BILL 7 -- 2004: SOCIAL SERVICE TAX AMENDMENT ACT, 2004

2004 Legislative Session: 5th Session, 37th Parliament
FOR REPORT

The following electronic version is for informational purposes only.
The printed version remains the official version.

Certified correct as amended in Committee of the Whole on the 25th day of March, 2004
Ian D. Izard, Q.C., Law Clerk

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

1 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,

(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:

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.

3 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~~ Canadian 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;

(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.

4 Section 6 (4.1) and (4.2) is amended by substituting, ", or if section 11(4.1) applies, the fair market value," after "purchase price".

5 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.

6 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

(b) the person who provided the gift

(i) paid tax under this Act, or

(ii) paid a sales tax to another province or under section 165 (2) of the Excise Tax Act (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) 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.

8 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.

9 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.

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

"market value" means the fair market value; .

11 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%.

12 Section 87 (2) is repealed.

13 Section 90.2 (b) is amended by adding "or (4.1)" after "section 11 (4)".

14 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,".

15 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;

(c.4) exempting containers from tax under section 8, and specifying the terms and conditions of the exemption;

(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

16 (1) In this section:

"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;

"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

(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

17 (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 Act 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,

(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

19 (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.

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