But owners of the province's care centres remain concerned about the impact of the harmonized sales tax in the lead-up to its implementation
By Glen Korstrom, Business in Vancouver
Executives at care centres for BC seniors watched Victoria shoot a $10.5 million hole in their collective budgets this summer when the BC Liberals announced plans to introduce a harmonized sales tax on July 1, 2010.
They feared that they would have to start playing the HST on hydro, general administrative purchases and contracts for outsourced custodial laundry, kitchen and other services.
But Finance Minister Colin Hansen has since held talks with the BC Care Providers Association and confirmed that some costs will be mitigated. He clarified for example, that care homes will not have to pay HST on hydro costs.
Hansen has also said that non-profit care facilities for seniors will be eligible for a 57% rebate on the provincial tax portion of the HST that they'll have to pay on contracting out such services as laundry, kitchen and custodial.
Residential hydro bills are exempt from HST, but care home operators worried that they would have to pay the HST because they would be classed as a business. Relax, Hansen told them. Residential care homes will be exempt from the hydro portion of the tax.
"Discussions are not over with the government," BC Care Providers Association director of public relations David Hurford told BIV. "We are still talking to them about further mitigation measures. We're making good progress."
Hurford believes that Hansen understands the residential care business case for contracting out services and that the Finance Minister doesn't want to penalize businesses by adding disincentives to pursue that strategy.
"The for-profit guys are even more upset about the tax on contracting out than the non-profit guys," said tax expert Susan Payment, who is principal at Meyers Norris Penny Chartered Accountants and Business Advisors.
She said commercial care centre operators pay the 5% goods and services tax on large maintenance contracts. Non-profit operators initially pay the GST but can claim a 50% rebate on the tax bill. Commercial operators must also fork over the entire new 7% tax when the GST is combined with the current 7% sales tax.
Non-profit care facilities, which tend to be operated by registered societies, will initially pay the 7% tax. But Payment said non-profit operators will be eligible for the 57% rebate on the additional 7% tax.
"It's kind of a weird rate. Of the 5% GST, non-profit care homes can get 50% back as a rebate. Of the 7%, they will get 57% back," Payment said. "It will be very confusing for anybody to fill out forms. I don't know what the forms are going to look like."
Victoria's HST plan has raised concern sector-wide said Carol Finnie, who is Executive Director at New Vista Care Home, BC's second largest care home. She has spent countless hours trying to determine how her facilities will be affected and has concluded it will not be significant.
Finnie's facility has what she calls a "strong union influence" and doesn't contract work out. So it will face no extra tax on labour. Hydro is a huge expense for Finnie and other care home operators. So she is pleased with Hansen's assurances that she won't have to pay the HST on that expense.
HST opponents such as consultant and activist Bill Tielman have loudly protested that the HST will be applied to office and other commercial rents. But Finnie said care homes won't have to pay HST on their rent.
About 70% of New Vistas 776 beds are in apartment-style housing as opposed to care bed facilities. The "rent geared to income" housing uses a rent structure that fluctuates with a resident's pension. Payment said the federal government classifies businesses that operate this kind of housing as municipalities. As such, she said, they qualify for a full rebate of the HST.
Biggest Senior Care Centres in BC
1. George Derby Centre (300 immediate care home beds)
2. New Vista Care Home I (236)
3. Laurel Place (215)
4. Mennonite Benevolent Society - Menno Home (196)
5. Windermere Care Centre (196)
6. Villa Cathay Care Home (188)
7. Stanford Place Care Campus (180)
8. Hilton Villa Care Centre (174)
9. Royal City Manor (165)
10. The Arbours Sunridge Place (160)
11. Capilano Care Centre (159)
12. Evergreen Baptist Care Society (157)
13. Langley Lodge (156)
14. Haro Park Centre (154)
15. Rosewood Manor (152)
16. Royal Arch Masonic Home (151)
17. Spring Valley Care Centre (149)
18. Central Care Home (147)
19. Zion Park Manor (147)
20. Louise Brier Home (145)
21. German Canadian Care Home (144)
22. Kinsman Place Lodge (144)
23. Morgan Place (144)
24. Selkirk Place (143)
25. Westminster House (140)
26. The Village at Smith Creek (139)
27. Newton Regency Care Home (136)
