Loggers get a tax break
British Columbia's forest industry got an unexpected financial break in July when the provincial government announced a tax exemption for logging machinery and equipment. Effective July 31, 2001, any purchase or lease of qualifying machinery and equipment used exclusively in logging-by a company or person involved in logging activities for commercial purposes-will be exempt from the province's seven per cent provincial sales tax. The tax exemption is part of a broader move by the BC government to assist manufacturing and natural resource-
based businesses. BC Finance Minister Gary Collins said the changes represented "another key to prosperity" for BC-tax reductions designed to increase investment and revitalize industries like logging and mining. As part of an overall package to assist business in BC, the corporation income tax rate will also be falling to 13.5 per cent from 16.5 per cent on Jan. 1, 2002. The wording of the legislation says that persons who regularly engage in logging for commercial purposes are eligible for the tax exemption. "Regularly engages" means that the activity is undertaken on a routine basis. This could be as a full-time occupation, seasonally, or on some other part-time basis.
For the purposes of the tax exemption, the government defines logging as: felling or bucking of trees; skidding or otherwise moving trees or logs to a landing or other first point of accumulation; loading, unloading, sorting or storing of trees or logs at landings, log dumps, sort yards, dryland sorts, booming grounds or mill yards. This would include such logging equipment as skidders and related attachments, towers and cable equipment, cranes, and yarders. Since this equipment is now exempt, provincial sales tax also does not apply to services, such as repairs or reconditioning, when they are provided for these items.
Replacement parts specifically designed for exempt machinery and equipment are also not subject to the tax. To claim the exemption, the person or company purchasing or leasing the equipment must provide each supplier with a completed Certificate of Exemption -Production Machinery and Equipment (FIN 453/M) to purchase or lease eligible machinery and equipment, or taxable services for such machinery and equipment, without payment of tax. Further detailed information on the exemption is available on the BC government's Consumer Taxation Branch website at www.rev.gov.bc.ca/cbt
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