British Columbia Provincial Sales Tax (PST)
After briefly converting to a harmonized sales tax (HST) the province of British Columbia (BC) returned to a PST (Provincial Sales Tax) system on April 1st, 2013. The PST rate is currently seven percent on applicable goods and services. If you operate a Canadian business, here's what you need to know about BC PST.
Businesses Required to Register for BC PST
Businesses located in BC that sell or lease taxable goods, software or services are required to register to collect and remit BC sales tax, otherwise known as PST unless they are Small Sellers (see the next section).
That includes people who "enter into contracts to improve real property where your customers pay PST" and people who "sell exclusive products as a direct seller to an independent sales contractor in British Columbia for resale". To be classed as a Small Seller and not have to register for, collect and remit BC PST you have to meet all of the following conditions:
- You are located in British Columbia but do not maintain established commercial or business premises (e.g. you sell goods from your home).
- You sell eligible goods or software or provide taxable services.
- You do not sell vehicles, boats or aircraft.
- You do not sell liquor, other than under a special occasion license.
- You have $10,000 or less in gross revenue from all retail sales of eligible goods, software and taxable services for the previous 12 months, and your estimated gross revenue from all retail sales of eligible goods, software and taxable services for the next 12 months is $10,000 or less.
- You are not a lessor.
- You are not an independent sales contractor.
- You are not a provider of four or more units of accommodation in hotels, resorts, boarding houses or similar establishments.
- You are not a contractor who acquires goods for the purpose of fulfilling contracts to improve real property.
If you qualify as a Small Seller, you can still register with the ministry to collect BC PST if you like.
Businesses located outside BC that do all of the following are also required to register for and collect BC provincial sales tax:
- Sell taxable goods or software to customers in British Columbia.
- Accept purchase orders (including by telephone, mail, e-mail or Internet) from customers located in British Columbia.
- Deliver taxable goods or software to a location in British Columbia. Delivery into British Columbia includes goods and software that you ship physically or electronically, even if you deliver the goods through a third party, such as a courier.
- Solicit sales in British Columbia (through advertising or other means, including mail, e-mail, fax, newspaper or the Internet) for orders to purchase taxable goods or software.
If you are involved in online sales, you will be especially interested to know that the BC government does not consider you to be soliciting sales in BC if your website, which is accessible from anywhere in the world, does not target British Columbia.
However, they say, "if you have a website and also solicit sales in British Columbia by other means, such as through targeted internet advertisements, promotional flyers or newspaper advertisements, you are soliciting sales in the province".
Registering to Collect Provincial Sales Tax (PST), The BC government's Bulletin PST 001, provides more details about exactly which businesses have to register for BC PST.
Goods and Services That Are PST Exempt
Your business does not need to charge, collect and remit BC PST on:
- sales of real property such as residential housing or commercial real estate admissions and memberships
- professional services (other than legal services)
- transportation fares (e.g. bus, train, ferry, airline)
- food for human consumption (e.g. basic groceries and prepared food such as restaurant meals)
- books, newspapers, and magazines
- children's clothing
Your business can also provide PST exemptions on the sale of taxable goods, software or taxable services that are purchased for resale by:
- a purchaser with a PST registration number
- a vendor who has not yet received a PST registration number but who provides an exemption certificate
- a wholesaler who provides an exemption certificate
When you do, remember to make a specific note in your records as to why you made the exemption and details such as the purchaser's PST number on your sales invoice. If the purchaser provided an exemption certificate, you need to keep a copy of that, too. If you don't, you could end up being assessed for the tax that should have been collected as well as accumulated penalties and interest.
How to Register Your Business for BC PST
To register to collect and remit BC PST you need to fill out the Application for Registration for Provincial Sales Tax form (FIN 418), which you can do online through the BC government's eTaxBC system, in person at a Service BC Centre or at the Ministry of Finance office at 1802 Douglas Street in Victoria, BC., or by mail or fax at 250-356-2195.
The ministry's postal address is:
Ministry of Finance
PO BOX 9435 STN PROV GOV
VICTORIA BC V8W 9V3
How to Charge PST
The standard BC PST rate is 7 percent but is higher for some taxable services. For example, the provincial sales tax rate for alcohol is 10 percent, while accommodation carries an 8 percent PST rate. The PST rate of passenger vehicles purchased in British Columbia depends on the price of the vehicle:
- Less than $55,000 - 7%
- $55,000 to less than $56,000 - 8%
- $56,000 to less than $57,000 - 9%
- $57,000 or more - 10%
Twelve percent BC PST is charged on vehicles, boats, and aircraft acquired from private individuals or non-GST registrants (purchased or received as a gift). See PST on Vehicles for more information.
The government of BC Small Business Guide to PST lists other individual products by category showing the PST rates and items which are PST exempt. Some items are charged GST but not PST - for instance, Veterinarian Services will charge 5% GST but are exempt from PST.
How to Remit BC PST
The process for remitting PST is very similar to the process for remitting GST, however, if your business revenue in the previous 12 months from sales or leases totals $1.5 million or greater you must file your PST returns and pay your collected PST taxes electronically, either via eTaxBC or through your bank or credit union.
If you don't have to file and pay electronically (and don't want to), once you're registered as a PST collector with the province of British Columbia, they'll regularly send you PST tax returns which you will need to complete and file according to your business's assigned schedule.
How often your business needs to do this will depend on what kind of business you operate and how much BC PST you collect each year. Most businesses will file and pay monthly, according to the Ministry of Finance, but others file and pay quarterly, semi-annually or annually.
Commission for Paying on Time and In Full
There is a commission for getting your provincial sales tax paid on time and in full of up to $198 per PST reporting period. And just like GST/HST, the PST you charge customers has to be shown clearly on your invoice.
For more information about BC PST, see the BC Ministry of Finance PST website and/or call them at 1-877-388-4440.