April 1: BC to Revert to the PST While PEI Implements HST

We post here occasionally about developments in the Canadian tax system to keep our readers aware of important changes and new requirements.

For instance, back in 2011, we wrote that voters in British Columbia had decided to discontinue the Harmonized Sales Tax (HST) and return to the provincial sales tax, or PST. As part of this deharmonization, BC taxpayers had to repay the $1.6 billion of transitional funding received from the federal government. BC officials also had to re-implement the PST. Officials have completed their work and BC will revert back to the PST on April 1. (Taxpayers, of course, will still owe 5% GST on certain goods and services after April 1, as well.) Current PST laws and regulations are all now available on BC’s PST website here. Retailers are also required to register for the PST and can do so online here. Note that even if a business was registered under the prior PST, that business must now re-register.

British Columbia Repeals HST in Voter Referendum

As we have written previously, in 2010, both Ontario and British Columbia entered into agreements with Canada to harmonize the Goods and Services Tax (“GST”) and their Provincial Sales Taxes (“PST”) into a single Harmonized Sales Tax, or “HST.” The HST went into effect July 1, 2010, in both provinces.

But, the HST proved unpopular in British Columbia, and on August 26, a majority of voters in British Columbia passed a referendum aimed at extinguishing the HST and reinstating the PST. The transition back to the PST is expected to take “a minimum of 18 months." The reason for the long transition is that the province must develop and pass legislation and regulations to re-implement the PST and put in place systems to administer it, and the federal government and the province must pass transitional rules to return the province to the GST. Additionally, British Columbia must determine how it will refund to the federal government the $1.6 million provided to the province to aid in its initial transition to the HST.

Update to eMarketers: Canada’s FISA Broader than US’s CAN-SPAM Act

Last late year, Canada enacted the Fighting Internet and Wireless Spam Act (FISA).  The framework established by FISA is fundamentally different from the United States’s CAN-SPAM Act.  First, while CAN-SPAM applies only to commercial email, FISA applies to any form of electronic message sent for marketing purposes (referred to as a “Commercial Electronic Message,” or “CEM”), including: email; SMS; instant messaging; and social media/networking. U.S. regulations have not to this point targeted communications with customers across social media.

Second, and perhaps more significantly from the standpoint of most U.S. firms, FISA requires affirmative consent from a potential recipient of a message before marketers can send a CEM.  This feature of the law stands in sharp contrast to CAN-SPAM, which permits at least “one free shot” at a recipient, provided that the message itself is CAN-SPAM compliant (ie. the message includes opt-out instructions, clearly identifies the sender, identifies itself as commercial email, etc.).

Accordingly, U.S. companies now will need to differentiate their approach to marketing to Canadian customers from their approach to marketing to U.S. customers in order to ensure compliance with both the Canadian and U.S. statutes.  Commonly utilized techniques for acquiring contact information, such as list rental, if used to market to Canadian customers, now have the potential to expose marketers to a violation of FISA.

Harmonized Sales Tax Expands to Ontario and British Columbia on July 1, 2010

In the past year, both Ontario and British Columbia entered into agreements with the Canadian federal government to harmonize the Goods and Services Tax (“GST”) and Provincial Sales Taxes (“PST”) into a single Harmonized Sales Tax or “HST.” The HST will be effective July 1, 2010, and will be administered by the Canada Revenue Agency (“CRA”).  Ontario and the federal government have already passed legislation implementing the HST.  British Columbia has yet to pass its own implementing legislation, but has already taken steps towards harmonization with the federal government.