New Tax Guidelines for Self-Employed BC Editors

On April 1, 2013, the BC government will repeal the HST and return to the former GST + PST regime. What does that mean for self-employed editors?

We’ve dug into the matter and are happy to share what we’ve found. Please note that these are our personal comments, not those of EAC. We are not tax accountants and cannot offer advice for everyone’s individual situation. However, we’ve gone through the publicly available provincial and federal tax information, and here’s how things look to us.

With the return to GST + PST, we return to the method of taxing clients that was in place before the HST was introduced in BC. All the former tax exemptions are back in place as of April 1, including the exemption for professional services (which includes editing). There’s more on the BC government’s Business & Investing website.

So for editors, it’s pretty much back to the old regime of charging 5% GST—to clients whose address is in BC, that is. What doesn’t change on April 1 is the “place of supply” rules that CRA introduced across Canada at the same time BC switched to the HST. Those rules require that services delivered to a client be taxed at the rate that applies in the client’s province, not the supplier’s.

If, for instance, you edit a report for an association whose permanent address is in Ontario, you charge 13% HST, the rate that applies in Ontario. If you do the same for a federal government department whose address is in Quebec, you charge 5% GST, the rate that applies in Quebec. And after April 1, if you edit for a business headquartered in BC, you charge 5% GST, the new rate in effect in our province.

There are a few exceptions to the place of supply rules. They likely won’t apply to editors, but you can find out more by reading a brief explanation of the rules from the Canada Revenue Agency.

A final note: self-employed editors do not need to register with the BC government before switching back to the old tax regime. Once April 1 comes, you just start charging BC-based clients the 5% GST. The only businesses that need to register with the government are those that will collect the PST.

This article was co-written by EAC-BC members Frances Peck and Ruth Wilson.