Return to PST is Proving Costly for Trailers
Following up on our September 9, 2013 post "Understanding MJV Exit and Trailer Taxes in BC", it appears there has been a change or omission in the policy defining PST exemptions for trailers. In the Ministry of Transportation's Bulletin PST 135, it states that “trailers obtained solely for use with MJVs are exempt from PST.”
This definition could be interpreted to read that unless a trailer is used 100% of the time with an MJV, companies must pay full PST on the trailer. Previously, companies were exempt from paying PST on a trailer used exclusively with an MJV, but only had to pay a portion of the PST on a trailer that they used with both MJV and intra-provincial vehicles, using a calculation based on the percentage of operations in province and a ratio of the distance intra-provincial vehicles travel to the total distance traveled by the fleet.
Some trucking companies have learned that their trailers are being subject to full PST, which could potentially result in hundreds of thousands of dollars in extra tax payable. Under the old PST system (i.e., pre-HST) these trailers would have been subject to a comparably small amount of PST.
Many trucking companies with largely multijurisdictional fleets require some non-MJV use of their trailers, including:
- Using BC-plated tractors to reposition trailers between local warehouse and distribution facilities and ferry terminals; and
- Contracting with a BC-based company for local deliveries under interlining agreements that may involve moving a company’s MJV trailers to a BC destination using a non-MJV.
The BC Trucking Association (BCTA) is recommending to the Ministry that it re-implement the pre-HST practice of assessing PST on trailers based on proportional use with MJVs and non-MJVs as a policy, and ensuring that the practice is properly defined in regulations, as well as a less rigid definition of use “solely with an MJV” to mean 90% of the time or more.
For more information on this issue and to view the letter written by the BCTA to the Ministry of Transportation, please see BCTA Protests Costly PST Tax on Trailers by the BC Trucking Association (October 3, 2013).
Tia Chisholm, HUB International TRANSPORTATION
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