January 18, 2010
In this issue:

Questions about HST?
Welcoming the World in 2010
DestiCorp 2.0 – Where Leaders in Travel & Tourism Come to Think
Media Update
VCM Board Members don the red mittens to carry the Olympic Torch!
Don’t miss the 2010 Community Breakfast Series
Nominations for Sport Tourism Awards Now Open
The Natural Light Workshop Series With Graham Osborne

Questions about HST?

Sales tax harmonization may generally be good for business and business investment when it is coupled with the right system of rebates and tax cuts. However, the implementation of HST in British Columbia comes with its challenges. The Wilderness Tourism Association (WTA) worked with COTA to complete an analysis of the impacts HST will have on BC’s tourism industry Impacts, and a report of these findings has been presented to the federal and provincial Finance Ministers, Premier Campbell, Minister Krueger, and other stakeholder groups.

The WTA also worked with COTA to develop a reasonable yet meaningful mitigation package, which was presented to the provincial and federal governments. They are hopeful that these mitigation measures will be considered and implemented by government. In the meantime we need to start looking at how HST will be implemented in business plans and operations. Aside from the process of claiming tax credits, there have been two main questions regarding the implementation of HST raised by WTA members: 1) how does HST apply to tour prepayments?; and 2) if the existing 50 % foreign visitor rebate (for GST under the Foreign Convention and Tour Incentive Program) will apply to the full 12 % tax rate of the HST (i.e. 6% rebate).

With respect to the first question it is common practice in the tourism industry for businesses to collect payments (deposits and invoice balances) for tours well in advance of the tour or service delivery. E.g. a tour occurring in July or August could be paid for 60, 90, or 120 days in advance. The HST transition rules are a bit vague and confusing with respect to the application of prepayments for service delivered after July 1. The transition rules suggest that the tax will apply to prepayments starting on May 1, 2010, for goods and services provided on or after July 1, 2010, which would imply that if customers paid before May 1, 2010 they would be exempt from paying the provincial portion of HST regardless of when the service was delivered (i.e. after July 1, 2010).

However many have interpreted the transition rules to imply that if a service is delivered after July 1, 2010 the provincial portion of HST will apply regardless of when the service is paid for. The WTA asked government for a definitive answer to this basic question, which is if a tour or service is paid in full before May 1, 2010 will it be exempt from the provincial portion of HST? The response from Jordan Goss, Manager, Consumption Tax, Tax Policy Branch, Ministry of Finance (Province of BC) follows:

“Generally it is the case that goods and services which are purchased by consumers and will be received on or after July 1, 2010 but are fully pre-paid prior to May 1, 2010 will not be subject to HST. However, if the good or service is currently subject to PST or to hotel room tax (in the case of accommodation), the PST or HRT would apply to these.”

“I say ‘purchased by consumers’ because there are some categories of non-consumers (see bulletin on general transitional rules, page 6) that will be required to self-assess HST on purchases of goods and services delivered on or after July 1, 2010 where consideration is due or paid on or after October 14, 2009 and before May 1, 2010. Therefore, they cannot avoid the HST by pre-paying in full prior to May 1, 2010.”

According to the HST transition rules, the requirement to self-assess in these circumstances would generally apply only to:

• non-consumers acquiring the service for consumption, use or supply otherwise than exclusively in the course of their commercial activities (e.g., a business, such as a financial institution, that is acquiring the service to make GST/HST-exempt supplies);
• non-consumers acquiring the service for consumption, use or supply exclusively in the course of their commercial activities but in circumstances where the service would be subject to an input tax credit restriction or recapture (e.g., certain entertainment expenses subject to the 50 per cent input tax credit recapture rules in the ETA);
• non-consumers that use simplified procedures available under the ETA for calculating their net tax (e.g., certain charities, public service bodies, and small businesses); and
• selected listed financial institutions, which use a special attribution method in determining their net tax.

The complete HST Transition rules for Services (including tourism services) can be downloaded here.

With respect to the second question of whether the existing 50 % foreign visitor rebate will apply to the full 12 % HST, inclusive tour package providers have been eligible for the foreign visitor rebate for GST under the Foreign Convention and Tour Incentive Program. Now that these businesses will be subject to the HST the WTA wanted to to confirm that a) the Foreign Visitor Rebate Program will still be in place, and b) if the 50 % rebate will apply to the full 12 % tax rate of the HST. The response from HST Inquiries, Tax Policy Branch, Ministry of Finance (Federal) follows:

“Specific to international tour operator bookings, the Foreign Convention and Tour Incentive Program will continue under the GST and the same rules will apply for the HST.”

“As such, a rebate of up to 50% of the HST will apply to eligible tour packages. Where an eligible tour package is currently exempt from the PST and taxed at 2.5 per cent of the GST, it will be taxed at six percent under the HST after claiming the rebate.”

So it appears that the 50% GST/HST rebate (six %) will continue to apply for eligible tour packages. For more information on the Foreign Convention and Tour Incentive Program, what qualifies as an eligible tour package, and rebate claiming guidelines, please refer to the Canada Revenue Agency website:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/rbts/vstrs/trprtr/menu-eng.html

Note, that one of COTA’s proposed HST mitigation measures includes expanding the definitions and scope of the Foreign Convention and Tour Incentive Program and to make the rebate process more streamlined.

Reprinted with permission from Evan Loveless, Executive Director of the Wilderness Tourism Association

www.wilderness-tourism.bc.ca

Media Update

More than 15,000 media from around the world are expected to cover the 2010 Olympic & Paralympic Winter Games competitions, venues and the destination, so please keep us up-to-date with any story ideas (this includes great packages and deals.) Send ideas to Lisa@vcmbc.com.

Current Trending Story Ideas

• Valentines Day/ Chinese New Year (both fall on Feb. 14)
• Paralympics /accessible travel ideas
• Getaways/quick trips – (where to take a break from Olympic frenzy)

Don’t miss the 2010 Community Breakfast Series

The series, co-hosted by Vancouver AM Tourism Association and Spirit of Vancouver®, will take place in the sixth-floor restaurant of HBC’s flagship store on West Georgia Street in downtown Vancouver. Dubbed “Spirit of Vancouver House” and “Vancouver AM House,” the restaurant will open every Friday morning between January 15 and March 19, 2010 for a celebration breakfast themed around the 2010 Olympic and Paralympic Winter Games.

While providing a physical location for the delivery of this joint community breakfast series, Vancouver AM House and Spirit of Vancouver House will be a relaxing and friendly meeting place for celebrating Olympic achievement and our Canadian athletes, meeting community and athletic leaders and hearing from special guest speakers.

Series Schedule

Tickets for each event are available online at www.vancouveram.org, or www.boardoftrade.com.

The Canadian Sport Tourism Alliance (CSTA) is now accepting nominations for the third annual PRESTIGE Awards. CSTA’S PRESTIGE Awards celebrate the people, places and events that make the Canadian sport tourism industry so dynamic. These awards are presented annually in five categories to individuals, companies and organizations that have made outstanding contributions to the success of the sport tourism industry. The PRESTIGE Awards are presented at a gala luncheon event that takes place in conjunction with CSTA’s annual conference, Sport Events Congress.

The nomination forms, criteria and supporting documentation can be found on-line. Nominations Accepted Through February 26th.

For more information, please contact Steven Trainor, Project Coordinator at strainor@canadiansporttourism.com or (613) 231-4105, or visit the CSTA’s website by clicking here.

Go "behind the scenes" with professional nature photographer, Graham Osborne. Hailed as a "Landscape Master" by Outdoor Photographer Magazine, Osborne has been called one of British Columbia's and Canada's best photographers by C.B.C. Television and B.C.T.V.

During the workshop Osborne will share some of his tips and secrets to creating world class publication quality images, including his personal composition techniques, secrets to maximizing depth of field, innovative uses of different lens focal lengths, how to capitalize on the unique light qualities of dusk and dawn, and using the whole frame to create visually focused compositions.

Examples of Graham's work can be seen throughout Vancouver, Coast & Mountains publications and on-line at www.grahamosborne.com.

For more information, or to book, please contact Graham Osborne at 604-535-9060 or grahamosborne@telus.net.