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Gold/Mining/Energy : A to Z Junior Mining Research Site -- Ignore unavailable to you. Want to Upgrade?

To: 4figureau who wrote (2989)	1/28/2003 9:58:51 AM
From: 4figureau	Respond to of 5423

Quebec has bagels, poutine and cheaper gold Financial Post - Tuesday January 28, 2003 By Drew Hasselback Ontario charges sales tax on coins, Quebec does not The price of gold is a little bit cheaper on the Quebec side of the Ottawa River. So found a federal civil servant from Ottawa, who we'll call Mr. X. Mr. X went to a bank on the Ontario side of the river and tried to buy gold Maple Leaf investment coins. He was shocked to learn he would have to pay Ontario's 8% provincial sales tax on his order. Ontario charges provincial sales tax on gold coin purchases, though it doesn't collect tax on purchases of gold bars. Quebec, on the other hand, doesn't charge retail sales tax on gold. The policy difference highlights two views of gold in the modern age. Quebec treats gold coins as money. Ontario, on the other hand, treats gold coins like it would jewellery. Ontario's stance annoys Mr. X because he believes gold is money, not a consumer trinket. "It should be just like going into a bank and exchanging two $10 bills for a $20 bill or a $20 bill for two $10 bills," he says. When Mr. X learned that Quebec does not charge PST on gold coin sales, he paid $5 to hop in a taxi and cross the bridge to Hull, Que. He went to a bank there and placed an order for 30 Maple Leaf coins worth about $15,000. Mr. X paid about $125 to have Brinks ship his treasure 1.5 kilometres back to Ottawa. The cross-border trip dodged $1,250 in sales tax. Which is why he requested anonymity: Ontario says he should still have to pay PST because the gold was purchased for delivery to his principle residence in Ottawa. "I question how any province can charge provincial sales tax on legal currency and why the Bank of Canada allows them to do so," Mr. X says. The Ontario government sees things differently. The problem comes with the face value of gold coins. For example, a $50 gold coin is 99% pure gold and weighs 31.15 grams, or one troy ounce. Consumers therefore buy the coins for the spot price of gold, not the face value. Gold closed yesterday at US$369.40 an ounce. "We charge PST on all tangible personal property, unless it's specifically exempt. Now, money, in any form, is exempt, unless you purchase it for more than its face value," said Sue Craig, spokeswoman for the Ontario Ministry of Finance. "It's the same thing with stamps. If you were to buy a Penny Black here in Ontario, you would be charged PST on it, and it would come to quite a sum, I should think." Ms. Craig said that in 1983 Ontario tried to exempt coins made entirely with Canadian gold from PST. Problem was, foreign gold producers complained this created unfair advantage that violated the General Agreement on Tariffs and Trade. Ontario therefore repealed the exemption in 1986. Maple Leaf gold bullion investment coins are produced by the Royal Canadian Mint and sold through the branches of chartered banks across the country. While sales are subject to sales tax in some provinces, they are always exempt from the federal GST. The mint would love nothing better than to do away with PST on their coins because it says it is reducing sales in Ontario, Canada's largest province and market. "The mint has been trying to persuade the Ontario Ministry of Finance to eliminate the sales tax," said Eileen McCarthy, mint spokeswoman. Canada has some complicated rules when it comes to retail sales tax for gold coins. Alberta and the three territories have no retail sales tax on anything, so there's no problem there. New Brunswick, Nova Scotia and Newfoundland have harmonized their retail sales taxes with the GST, so they follow the federal government's policy of not collecting sales tax on gold coins. British Columbia, Manitoba and Ontario charge PST on some gold purchases, but not on all, so you have to check with your bank before you buy the gold. Prince Edward Island and Saskatchewan make things easy by collecting PST on all gold deliveries. "If you take possession, they put it in the tangible, personal property section, and tax all of that," said Mike Woods, spokesman for the Saskatchewan Ministry of Finance. Saskatchewan doesn't tax gold and silver investment certificates, because the gold remains in bullion banks abroad. finance.canada.com