PST returned to BC April 1, 2013. I attended a presentation by PST specialists on March 22, 2013 hosted by IPBC.
Here are the PST basics I came away with that should help you transition from HST to PST + GST.
Note: If you have been notified about a PST Audit, learn what to expect during your audit.
PST will remain substantially the same as the old SST that was in effect prior to July 1, 2010 with permanent exemptions reinstated.
Notice 2013-003 explains that you pay PST on goods used in fulfilling contracts, including lump sum payments OR time and materials, unless SPECIFIC CONDITIONS are met. IF these conditions are NOT met, you DO NOT charge PST to your customer.
Specfic Conditions If You Want To Charge The Customer PST
The customer MUST agree to sign an agreement that states they agree to pay BC PST on materials. Remember, services to real property aren't taxable. This agreement must be presigned and pre-written in advance (before works commences). It cannot be done as part of the invoice at the end of the contract.
This is a change from the "old PST" days. The change was driven by consumer requests for consistency when dealing with contractors. Consumers found it too confusing when some contractors charged PST while others didn't.
It is my understanding that the government plans to be pretty strict on enforcing this rule so let me say this again ... the customer is NOT taxed on the invoice. The contractor is now responsible for paying the PST.
One additional point; the contractor does not have to be a BC PST registrant because the contractor is paying the PST and is not collecting PST from the customer ... so there is no PST reporting requirement.
The Exception - Retail Sales
If you, as a real property contractor, sell something but don't install it ... such as a water heater ... this is considered a retail sale and you must charge your customer PST.
If you are not a PST registrant, you would remit the tax on a Casual Remittance form.
Who is a small seller?
The above criteria are "AND" conditions ... meaning you have to meet each requirment on the list to qualify as a small seller.
Small sellers have the option to register for BC PST.
Software is defined in Notice 2012-024 as all programs delivered or accessed by any means. It includes source code, operating systems, application and gaming software.
You must self assess BC PST if a product purchased and paid for online (or offline) does not include PST.
I interpret this to mean that all software as a service (SaaS) are PST-able. So if you use software based services such as HostGator, Amazon Web Services, AWeber, or Expensify It, you would need to self assess PST.
Businesses, Canadian or non-resident, should be a PST registrant if they regularly sell goods into BC. This means your purchases would be charged PST relieving you of the requirement to self assess on the purchase.
Please note though that the PST Specialists emphasized it is the purchaser's responsibility for payment of the PST, not the seller's.
Bulletin PST 301 (previously Notice 2012-016) explains which services are taxable. Generally taxable services, provided in BC or outside BC, are:
What is tangible personal property anyway?
It is property that you can "see, weigh, measure, feel or touch". It includes utilities but NOT real property (land including permanent structures attached to the land).
Bulletin PST 301 contains a long list of exemptions that you should become familiar with.
Goods brought into the province where tax is due through self assessment are:
The BC PST applies to the purchase price which includes:
The following are exempt from BC PST:
If YOU use the good in / for your business, it is taxable and does not fall under the exemptions. For example, shop supplies are taxable because YOU, not your customer, are using them.
Exemption Paperwork Requirements
The alternative way to get an exemption is to have the store verify your BC PST number. This ensures you qualify for the tax exemption. They can do this by:
To verify a BC PST number, they need:
The BC Government website says, "The PST Number Verification Service is a free and optional service that you [businesses] can use to verify the PST number of your customers. You [businesses] are not required to verify the PST numbers of each of your customers before providing an exemption."
The BC Government website says:
"If a purchaser can't provide the required information you must charge and collect PST. If the purchaser provides the required documentation after the purchase but within 180 days, your businesses may refund or credit the PST charged.
It is the purchaser's responsibility to ensure they qualify for the exemption. If the purchaser completes an exemption certificate but they don't qualify for the exemption, the purchaser is responsible for paying the PST."
See B.C. Home> Business> Taxes & Rebates> Consumer Taxes> Provincial Sales Tax for more information.
You can claim a refund if you paid tax that was exempt because you resold it. You CANNOT net the two and remit the difference.
If you are selling to First Nations, their status card or exemption certificate must be provided AND the goods and/or services must be delivered on a reserve. If the service or good is not delivered on a reserve, you must charge BC PST.
The example given was how many car dealers will take photos of the car at delivery on the reserve. Deloitte's Janice Roper recommends you keep a schedule:
The First Nations individual does not have to live on the reserve ... you just have to deliver it to a reserve. This means a First Nations individual cannot walk into your store front and walkout with their purchase.
Certificate of Exemption Links
These are the exemptions that are currently available and allow certain purchasers to claim an exemption from PST.
More links will be added as the government releases the forms to the public ... so please keep checking back if you didn't find what you needed today.
|Form #||Exemption Certificate Title|
|FIN 425||Children's Clothing and Footwear*|
|FIN 440||Purchase of Vehicle or Aircraft for Use Outside BC|
|FIN 441||Multijurisdictional Vehicles|
|FIN 443||Self-Assessment on Software|
|FIN 455||Commercial Fisher|
|FIN 462||Out-of-Province Delivery|
|FIN 480||Substances Sold for Use Other Than in Internal Combustion Engines|
|FIN 492||Production Machinery and Equipment|
* Deloitte's reported in a March 19, 2013 newsletter that the "certification process is much more onerous than under the previous Social Service Tax Act (SSTA) in that there is one certificate per customer, rather than the previous listing of transactions that use to be acceptable. Also, it requires both the purchaser’s name and the child’s name. It appears that the amount of paperwork to be kept could be voluminous for some retailers."
Please note these links are to fillable PDF forms.
Form#, PST Form Title
FIN 262, Application for Registration as an Exempt Sale Retail Dealer (ESRD) and/or Exempt Fuel Retailer (EFR)
FIN 319, Gift of a Vehicle
FIN 355, Application for Refund - General (PST)
FIN 355/MV, Application for Refund of Provincial Sales Tax (PST) Paid on a Motor Vehicle
FIN 355/Schedule, Refund Claim Schedule (PST)
FIN 400, Provincial Sales Tax Return
FIN 405, Casual Remittance Return
FIN 401, Municipal and Regional District Tax Return
FIN 407, Provincial Sales Tax (PST) Schedule – Boats and Aircraft
FIN 447, Application for Clearance
This wraps up the BC PST basics. Here is the index on all PST pages in case you want information on PST, transition rules, or ...