BC PST Basics
Part 1 of 3

by L. Kenway BComm (Retired CPB)

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.

Quick Reference on BC's PST Basics

PST will remain substantially the same as the old SST that was in effect prior to July 1, 2010 with permanent exemptions reinstated.

• You need a new BC PST number. Your old BC PST number is no longer valid. Sign on to eTaxBC to register online (your best option however watch their video first) ... but because you have procastinated in registering, you will not receive your PST number by April 1, 2013 due to the backlog. Read more here ...
• Your filing date is the last day in the month following your reporting period. This due date is now in line with the GST filing due dates. Your reporting period is most likely monthly, but could be quarterly, semi-annually or annually. Read more here ...
• The act and regulations are now grouped by industry to make it easier to understand what laws and regulations apply to your business.
• The rules are now included in the regulations not the act itself. This makes it easier to change, requiring only an Order in Council instead of calling in the legislative assembly to enact change.
• The tax is payable when consideration becomes due or paid.
• You must self assess when required and remit the tax by the last day in the following month on a casual remittance form if you are not a PST registrant. PST registrants are supposed to report self assessments on their return ... see the line with Box F Tax Due on Purchases/Leases on form 400.
• As mentioned above, you now have the option to register and file your PST returns online using eTaxBC.
• Your best reference when looking for information ... other than my site of course ... is gov.bc.ca/pst.

Real Property Contractors

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.

Small Sellers

• Small sellers do not have to register for or collect PST.
• If you have a store front, you are NOT a small seller.

Who is a small seller?

• You have a home based business in BC
• You make $10,000 or less of gross sales (taxable and not taxable)
• You sell taxable goods, software or services
• You don't sell liquor, vehicles, boats or aircraft on a regular basis
• You  are not a lessor or independent contractor
• You don't offer four or more units of accommodation

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 Including Online Purchases

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.

Taxable and Related Services

Bulletin PST 301 (previously Notice 2012-016) explains which services are taxable. Generally taxable services, provided in BC or outside BC, are:

• legal services
• telecommunication services
• related services - is a service provided to goods (tangible personal property) are called related services ... think repairs, maintenance, installation ... or creating a new piece of jewellery from materials supplied by the customer ... applying fabric protection or restoring furniture ... setting up / taking down booths at trade fairs.

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.

Out of Province Purchases

Goods brought into the province where tax is due through self assessment are:

• tangible personal property (see related services above for a definition) - see Notice 2012-013
• software - see Notice 2012-024
• services - see Notices 2012-014, 018 and Bulletin 301

The BC PST applies to the purchase price which includes:

• transportation and freight
• custom and brokerage fees
• other costs prior to use in BC

Exemptions Specific To Business

The following are exempt from BC PST:

• Goods for resale
• Goods incorporated into goods for resale
• Rental of tangible personal property (If you include a driver with a car/equipment rental (which is a service) it becomes taxable)

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

1. The reseller customer must provide a copy of the certificate of exemption which you attach to the invoice (at the very least, you must keep a copy of the certificate of exemption on file for recurring customers).
2. Record the reseller's PST number (not your PST number) on your invoice.

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:

1. your business number (BN), which is also the
   first 9 digits of your GST/HST number, and
2. your PST number (e.g., PST-XXXX-XXXX)

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:

1. listing these transactions,
2. the status card number of the purchaser, and
3. a note saying they were delivered on reserve.
   

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 456	Aquaculturist
FIN 458	Farmer
FIN 462	Out-of-Province Delivery
FIN 480	Substances Sold for Use Other Than in Internal Combustion Engines
FIN 490	General
FIN 491	Contractor
FIN 492	Production Machinery and Equipment
FIN 493	Subcontractor

* 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."

Other PST Forms Released

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  ...

Bookkeeping Essentials › Reimplementing PST in BC › Part 3 - BC PST Basics