Carbon Tax in Construction – What You Need to Know
All 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 email@example.com, or John Diduch at (250) 763-5021 or at firstname.lastname@example.org.
This article first appeared in the Spring 2017 issue of SICA's Construction Review Magazine. To read the entire magazine click here.
Emil Anderson Construction Wins 2018 SICA Innovation Award
Record-tying number of Commercial Building Award Finalists
REPOST: Pattullo Procurement Strategy Takes BC Construction a Bridge Too Far
Response to the Province’s Community Benefits Agreement Announcement
2nd Annual Family Fishing Derby
Celebrating our Own - Terry Brown Receives CCA's Person of the Year Award
10th Anniversary of Heavy Metal Rocks in Kamloops
Celebrating Construction Month at Thompson Rivers University
Construction Industry Celebrates BC Construction Month at Okanagan College
Member Spotlight: TKI Construction
Message Delivered, Message Received
All Parties at the Table | SICA CCO Workshop
TAX ALERT – Government Simplifies Measures to Rein in Income Sprinkling
Member Spotlight: Ok Excavating
Employee Benefits are Your Secret Weapon when Life Gets Tough!
Construction and Cyber Risk: An Overview
The Devil is in the Details: A Cautionary Tale about Filing Builders Liens
Could Tax Issues Throw Your Business Off Track?
Top Five Reasons for Having an Employee Benefits Plan
Southern Interior Construction Association Announces New CEO
Kelowna Police Services Building wins Commercial Building Awards
Looking to Grow and Expand | Are you thinking far enough ahead?
A Businesslike Approach to Safety – A Safety Management System
Record number of Commercial Building Awards Finalists
All in the Family | Generations in business share their secrets
Insurance: Wrap Up versus Non Wrap Up. It’s important to know the difference. Do you?
5 ways your accountant can support you in strong real estate market
Maximizing Efficiency in Dispute Resolution: Help Tell Your Story
Building Information Modelling: A powerful tool for design efficiency
Heavy Lifting | A program for students interested in heavy equipment operation
Member Spotlight: Secure-Right Mobile Storage Inc.
The future is friendly: making the link between innovation and CSR
Legal Talk: Modernizing your Construction Agreements
Carbon Tax in Construction – What You Need to Know
Reaching the Millennials | Attracting the right people is in how the story is told
Innovation key as the BC construction industry steps into a modern trades training future
Okanagan College Trades Building wins top honours at SICA Commercial Building Awards
As a Member you are a part of a collective voice, the SICA voice. Together, our voice is changing the construction community and helping your business grow through advocacy, networking events, affinity programs, direct business leads and more. Our voices promotes fairness, transparency and open communication in the construction industry. Join SICA to grow your business today and be a voice for our industry tomorrow.JOIN NOW