an exempt sale or lease under this Division unless the vendor or lessor has obtained from the purchaser or lessee the certifi- cation referred to in subsection (1).

Despite subsection (2), if a vendor or lessor has reason to believe that a person who claims an exemption under this Division is not entitled to the exemption claimed, or that the machinery or equipment is not exempt under this Division, the vendor or lessor must (

a) collect from the person the tax that would be payable under the Act if the exemption did not apply, and (

b) advise the person to apply to the commissioner for a refund of tax the person claims to have paid in error.

(4) The vendor or lessor must retain the certification referred to in subsection (2) to substantiate the non-collection of tax.

(5) If a vendor or lessor does not collect tax from a person who claims, but is not entitled to, an exemption under this Division, the vendor or lessor is not liable for 7 of 8

a penalty imposed under

section 115 (5) of the Act, provided the conditions under subsections (2), (3) and (4) of this

section have been met. Vehicle mounted machinery or equipment 13.12

(1) Subject to subsection (2), if (

a) machinery or equipment is mounted on a vehicle that is not exempt under this Division, (

b) the machinery or equipment would be exempt from tax under this Division if purchased or leased separately from the vehicle, (

c) the vendor or lessor makes a reasonable allocation of the portion of the purchase price or lease price that represents the purchase or lease price of the machinery or equipment, and (

d) the allocation of the purchase or lease price for the machinery or equipment is separately stated on the sales or purchase invoice, the purchaser or lessee is exempt from tax on the amount allocated for the machinery or equipment.

(2) An allocation made under subsection (1) must be based on the price at which the legal and beneficial interest in the vehicle, without the machinery or equipment, would, if unencumbered, oe 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.

(3) If an allocation made under subsection (1) (

c) is not made in accordance with subsection (2), the commissioner may make an allocation that is in accordance with subsection (2) and assess tax based on that allocation. 8 of 8

Document details

Collection	British Columbia — Orders in Council
Citation	O.C. 915/2001
Type	order_in_council
Volume / chapter	arc oic 0915 2001
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	4c1175cdb09f326a20a0c6a98ca674b08819e076

Source file is stored in the law ingest library (pdf).