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Things You Need You Need To Know About The Move To PST

Wednesday, March 27th, 2013 by

I got to visit the Global TV set again today and this time and the topic was about the tax changes here in regards to the provincial sales tax (PST). I figure as a quick recap for those of you who do live in BC here is the general breakdown that I talked about:

1) HST is being abandoned and various goods and services that are taxable will no longer be charged at a flat 12%. Items will be taxed in two categories consisting of a 5% GST rate and a 7% PST rate if applicable.

2) It’s better to hold off some of your purchases until the PST arrives to save money as many items are only GST applicable. Some examples of items that you will now only pay a 5% tax on as opposed to 12%:

Dry Cleaning
Vitamins and Supplements
Prepared Food, including Restaurant Meals
Basic Cable Television services
Services to Real Property including Repair, Maintenance or
Renovation of Real Property (e.g., Plumbing, Electrical Wiring)
New Homes, excluding manufactured homes

3) Some items may get more expensive as well so be sure to review your service contracts. For example, you may need to pay more if you have a vehicle leasing contract as the rate is now 5% GST + 7-10% PST. Potentially more than the 12% HST rate.

4) A lot of small businesses have yet to register for a PST account and will go through transition pains. Make sure to check your bill that you aren’t being charged with the old HST system.

5) Be sure to take advantage or anticipate any tax deductions that may or may not apply to you if you run a business as PST is not tax deductible cost to a business.

Example of Before:
Business spends $1000 and pays 12% Tax = Total $120 In Tax Paid
Business sells goods to the customer at $1000 and charges them 12% tax = Total $120 In Tax Collected
Business breaks even as they paid $120 in taxes as an expense and collected $120.

Example of Now:

Business spends $1000 and pays 5% GST and 7% PST = Total $120 In Tax Paid
Business sells goods to the customer at $1000 and charges them 5% GST = Total $50 In Tax Collected
Business submits the $70 PST and claims back the $50 in GST. You end up with $70 less than with the HST system.

As I posted before, if you need a list of what items are taxable and which ones aren’t you can find a great list at http://www2.gov.bc.ca/assets/gov/topic/BED47DA4EBDBA60A5F28622B8B2E1451/uploads/whats_taxable_whats_not.pdf

On a side note, it was kind of cool and unexpected to see Trevor Linden there. He was a former hockey player for the Canucks for those who don’t watch hockey. It did feel kind of intimidating to up after him….

Just Another Business or Work Day On Holidays

Monday, February 11th, 2013 by

Today here in BC it was an introduction of a new statutory holiday called BC family day where the intent was to try and give people time off to spend time with their family. What I thought it was kind of interesting though was that for the most part a lot of people were still working. For example, people working in government jobs or places like restaurants and attractions want to stay open to capitalize on more business.

That just made me think of difference in mentality where you could either treat a holiday like an entitlement to take time off or you could capitalize on it to generate more revenue while taking a less productive day off instead. Sounds like an odd way of thinking but makes sense in many ways huh? For example, for many tomorrow is probably going to be less busy for like a food vendor on the street and so working today and taking the day off and having the “family day” tomorrow would probably make more sense.

I suppose in that sense it’s all about if you are willing to not follow the crowd and do what makes more sense for your business and lifestyle.

Anticipating For The New Tax

Thursday, January 7th, 2010 by

So here it looks like soon there will be an introduction of a new tax. Basically, here we have different taxes for different things. Depending on what you buy you would be charge the appropriate taxes. Instead, now we are going to be universally taxed on everything using this new one rate system.

That means a lot of things are going to be more expensive. For example, normally for services like a consulting business you would only charge people one tax of like 5%. For goods like a new TV people would get charged the 5% plus another 7%. Everything now will be charged a 12% rate.

I suppose if you are self employed this can benefit you in many ways as you can now write off the taxes on everything. That’s the only real way that I can think to take advantage of the situation. Other then that, if you intend to make a large purchase that normally only requires one small tax you might want to consider buying it before the new rules come into play.

Operation Phoenix

Tuesday, February 3rd, 2009 by

This is a local issue as here in Vancouver there is this new initiative by some large media outlets trying to raise awareness of the poor Downtown Eastside here as for years it has been plagued as the sore spots of the city. Drugs, addicts, the homeless, etc. I did make a post about this area a few months back about Trying To Operate A Business In A Poverty Area that dealt with the area in question.

Now one of the goals apparently is to raise awareness of the issue and to find solutions for it. At the same time, the attempt is to try and explore what does and doesn’t work while encouraging public input. First of all, this was the report I saw and you can watch it too if you are interested:

This topic actually interested me a lot as back when I participated in the Vancouver Board of Trade I was actually interested in volunteering in one of those committees which dealt with the poverty in that area since I think it is fixable with the right set of actions. While watching that report, maybe I am just a little bias but seeing how some of those people are struggling financially yet they are still doing things like smoking cigarettes and drinking a lot of alcohol makes me believe that we are just catering the problem.

In many ways, it’s like a person that keeps going into personal financial debt because of habits yet people keep throwing them money and resources where they end up just using it as a vehicle to continue the exact same thing for who knows how much longer until they need more again. I am a strong believer in finding the roots of the problem first as issues like these usually go much deeper.

My thought to fix the poverty issue personally is to create an environment where these people can work to sustain a self sufficient lifestyle. I personally don’t think just giving housing and money really solves the issue in the end. By work I don’t mean give them jobs at say a fast food place either. Instead, maybe there are more super old fashion approaches such as setting up an environment where people can grow/harvest their own food while having a livable shelter. I’m definitely one of those who would rather teach someone to fish for themselves rather than me doing it for them.

That way, they don’t really need money when you think about it to live and they are doing something pro-actively to fix their lives instead of sitting on the streets and expecting things to fall from the sky. Isn’t it kind of weird too how we have like a system for criminals where we give them food, shelter and recreation yet for some reason we can’t create a solution for this? Of course though, my thoughts is still the same where you need to fix the root of the problems first as oppose to just handing people things.

My question is how in the world did that area get to the way it is now and why did it attract so many less fortunate people? Why is it allowed to continually happen too, so to speak? I always found it so ironic that the police station is right there and you would think things like drug dealings and all would be less prominent in an area like that. I would like to see a report about that personally as I am willing to bet there is something in that area that is the cause of the majority of the problem. I think the 80/20 rule holds the same for this where 80 percent of the problem is probably caused by 20 percent of the people there.

As an example, in the Downtown Eastside there used to be this big business called Woodwards that unfortunately went out of business a long time ago. The building has been abandoned for the most part and so homeless people began to gather around the area and claimed that building as theirs. The thing is the city and everyone just allowed it to happen and sure enough more people gathered there. Like in that case, I can see how that can actually encourage a person to live in a homeless way. That situation has since been solved though (Albeit it was done in a forceful way).

I’m assuming a big reason that an issue like this is being raised now is so that Vancouver can try and clean the place up for the Olympics next year. So just like personal finance, hopefully what will be done is that the media will try and flush out the underlying problem first. If I was trying to help a person with their financial situation for example, I would want to learn about habits and sources that lead the person to continually mismanage money as an example. Once you know that it is usually pretty easy to turn things around.

Carbon Tax

Monday, June 30th, 2008 by

Starting tomorrow there is going to be this carbon tax that is going to be introduced here. Basically, for every litre of fuel that is sold about an additional 2.5 cents will be added to it. The idea is to try and make people more aware of harmful greenhouse gases to encourage less usage of say a gas guzzling car.

This definitely makes owning a vehicle an even bigger expense. Maybe I am a little bias, but I personally always try to use a vehicle as less as possible and so in many ways I don’t mind this tax too much. I know one person who has decided to sell his car due to gas prices and will try to live a life around services such as public transportation.

Another idea that a lot of people do to save money if they still need to use a car is to carpool with others. We’ll just have to wait and see how this pans out.