1992 Legislative Session: 1st Session, 35th Parliament
FIRST READING


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


MINISTER OF FINANCE AND
CORPORATE RELATIONS

BILL 9 -- 1992

SOCIAL SERVICE TAX AMENDMENT ACT, 1992

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

1 Section 1 (1) of the Social Service Tax Act, R.S.B.C. 1979, c. 388, is amended

(a) by repealing the definition of "line" and substituting the following:

"line" includes, in relation to telecommunication services, the space between a transmitter and receiver of telecommunication services; ,

(b) in the definition of "mineral" by striking out "dolomite,", and

(c) by repealing the definition of "tangible personal property" and substituting the following:

"tangible personal property" means

(a) personal property that can be seen, weighed, measured, felt or touched, or that is in any other way perceptible to the senses, and includes fixtures and natural or manufactured gas,

(b) computer software,

(c) electricity, and

(d) telecommunication services, including cable television services; .

2 Section 1 (1) is amended

(a) by adding the following definition:

"legal services" means

(a) services that come within the meaning of the practice of law under the Legal Profession Act,

(b) services described in section 15 of the Notaries Act, and

(c) services prescribed as legal services,

but does not include services provided by a person to that person's employer in the course of employment; ,

(b) by repealing the definition of "purchaser" and substituting the following:

"purchaser" means

(a) a person who acquires tangible personal property at a sale in the Province

(i) for the person's own consumption or use,

(ii) for consumption or use by another person at the expense of the person acquiring the property

(iii) on behalf of or as agent for a principal, if the property is for consumption or use by the principal or by another person at the expense of that principal,

(b) a promotional distributor that does not come within paragraph (a), to the extent that the purchase price of the tangible personal property provided by way of promotional distribution exceeds the amount of the payment specifically made for it by the person to whom that property is provided, and

(c) in relation to legal services, a person who agrees to pay or is otherwise obliged to pay consideration for the legal services; , and

(c) by repealing the definition of ' "sale price" or "purchase price" ' and substituting the following:

"purchase price" means a price in money, and also the value of services rendered, the actual value of the tangible personal property exchanged, acquired or repossessed, and other consideration accepted by the seller or person from whom the property passes as price or on account of the price of the tangible personal property covered by the sale and, in addition,

(a) the charges for installation of the tangible personal property sold, and for interest, finance, service, customs, excise and transportation in relation to the tangible personal property, whether or not such charges are shown separately on the invoice or in the seller's books,

(b) if the tangible personal property is purchased, manufactured, processed or otherwise acquired outside the Province and subsequently brought or sent into or received in the Province for use or consumption in the Province, the costs and expenses of and to the user for materials, labour and other manufacturing and processing costs and expenses, and for service, customs, excise, transportation and other costs and expenses incurred by the user before the use of the property in the Province, and

(c) in relation to legal services,

(i) the fees and charges, other than those prescribed as excluded, and

(ii) the prescribed disbursements

that are billed or otherwise charged to a purchaser for or in relation to the legal services;

"sale price" means purchase price; .

3 Section 2 (4.01) is amended

(a) by repealing paragraph (a) and substituting the following:

(a) interprovincially or internationally for commercial purposes, and , and

(b) in the formula by repealing the definition of BCH and substituting the following:

BCH = airspace over the Province in the flights referred to in paragraph (b) during the period beginning on the entry date of the aircraft and ending on the third anniversary of that date; .

4 Section 2 (4.02) is amended in the formula by repealing the definition of BCH and substituting the following:

BCH = is to be installed will fly in the airspace over the Province in the flights referred to in subsection (4.01) (b) during,

(a) in the case of a prescribed part, the period beginning on the entry date of the prescribed part and ending on the third anniversary of that date, and

(b) in any other case, the 12 months after the entry date of the part; .

5 Section 2 (15) to (17) is repealed and the following substituted:

(15) A purchaser of private dedicated telecommunication services transmitted over a line that is located partly outside British Columbia shall pay to Her Majesty in right of the Province tax in accordance with subsections (16) and (17).

(16) The tax payable under subsection (15) shall be calculated in accordance with the following formula:

Tax = P x BCD x R
TD

where

P = the purchase price of the private dedicated telecommunication services referred to in subsection (15);

BCD = the distance of the line over which the private dedicated telecommunication services are transmitted that is within British Columbia;

R = the rate in subsection (1) on the date the purchase price for the private dedicated telecommunication services is payable;

TD = the total distance of the line over which the private dedicated telecommunication services are transmitted.

(17) If the purchase price for telecommunication services is only partly payable for private dedicated telecommunication services referred to in subsection (15), the commissioner may determine the portion of the purchase price attributable to those private dedicated telecommunication services.

6 The following section is added:

Tax on legal services

2.0 (1) Unless subsection (2) applies, if a purchaser or recipient of legal services resides, ordinarily resides or carries on business in British Columbia, the purchaser shall pay to Her Majesty in right of the Province a tax at the rate of 6% of the purchase price of the legal services, whether those services are provided inside or outside British Columbia.

(2) No tax is payable under subsection (1) if the legal services have no connection to British Columbia, other than the mere fact that the purchaser or recipient resides, ordinarily resides or carries on business in British Columbia, or that the legal services are provided in British Columbia, or both.

(3) If neither the purchaser nor the recipient of legal services provided in British Columbia resides, ordinarily resides or carries on business in British Columbia, the purchaser shall pay to Her Majesty in right of the Province a tax at the rate of 6% of the purchase price of the legal services if those services are in relation to one or more of the following:

(a) real property situated in British Columbia;

(b) tangible personal property, within the meaning of paragraph (a) of the definition of tangible personal property, that is ordinarily situated within British Columbia or that is to be delivered in British Columbia;

(c) a court or administrative proceeding in British Columbia;

(d) the incorporation of a corporation under the Company Act or the Society Act, or the registration of a corporation as an extraprovincial company under the Company Act or as an extraprovincial society under the Society Act;

(e) another matter substantially connected to British Columbia that is prescribed as being included for the purposes of this subsection.

(4) Subject to subsection (5), the tax under subsection (1) or (3) shall be paid by the date on which the purchase price is paid or payable, whichever is earlier.

(5) If the legal services are provided outside British Columbia and the person providing the legal services does not collect the tax under subsection (1), the purchaser shall pay the tax by delivering it to the commissioner by the 15th day of the month following the month in which the purchase price was paid or became payable.

(6) The purchase price for legal services shall be deemed to be payable when it is billed or otherwise charged to the purchaser.

(7) If there is more than one purchaser for legal services to which subsection (1) or (3) applies, all purchasers are jointly and severally liable for the tax imposed by the applicable subsection.

(8) For the purposes of this section, a person shall be deemed to be carrying on business in British Columbia if an employee or other representative of the person carries on activities in British Columbia on that person's behalf for the purpose of promoting the sale or use of the person's products or services.

(9) If the person providing legal services does so as a partner in a partnership or as an employee of an individual, partnership or corporation, a reference in this Act to that person shall be deemed to be a reference to the individual, partnership or corporation.

(10) For the purposes of this Act,

(a) the receiving of legal services for consideration is deemed to be a purchase,

(b) the provision of legal services for consideration is deemed to be a sale of tangible personal property at a retail sale, and

(c) the receiving of legal services is deemed to be use of legal services,

except that section 2 does not apply to a purchase of legal services.

(11) This section does not apply to legal services provided to an individual to the extent that the purchase price for the services is paid by the Legal Services Society, or by a funded agency within the meaning of the Legal Services Society Act, for the purposes of section 3 of that Act.

7 Section 2.1 (3) (a) (i) is repealed and the following substituted:

(i) interprovincially or internationally for commercial purposes, and .

8 Section 2.1 (9) is repealed and the following substituted:

(9) Notwithstanding subsection (1), a lessee who comes within any of the following descriptions shall pay tax calculated in accordance with subsections (3), (3.01) and (5):

(a) a lessee who

(i) leases in the Province any railway rolling stock, and

(ii) from the date the lease is granted, uses the railway rolling stock interprovincially or internationally;

(b) a lessee who

(i) leases in the Province an aircraft, and

(ii) from the date the lease is granted, uses the aircraft interprovincially or internationally for commercial purposes;

(c) a lessee who

(i) leases in the Province a vehicle, vessel or other conveyance, other than railway rolling stock or an aircraft, and

(ii) from the date the lease is granted, uses the conveyance in interprovincial or international trade for the commercial carriage of passengers or goods.

9 Section 4 (1) is amended

(a) by repealing paragraph (z) and substituting the following:

(z) telecommunication services in the form of telephone services that qualify for a residential rate, other than long distance telephone services; ,

(b) by repealing paragraph (z.92) and substituting the following:

(z.92) telecommunication services in the form of cable television services, other than those cable television services described as

(i) pay television,

(ii) specialty service channels, or

(iii) non-programming channels

for which there is a charge in addition to the basic cable television charge; , and

(c) by adding the following paragraph:

(z.99) aircraft powered by a turbine and parts for these aircraft.

10 Section 7 is amended

(a) in subsection (1) by striking out "Subject to sections 2 (3.1)" and substituting "Subject to subsection (1.1) and sections 2 (3.1)", and

(b) by adding the following subsection:

(1.1) The tax imposed under section 2.01, whether the purchase price is payable in cash, on terms, by instalments or otherwise,

(a) shall be collected at the time the purchase price for the legal services is paid or payable, whichever is earlier, and

(b) shall be remitted to the commissioner at the prescribed times and in the prescribed manner.

11 Section 23 is amended by striking out "tangible personal property that is taxable under section 2, 2.1 or 2.2 or subject to a levy under section 2.4," and substituting "tangible personal property that is taxable under section 2, 2.1 or 2.2, legal services that are taxable under section 2.01 or tangible personal property that is subject to a levy under section 2.4,".

12 Section 33 (1.1) is amended by striking out "section 2, 2.1, 2.2, 2.4, 3, 5.1, 7, 9, 10, 17, 28 or 29," and substituting "section 2, 2.01, 2.1, 2.2, 2.4, 3, 5.1, 7, 9, 10, 17, 28 or 29".

13 Section 37 (2) is amended

(a) in paragraph (c.1) by striking out "sections 2, 2.1 and 2.2," and substituting "sections 2, 2.01, 2.1 and 2.2,", and

(b) by adding the following paragraph:

(e.1) in relation to legal services,

(i) prescribing legally related services as legal services for the purposes of section 2.01,

(ii) excluding specified fees and charges in relation to legal services from the purchase price of the legal services,

(iii) prescribing specified disbursements in relation to legal services as disbursements to be included in the purchase price of the legal services,

(iv) prescribing matters having a substantial connection to British Columbia as matters in relation to which tax shall be payable under section 2.01 (3),

(v) exempting specified legal services from tax under section 2.01, subject to such terms and conditions as the Lieutenant Governor in Council specifies, and

(vi) exempting legal services provided to persons or classes of persons from tax under section 2.01, subject to such terms and conditions as the Lieutenant Governor in Council specifies; .

14 Section 37 is amended by adding the following subsection:

(5) A regulation under this Act in respect of legal services made before May 1, 1993 may be made retroactive to any date after April 30, 1992 and, if made retroactive, shall be deemed to have come into force on the date specified in the regulation.

Retroactive exemption for certain aircraft and aircraft parts

15 (1) An aircraft referred to in section 2 (4.01) of the Social Service Tax Act and parts for such an aircraft are exempt from taxation under section 2 of the Social Service Tax Act if both the following requirements are met:

(a) the aircraft flies in the airspace over British Columbia for less than 80% of the total hours the aircraft flies, as calculated in accordance with section 2 (4.01) and (4.02) of the Social Service Tax Act and adjusted under section 2 (4.07) of that Act;

(b) during the time period used for the calculation referred to in paragraph (a), the aircraft is used for

(i) regularly scheduled flights for the commercial carriage of passengers or goods, or

(ii) flights chartered on a per flight basis for which fares are charged to passengers or shipping charges are charged to shippers.

(2) If the entry date for an aircraft or part is such that the period to be used for the calculation referred to in subsection (1) (a) has not elapsed by March 31, 1992, the calculation shall be based instead on the period from the entry date of the aircraft or part to March 31, 1992.

(3) An aircraft referred to in section 2.1 (3) (a) of the Social Service Tax Act is exempt from taxation under section 2.1 of the Social Service Tax Act in respect of a rental period if both the following requirements are met:

(a) during the rental period, the aircraft flies in the airspace over British Columbia for less than 80% of the total hours the aircraft flies, as calculated in accordance with section 2.1 (3) (a) of the Social Service Tax Act and adjusted under section 2.1 (3.01) of that Act;

(b) during the rental period, the aircraft is used for

(i) regularly scheduled flights for the commercial carriage of passengers or goods, or

(ii) flights chartered on a per flight basis for which fares are charged to passengers or shipping charges are charged to shippers.

Transitional provision regarding tax on legal services

16 (1) Subject to subsection (2), if the purchase price of legal services relates to legal services provided in part on or before April 30, 1992 and in part after that date, section 2.01 of the Social Service Tax Act, as enacted by section 6 of this Act, applies only to that part of the purchase price which relates to the legal services provided after April 30, 1992.

(2) If a purchase price referred to in subsection (1) is payable under a contingent fee agreement, being an agreement under which the consideration for the providing of legal services is contingent, in whole or in part, on the successful disposition of the matter in respect of which the services are provided, the portion of the purchase price that represents the legal services provided after April 30, 1992 shall be as determined in accordance with the following formula, unless the commissioner is satisfied that the purchase price should be otherwise apportioned:

TP = PP x T1
T2

where

TP = the portion of the purchase price deemed to be related to legal services provided after April 30, 1992;

PP = the purchase price of the legal services payable by way of contingent fee;

T1 = the number of days between April 30, 1992 and the date on which the tax under section 2.01 is imposed;

T2 = the number of days between the date on which the person providing the legal services began to provide those services and the date on which the tax under section 2.01 is imposed.

(3) A decision of the commissioner under subsection (2) may be appealed in accordance with sections 13 and 14 of the Social Service Tax Act.

Commencement

17 (1) Sections 1, 3 to 5 and 7 to 9 shall be deemed to have come into force on April 1, 1992 and are retroactive to the extent necessary to give them effect on and after that date.

(2) Section 15 shall be deemed to have come into force on May 5, 1983 and to have been repealed on March 31, 1992 and is retroactive to the extent necessary to give it effect between those dates.

(3) Sections 2, 6, 10 to 14 and 16 come into force on May 1, 1992.


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