by Ryan

"What's New in Provincial Commodity Taxes" is a feature exclusive to CCH Canadian Limited's provincial tax reporting services. Prepared by Ryan, Canada's leading commodity tax consulting firm, this feature provides readers with insights into government policies, bulletins, and related documents that are included in your CCH provincial tax service. In your electronic service, click on the link to the document referenced to view it directly, and rely on CCH and Ryan^® to keep you up-to-date with expert commentary on breaking developments in Canadian commodity taxes. This article first appeared in CCH’s Atlantic Tax Reporter No. 720 dated June 2009.

Alberta
2009 Budget Highlights

On Tuesday, April 7, 2009, Finance Minister Iris Evans delivered the 2009 Alberta Budget, which included a deficit of $4.7 billion, the province's largest deficit and the first in 16 years. Included in the Budget announcement were two commodity tax changes.

Tobacco

Alberta has a "Tobacco Reduction Strategy" designed to reduce tobacco use among Albertans. To accomplish this goal, the Budget increased tobacco taxes, effective April 8, 2009, as noted below:

• cigarettes by $3 to $40 per carton;
• loose tobacco by 11.5 cents to 30 cents per gram; and
• the taxable price of cigars to 103% from 95%.

Liquor Markup

The Budget also increased liquor markups as follows:

• a dozen beer from a major brewer increased by $1.30;
• a 750 millilitre bottle of wine increased by at least 75 cents; and
• a 750 millilitre bottle of most spirits was raised by $2.85.

Additional information on the 2009 Alberta Budget may be found in the CCH Budget Dispatch and 2009 Budget documents, available in the electronic Alberta and Territories Tax Reporter.

Prince Edward Island
2009 Budget Highlights

Provincial Treasurer Wesley J. Sheridan tabled the 2009-2010 Prince Edward Island Budget on April 16, 2009, which included only one significant commodity tax announcement.

Tobacco Tax

For the second consecutive year, as part of ongoing efforts to reduce smoking within the province and provide funding for various health care initiatives, the price of a carton of cigarettes was increased by $5 per carton, effective at midnight on April 16, 2009.

Ontario
Retail Sales Tax Guide 302, "Alcoholic Beverages"

Ontario recently revised this guide to clarify that a brew pub is a licensed establishment that manufactures draught beer for on-site consumption. In addition, it is noted that liquor delivery services provided by a person who holds a liquor delivery service licence, as well as corkage charged by a restaurant for opening bottles of wine brought into the restaurant by the customer, are non-taxable services.

Retail Sales Tax Guide 601, "Labour Charges"

The province has updated this guide to provide more information on the types of services that are considered to be taxable for retail sales tax purposes. The guide reiterates that local travel charges associated with taxable labour form part of the fair value of the services provided, and are subject to retail sales tax. Local travel charges include expenses incurred during a normal working day, such as meals and mileage, but exclude other types of expenses, such as accommodation or airfare. The guide also specifies that repairs and alterations to adult clothing are taxable, whereas these same services performed on children's clothing are non-taxable, as the underlying goods are unconditionally exempt from retail sales tax.

Retail Sales Tax Guide 600, "Motor Vehicle Repairs", and Small Business Pointer 905, "Motor Vehicle Repairs"

These documents now reflect a recent change to the tax status of Drive Clean inspection services when provided with other taxable services. Retail sales tax does not apply to charges for Drive Clean emissions testing when other repair work is performed at the same time, even where all work performed is billed under one charge. In addition, the publications clarify that, for vehicle repairs performed under contracts of insurance, the repair facility must charge retail sales tax on the full cost of parts and labour before any deductible is applied.

Small Business Pointer 906, "Prepared Foods"

Ontario has recently revised this publication to update the retail sales tax factors used in tax-included pricing, due to the GST rate reduction effective January 1, 2008. In addition, the pointer indicates that a taxpayer must self-assess tax on any meals given away for free, if the cost is more than $4. A vendor has the option of using either the actual cost of the free meal or 60 per cent of the normal selling price to determine if the value of the meal is more than $4.

British Columbia
Information Bulletin GEN 009, "Understanding Your Consumer Tax Audit"

British Columbia has recently updated this bulletin to provide more information regarding the Audit Limitation Waiver Agreement. By signing a waiver agreement, a taxpayer elects to waive the audit period beyond the time limit required by law. This waiver agreement will allow a taxpayer more time to gather additional information requested by an auditor, prior to an assessment being issued.

Information Notice 26, "Carbon Tax Refunds—Purchasers"

This notice has been issued by the province to explain the requirements for claiming a refund of tax paid under the Carbon Tax Act by a person who purchases or receives delivery of fuel for their own use. In addition, the notice includes updates to the method for calculating the amount of a carbon tax refund claim for purchasers of fuel used as a reductant in the production of lead or zinc. This new calculation method took effect February 1, 2009.

Information Notice 2009-004, "School Supplies Purchased by Career Training Institutes", and Information Bulletin SST 012, "School Supplies"

British Columbia recently issued this notice and revised this bulletin to clarify that private career training institutions must be registered and accredited with the Private Career Training Institute Agency to qualify for the social service tax exemption on school supplies.

Saskatchewan
Information Bulletin PST-56, "Information on the Taxation of Aircraft"

Saskatchewan has revised this bulletin to clarify the criteria for exemption from provincial sales tax for aircraft and related repairs and parts. New and used personal-use aircraft that are registered under the Aeronautics Act (Canada) for commercial purposes to transport passengers or freight for a fee qualify for the exemption. This exemption applies to both resident and non-resident aircraft. Repair parts, lubricants, installation, and repair labour may also be acquired exempt of tax for qualifying aircraft.