Consultant recommends fixed asset investment increase after BC sales tax repeal
May 22, 2012
Following the introduction of a law that will end the Harmonized Sales Tax (HST) in the Canadian province of British Columbia, an accounting consultant is advising B.C. construction companies to increase their fixed asset
investments, the Journal of Commerce reports.
The legislation, which will reinstate a 7 percent Provincial Sales Tax (PST) on April 1 of next year, was introduced by B.C. Finance Minister Kevin Falcon earlier this month.
"If you are considering buying vehicles, tools, equipment, supplies or any items that will be subject to PST, then do so prior to April 1, 2013, and save 7 percent," construction business and management consultant Ron Coleman recommended, as quoted by the news source.
Coleman explained that current leases on fixed assets
- specifically vehicles and equipment - are subject to the 12 percent input tax credit. This will be reduced to 5 percent, with the 7 percent PST added as a cost. Because of this, he advised converting leases into purchase agreements.
According to The Wall Street Journal, the HST had been unpopular since it came into effect in July 2010, largely due to the fact that the tax burden applied to purchases ranging from haircuts to internet service that would previously have been exempt.