BCYBA Sheds Light on British Columbia's Tax on Designated Property


The British Columbia Yacht Brokers Association (BCYBA) met with a representative from the Ministry of Finance last week to ask questions about the new Tax on Designated Property (TDP) and how it applies to boat sales in the province.

Kim Barbero, recently appointed Executive Director of the BCYBA and BCMTA, forwarded a transcript of the question and answer discussion with the representative.

TDP – General
Q1: What is the Tax on Designated Property (TDP)?
A1: The TDP, in effect as of July 1, 2010, is a new provincial 12% tax levied on the sale of private boats. The TDP is paid by the purchaser.

Q2: Do I collect and remit, on behalf of the purchaser, the TDP in the same way I did for the PST?
A2: No, payment and remittance of the TDP is the purchaser's responsibility. The
purchaser has 23 days following the last day of the month of the boat sale to self-assess and pay the TDP using the form titled: Casual Remittance Return for Tax on Designated Property. This form is available for download on the Ministry of
Finance Web site at:
http://www.sbr.gov.bc.ca/business/Consumer_Taxes/Designated_Property/desig
nated_property.htm

Note: The Ministry will be monitoring tax payments in accordance with registered ownership and will be following up in writing with purchasers who have not completed their forms and submitted payment.

Q3: When does HST, GST and TDP apply to boat sales?
A3: HST and GST will be answered in a separate format. We are attempting to get formal answers from the HST and GST departments. TDP is a 12% tax, also in effect as of July 1, 2010, that is applicable to private boat sales between individuals. As with HST/GST, the purchaser pays the tax; the difference, however, is that the purchaser is responsible for remitting the tax themselves.

Q4: What is the procedure that must be followed to ensure an out-of-province buyer (ie. Alberta resident) is exempt from paying the TDP on a used recreational boat purchased from a BC broker?
A4: To be exempt from TDP, the purchaser must formally reside outside of BC (ie. Does NOT pay BC Medical Plan premiums MSP or in receipt of a Homeowner's grant) and the transfer of title must be executed outside the province.

Q5: What is required to demonstrate that a transfer of title has been executed outside of BC?
A5: The preferred protocol for demonstrating transfer of title outside of BC is a written statement that identifies the location and date of the transfer, and the signatures of the sellers and buyers and/or their representative (ie. delivery person) at time of transfer. Other practices that have been considered acceptable include: a GPS printout or a photograph of the boat and its buyer in an identifiable out-of-province location.

Q6: Does TDP apply at all if a boat is purchased outside of BC and brought into BC to do business?
A6: Yes, but exceptions includes:
1) If boat is for resale
2) Other exemptions may apply – for more information contact the Ministry of
Finance at 877 388-4440 or mailto:CTBTaxQuestions@gov.bc.ca

Q7: Will out of province and out of country purchasers who bring their boats into BC have to pay any taxes?
A7: There have been cases where the HST has been levied by CBSA upon entry into Canada. Please refer to Canada Border Services Agency for guidance.

Marketing Fees
Q8: Does a boat seller have to pay TDP on the marketing fee charged by the yacht broker to facilitate the sale of the boat (Note: this is not a consignment sale)?
A8: No.

HST Registrants
Q9: If a BC company buys a used vessel from a non-HST registered seller does TDP apply to the sale?
A9: Yes, but exception includes:
1) If boat is for resale
2) Other exemptions may apply – for more information contact the Ministry of
Finance at 877 388-4440 or mailto:CTBTaxQuestions@gov.bc.ca

Trade-Ins
Q10: How does TDP apply to trade-ins?
A10: If TDP is applicable, the purchaser is required to pay TDP on the difference between the vessel being purchased and the fair market value of the trade-in.