Carbon Tax in Construction – What You Need to Know

Carbon Tax in Construction - What you need to knowAll Canadian provinces are mandated by the federal government to implement a provincial carbon tax by 2018. This article discusses how provincial taxes, including carbon tax, motor fuel tax, and provincial sales tax (PST) impact the construction industry.  

For a detailed discussion this topic, please refer to our article “Carbon Tax in Canada,” which can be found at: http://crowemackay.ca/blog/articles/carbon-tax-canada/

While there is no specific exemption from the B.C. Carbon Tax for the construction industry, there are a few important issues and tax exemptions that may be noteworthy:

1.    B.C. Carbon Tax on cement

The B.C. Carbon Tax is applied only to domestically produced cement, while imported cement from the U.S. and Asia is exempt, thus, resulting in a higher cost on domestically produced cement for construction use. To offset this, the B.C. provincial government has proposed “transition incentives” of $22 million to be paid over a three-year period to encourage the B.C. cement industry to adopt cleaner fuels and further lower emission intensities in order to offset the inequities between domestically produced and imported cement.

2.    B.C. PST exemption on energy conservation materials and equipment

The following materials and equipment are exempt from PST when acquired to prevent heat loss from a building:

  • thermal insulation material that is a batt, blanket, roll, panel, loose fill, or cellular plastic material;
  • polystyrene forming blocks designed as a form for concrete, which remains permanently attached to the concrete to serve as the primary insulation for the completed buildings; 
  • fastening components specifically designed for use with exempt polystyrene forming blocks; 
  • chemicals obtained for use to make spray polyurethane foam insulation; 
  • window insulating systems consisting of transparent or translucent film, including frames or integral parts of the systems, installed in an existing window and designed primarily to retain heat in a building by absorbing solar heat or reducing drafts;  
  •  weather stripping and caulking materials designed to prevent heat loss (bathtub caulking would not qualify);
  • insulation that is designed to prevent heat transfer to or from hot water tanks, hot or cold water pipes, or ductwork. 

3.    B.C. PST exemption for alternative energy source

The following materials and equipment are exempt from B.C. PST:

  • wind-powered generating equipment specifically designed to produce mechanical or electrical energy, and generators, controllers, wiring, and devices that convert direct current into alternating current;
  • equipment specifically designed to produce mechanical or electrical energy from ocean tides, currents of waves, and generators, wiring, controllers, monitors, pumps, tubing, floats, water fences, aids to navigation, and devices that convert direct current into alternating current;
  • solar photovoltaic collector panels, and wiring, controllers, and devices that convert direct current into alternating current;
  • solar thermal collector panels, and wiring, pumps, tubing, and heat exchangers;
  • micro-hydro turbines and generators designed to produce up to 150 kilowatts of mechanical or electrical energy, and controllers, wiring, and devices that convert direct current into alternating current.

4.    B.C. PST exemption for electricity, natural gas, and propane conversion kits

Natural gas and propane conversion kits for internal combustion engines are exempt from PST. Conversion kits meant to convert motor vehicles to operate solely on electricity are also exempt from PST.

5.    B.C. Motor Fuel Tax exemption

A motor fuel tax exemption is provided for B.C. businesses that operate an engine of a motor vehicle while the vehicle is stationary. The engine has its own fuel tank, is not used to operate the vehicle while in motion, and operates equipment for the purpose of any of the following:

  • rotating the drum of a ready-mixed concrete truck or pumping ready-mixed concrete;
  • pumping or dispensing liquids or other materials such as water, milk, flour, syrups, fertilizer, and fuel to or from a commercial vehicle (this does not include the use of a hydraulic arm, unless it is on a logging truck or a hydraulic cylinder);
  • operating a drilling unit that is operated by a power takeoff unit;
  • operating a mobile crane;
  • operating a hydraulic arm mounted on a logging truck.

6.    Other B.C. Fuel Tax exemptions

There are various provincial tax exemptions available for the construction industry:

You may use coloured fuel in road-building machines when the vehicle is used:

  • at a highway project area;
  • by or for the provincial or municipal government in construction or repair of roads maintained by the government including logging, mining, or petroleum and natural gas access roads on Crown land; or
  • for travel to and from locations where the use of coloured fuel is authorized.

You must use clear fuel in road-building machines when:

  • the vehicle is used on a highway outside a highway project for grading, clearing, snow ploughing, or other maintenance activities, or
  • the vehicle is not used by or for the provincial or municipal government in construction or repair of roads maintained by the government.

Road-building machines including:

  • bulldozers, compactors, loaders, self-propelled compressors, paving machines, rollers, cranes, scrapers, dumptors, tractors, machines equipped with shovels, articulated rock trucks, and
  • trucks such as Euclids that, because of their size, are not permitted to travel on-highway without a permit.

Need help navigating the technicalities of carbon tax and your business? Call our experts today. Our professional team at Crowe MacKay LLP will be available to assist you identify and maximize any exemption and tax refund opportunities for your business. Please feel free to contact Catarina Wong at (604) 697-5221 or at catarina.wong@crowemackay.ca, or John Diduch at (250) 763-5021 or at john.diduch@crowemackay.ca.


This article first appeared in the Spring 2017 issue of SICA's Construction Review Magazine. To read the entire magazine click here.

Kelowna-Construction-Breakfast-8.jpg
April 19, 2018

Construction Industry Celebrates BC Construction Month at Okanagan College

The Kelowna building community was proud to celebrate BC’s Construction & Skilled Trades Month with a breakfast held at Okanagan College on Thursday. In the newly built Trades Building contractors, apprentices, foundation program students and industry support organizations gathered to recognize the impact the construction industry has on the BC and specifically the Okanagan economy.
Read More
Brandon_TKI.png
March 07, 2018

Member Spotlight: TKI Construction

TKI recently completed construction on the flagship Mr. Lube store in Kelowna, where they went beyond your standard oil change facility and built a truly stunning building. Brandon had the opportunity to work with the Mr. Lube franchise owner to design a tower and architectural details that make the store more visually appealing than it would otherwise be.
Read More
BCCA Employee Benefits logo.JPG
February 07, 2018

Unsung Benefits

The BCCA Employee Benefits’ plans offer other services beyond dental and extended health care.
Read More
iStock-619508318.jpg
January 24, 2018

Message Delivered, Message Received

Successful buildings have always been the result of collaboration between the client, designers, and contractors. A strong team, clear expectations, and concise information will typically result in a project which all involved parties will consider successful. Through recent decades the delivery of projects has changed with increased complexity, decreased timeframes, and changing delivery methods. Now more than ever it is critical that the collaboration between the team occurs to ensure the desired outcome.
Read More
Panel_Image.jpg
January 03, 2018

All Parties at the Table | SICA CCO Workshop

The SICA CCO Workshop is designed to bring industry partners together to discuss everyday topics that effect everyone. It’s an opportunity to network, gain a better understanding of challenges faced by other parties, and to better understand the impact decisions have on others.
Read More
img-bdo.png
December 20, 2017

TAX ALERT – Government Simplifies Measures to Rein in Income Sprinkling

On December 13, the federal government released legislation to simplify restrictions on income sprinkling, proposed to go into effect January 1, 2018. These revisions indicate they’ve listened to feedback during the consultation period, by providing more certainty to taxpayers through the introduction of “bright-line” tests to automatically exclude some family members, and allow income sprinkling for those members who make sufficient contributions to the business.
Read More
8F - 2006 Mack Dump Truck.jpg
December 13, 2017

Member Spotlight: Ok Excavating

Adaptability, initiative, and customer service are the keys to longevity for a local commercial and residential excavation business in Kelowna. OK Excavating is celebrating 50 years of business in 2017 and, in those years, has undergone many evolutions.
Read More
7-1 BCCA Trish before.jpg
December 06, 2017

Employee Benefits are Your Secret Weapon when Life Gets Tough!

As a Client Services Associate with BCCA Employee Benefits, my job revolves around helping companies and their employees with their benefits. I know how important my work is, but when I started new jobs in the past, I often wondered whether the premiums were worth it. I am young and healthy, so is it worth the cost? I learned the true value of having employee benefits when, in a moment frozen in my mind, I heard the dreaded “c” word – cancer.
Read More
cyber-security-2851201_1920.jpg
November 29, 2017

Construction and Cyber Risk: An Overview

A hazard such as a fire has protocols and procedures that are designed to mitigate risks – inspections, suppression systems, and risk management practices. Cyber protection of a business should also employ a rigorous process to develop both a risk prevention and incident response plan. Most cyber insurance applications serve as a catalyst in moving towards this process.
Read More
calculator-1044173_1280.jpg
November 15, 2017

Could Tax Issues Throw Your Business Off Track?

To stay on track, real estate and construction companies should develop a better understanding of where tax issues are likely to complicate or disrupt their business — and develop a plan to mitigate those risks well in advance.
Read More
father-2090061_1920.jpg
November 08, 2017

Top Five Reasons for Having an Employee Benefits Plan

One of the biggest investments employers can make is in their employees. And it makes sense to want productive, healthy, and engaged employees. Employees with poor health cannot exert the effort required to be highly productive, and you need engaged employees in order to create innovative solutions.
Read More
courthouse-1799353_640.jpg
August 30, 2017

Obligation of Good Faith in Contracting

The Supreme Court of Canada changed the legal landscape for contracts in the decision of Bhasin v. Hrynew, [2014] SCC 71. This decision created a new common law obligation of good faith that applies to all commercial contracts.
Read More
write-593333_1920.jpg
August 23, 2017

Embracing the Purpose Era

Regardless of the size of your business or the sector you operate in, the purpose movement is shaking up the rules of business and ringing in a new era where business is an active participant in making the world a better place.
Read More
blueprints-1837238_1920.jpg
April 05, 2017

Reaching the Millennials | Attracting the right people is in how the story is told

With businesses adjusting to the era of the happy workplace, concepts such as social responsibility, company culture, and employee engagement are common buzz words used around the open-concept, flexible, shared workspace. They are used more so as companies shift their recruiting focus toward the millennials, the largest generation in the workforce today.
Read More
News-Feature.PNG
May 09, 2016

SICA's New Website Launches

We are excited to announce that our new website is live! We have been busy working behind the scenes and are so excited for you to utilize all the new features.
Read More
kelowna-yacht-club.jpg
October 15, 2015

Kelowna Yacht Club takes top honors

Kelowna Yacht Club was the Judges’ Choice best overall entry winner in the 7th Annual Southern Interior Construction Association Commercial Building Awards Thursday night at the Coast Capri Hotel.
Read More
Commercial_Building_Awards2016.png

Commercial Building Awards - Finalists Announced!

A spectacular assortment of commercial and industrial buildings have been named as finalists for the 8th Annual Southern Interior Construction Association Commercial Building Awards, set for Thursday, Oct. 27 at the Four Points Sheraton Hotel in Kelowna.
Read More