CPPM Procedure Chapter M: Sales Taxes

This chapter of the Core Policy and Procedures Manual outlines procedures to support government staff and guide internal sales tax administration.

Effective April 1, 2013

The Province pays the 7% Provincial Sales Tax (PST) and the 5% Federal Goods and Services Tax (GST) on taxable goods and services. Entities on Schedule A of the Reciprocal Taxation Agreement are entitled to a full rebate of GST paid from the Canada Revenue Agency (CRA).

Ministries charge and collect PST and GST on applicable government sales, and pay PST and GST on taxable goods and services where payable after March 31, 2013. The Office of the Comptroller General (OCG) is responsible for corporate GST administration and reporting, and settlement of CRA GST remittances and rebate claims.

M.1 Sales

Ministries charge and collect PST and GST on government sales of taxable goods and services.


PST applies to the sale or lease of taxable goods1 and taxable services2, and is charged on the total selling price. The total selling price includes all charges a customer pays, such as transportation, delivery or handling, but excluding GST. PST is due at the time of sale, including sales on credit, unless the item or service is exempt from tax.

The B.C. provincial government, B.C. Crown corporations and municipal governments pay PST and other provincial taxes, unless a specific exemption applies.

PST is not charged on:

  • sales of goods purchased for resale;
  • sales of goods and materials purchased to be incorporated into goods for resale;
  • sales or leases of real property or on services to real property;
  • sales to non-residents of B.C. and on out-of-province sales when goods are shipped, mailed or delivered to a place out of the province;
  • sales or leases on reserve land to a First Nation government that qualifies as a band under the Indian Act (Canada). However, First Nation governments that have a treaty in effect with Canada and B.C. (i.e., Nisga'a Nation; Tsawwassen First nation; Maa-nulth Nation) pay PST and other taxes. Refer to CTB 002 (PDF) for details;
  • sales or leases to the Government of Canada when the applicable federal department provides its PST number (often called the “exemption number”). However, employees of the Government of Canada who are billed directly (e.g., credit cards in an employee’s name), and federal Crown Corporations and agencies and their employees pay PST and other taxes. Refer to CTB 002 (PDF) for details; and
  • items exempted by the Provincial Sales Tax Act.

1 A taxable good is tangible personal property that you can see, weigh, measure, feel or touch, and includes natural gas, heat, electricity and fixtures, but does not include prescribed fixtures. Prescribed fixtures include machinery and equipment installed in a building or structure for heating, air conditioning, lighting, sewage disposal, and elevators or escalators to move people or freight.

2 A taxable service includes any service provided to install, assemble, dismantle, repair, adjust, restore, re-condition, refinish or maintain tangible personal property. In general, if an item or good is taxable when purchased, services provided to that item are also taxable.


GST is required when the Province supplies taxable goods and services to the public, the private sector or to tax-paying public bodies, such as: municipalities, schools, colleges, universities and hospitals, and commercial government enterprises such as BC Hydro and ICBC, and on any taxable supply to a separate registered entity (i.e. with a different business number than the Province).

GST does not apply to zero-rated (taxable at zero per cent, e.g. exports, see M.13) or exempt supplies (see M.14).

No GST is charged (or payable) on sales transactions between ministries and entities registered under the Province's business number: BN 10786 4738.

Other non-participating provincial and territorial governments are entitled to use a certification to support their tax-free status on the GST. Individual aboriginals and aboriginal bands purchase goods and services free of GST when the goods are delivered to a reserve or services are performed on a reserve. The Government of Canada pays GST.

M.2 Purchases


Ministries pay PST on the purchase or lease of taxable goods3 and taxable services4 for government.

PST applies to:

  • the purchase or lease of new or used goods;
  • goods brought into to B.C. for use in B.C.;
  • most labour services to goods (e.g. vehicle maintenance, furniture assembly, computer repair);
  • telecommunication services, computers and software;
  • natural gas, heat and electricity for business use;
  • accommodation (e.g. hotel, motel, resort or bed & breakfast); and
  • legal services.

Common items exempt from PST include:

  • basic groceries and prepared food such as restaurant meals;
  • water, non-alcoholic beverages, vitamins and dietary supplements;
  • children’s clothing and footwear;
  • prescription drugs;
  • personal services such as haircuts, massages, dry cleaning, tailoring and funeral services;
  • admissions and memberships;
  • bicycles and transportation services (e.g. bus, train, ferry, airline);
  • professional accounting and engineering services; and
  • newspapers and magazines.

3 See footnote 1.

4 See footnote 2.


GST is required on the purchase of taxable supplies. Ministries must record GST paid on a complete and accurate basis to ensure that government funding is not overspent and the Province can rightfully claim a full rebate from the CRA.

It is a responsibility of vendors to invoice PST and GST correctly. In general, the PST and GST that is invoiced needs to be paid.

The level of Expense Authority required to approve a purchase is based on cost including PST, but excludes GST. PST is a non-recoverable tax. GST is a recoverable tax.

M.3 Transition


PST applies when the tax becomes payable on or after April 1, 2013. There is no pre-payment period for PST prior to this re-implementation date. The tax become payable at the earlier of the time the consideration becomes due or the time the consideration is paid without becoming due. The Provincial Sales Tax Act governs when consideration becomes due5.


Similar to the PST, the application of GST (or HST) depends on the time at which the tax in respect of a supply becomes payable under CRA requirements. For example, the applicable tax on taxable goods and services is as follows:

  • If the tax becomes payable after March 31, 2013, without having been paid before April 1, 2013, 5% GST would apply.
  • If the tax becomes payable, or is paid without having become payable, before April 1, 2013, 12% HST would apply.

Consideration for a taxable supply generally becomes due on the earliest of the day the supplier first issues an invoice with respect to the supply; the date of that invoice; the day the supplier would have, but for undue delay, issued an invoice with respect to the supply; and the day the recipient of the supply is required to pay the consideration pursuant to a written agreement. In the case of a supply of property by way of lease, licence or similar arrangement under a written agreement, however, consideration becomes due on the day the recipient of the supply is required to pay the consideration pursuant to that agreement.

M.4 Accounting & Administration


For ministry programs with taxable sales, the program area collects and records the PST. The tax is initially recorded with the cash sale or receivable and a revenue STOB (4006 to 4032), then cleared by journal voucher to account STOB 1509. On a monthly basis, the program area prepares the supporting documentation, and files the Ministry of Finance tax return under separate registration. For PST Registration information, refer to the B.C. Provincial Sales Tax (PST) public website.

PST paid and payable is recorded in the same expense or asset STOB as the item purchased.


Ministries record GST on sales in the “GST/HST Collected” STOB 1576 (cr. 1576), and record GST paid and payable on purchases in the “GST/HST Paid” STOB 1575 (dr. 1575). For both GST streams, ministries must use the financial system generated Service Line: “00000”, and not code GST collected to a ministry specific Service Line.

OCG prepares the required CRA GST remittance returns and rebate applications on behalf of ministries using the Province’s business number. OCG reports and remits the total GST recorded (STOB 1576) on ministry sales to the CRA on a monthly basis. OCG reports and claims rebates for the total GST recorded on ministry purchases (STOB 1575) on a semi-monthly basis. STOB 1577 “GST/HST Rebate” is for OCG use only to record rebates received from the CRA.

M.5 CAS Corporate Financial System

The financial management and reporting system maintained by Corporate Accounting Services (CAS), including the iExpenses, iProcurement, Purchasing, Accounts Payable and Accounts Receivable modules calculate tax based on the tax codes selected. The GST, GST and PST, and PST tax codes assign each tax by their respective attribute. The GST tax code utilizes a GST related responsibility centre, service line and STOB combination specific to the CAS Corporate Financial System organization. The PST tax code uses the same account combination as the expense or asset item.

The GST paid on travel expenses incurred by ministry employees is recoverable. The CAS iExpenses module automatically calculates and posts embedded GST after approval of expense reports by expense authority. In the Accounts Payable module, manual travel vouchers require the “GST TRAVEL” tax code to process the total amount of the reimbursement and recover GST.

M.6 Purchase Cards and Business Transaction Accounts

Ministries use the purchase card for selected purchases and the Business Transaction Account (BTA) to pay for travel agency bookings.

Procurement Services Branch processes and pays monthly card statements on behalf of ministries. Ministries are charged back their total expenses by inter-ministry journal voucher to ministry clearing accounts. Ministry cardholders and BTA accountholders need to ensure that their statements are reconciled, purchases and travel tickets are approved, and that summary sheets and transaction registers are completed for pre-tax, PST and GST amounts.

“Zero Dollar” entries into the CAS Accounts Payable module record charges, PST and GST paid based on tax codes to the appropriate accounts and off-set ministry clearing accounts. On invoice distributions subject to GST, a tax distribution line will be automatically generated based on the tax code entered.

Single and multi-page forms are available on OCG Financial Forms (government access only) to card and account holders to log purchases, and to support reconciliation and expense authority approval of monthly statement transactions.

M.7 Government Transfer Payments

Government transfer payments related to shared cost arrangements, entitlements and grants, by definition, do not result in the direct acquisition of goods or services. In addition, transfer payments made in the public interest or for charitable purposes are not regarded as consideration for supply.

Where a taxable supply was provided to the Province in return for a transfer payment, the payment may be regarded by the CRA as consideration for the supply. The amount of the transfer payment would then be used to determine the GST payable, and the GST that the recipient, if registered for the GST, would collect from the Province. For more information, refer to the CRA’s Technical Information Bulletin B-067.

M.8 External Party Costs

Shared cost arrangements may include provision for ministries to reimburse external parties for certain costs. Ministries must ensure that arrangements specify the recipient costs to be reimbursed and that these costs are to be net of any federal GST rebates.

For example, full or partial federal GST rebates may be claimed by municipalities, universities, public colleges, school and health authorities, charities and qualifying non-profit organizations. For these recipients, the reimbursed costs must be net of any GST rebate to which the recipient is entitled. The federal eligible rebates are as follows:

  Rebate on Federal GST
Municipalities 100%
Universities & Colleges 67%
School Authorities 68%
Health Authorities, Eligible Facility Operators & External Suppliers 83%
Charities & Qualifying Non-Profit Organizations 50%

M.9 Recoveries

PST is due on sales of taxable goods or services settled by internal recovery (e.g. journal voucher). GST is not charged on intra/inter-ministry chargebacks.

Ministries may charge an external party (e.g. a public sector partner) to recover costs, such as staff salaries, in accordance with a cost recovery agreement. The fact of cost recovery does not change the need for GST charges when a taxable supply is rendered.

M.10 Small Suppliers

PST registration and tax collection is not required by suppliers that provide non-taxable goods or services, or that have annual gross taxable sales of $10,000 or less. Small suppliers pay PST when purchasing products for resale, but do not charge or collect PST on sales.

Purchases from small suppliers* are not subject to GST and invoices for taxable services may be paid as presented without GST.

* Annual total revenues from taxable supplies not exceeding $30,000 or, where the recipient is a public service body, $50,000. A public service body is defined by the CRA for GST purposes as a non-profit organization, a charity, a municipality, a school authority, a hospital authority, a public college or a university.

M.11 Non-resident Suppliers

For PST, suppliers that are located outside of the Province that make taxable sales in B.C. need to register and collect the tax.

For GST, a non-resident may register to collect the tax. If an invoice from a non-resident supplier includes GST, the registrant’s business number and meets requirements (refer to CPPM D.6) the invoice should be paid as presented.

M.12 Self-Assessment

Ministries need to self-assess the PST if the tax is not paid to the supplier (e.g. not registered or goods used internally). In addition, where the Canada Border Services Agency does not collect PST on imported goods ministries are responsible to self-assess the tax due.

The self-assessment rules in the Federal Excise Tax Act for GST/HST do not apply to ministries and other Schedule A entities. Ministry program area and accounts payable staff are not responsible to determine the GST on imported goods or services.

M.13 GST Zero-rated Goods & Services

No GST is charged on the sale of zero-rated items. Vendors are responsible to know which goods and services are zero-rated and are invoiced correctly. The following are examples of GST zero-rated goods and services:

  • basic groceries such as milk, bread, and vegetables
  • agricultural products such as grain, raw wool, and dried tobacco leaves
  • fishery products for human consumption
  • prescription drugs and drug-dispensing fees
  • medical devices such as hearing aids; heart-monitoring devices; hospital beds; etc.
  • exports
  • flights to international destinations (except the U.S.A)

For information on zero-rated goods and services, refer to the CRA’s GST/HST Memoranda Series: Zero rated supplies.

M.14 GST Exempt Goods & Services

No GST is charged on the sale of exempt services. Vendors are responsible to know which goods and services are exempt and are invoiced correctly. The following are examples of GST exempt goods and services:

  • used residential housing; long-term residential accommodation (one month or more) and residential condominium fees
  • most health, medical, and dental services performed by licensed physicians or dentists for medical reasons
  • child-care services (day-care services for less than 24 hours a day) for children 14 years old and younger
  • personal-care services for children, underprivileged individuals, or individuals with disabilities
  • bridge, road, and ferry tolls
  • many educational services, such as courses from a vocational school that lead to a certificate or a diploma to practise a trade or a vocation
  • most food or beverages sold in an elementary or secondary school cafeteria
  • certain goods and services provided by non-profit organizations, governments, and other public service bodies, such as municipal transit services and standard residential services such as water distribution
  • most goods and services provided by charities
  • imports of zero-rated goods

For information on exempt goods and services, refer to the CRA’s GST/HST Memoranda Series: Exempt supplies.

M.15 Other Taxes and Levies

Hotel room tax: 2% (maximum 3% effective September 1, 2015) municipal and regional district hotel room tax (levied on behalf of local governments, regional districts, and eligible tourism associations), in addition to the PST of 8% on short term lodging.

Passenger vehicle rental tax: $1.50 per day, or portion of a day, applies to passenger vehicles leased or rented for a period of 28 consecutive days or less. It does not apply to passenger vehicles leased or rented for 8 consecutive hours or less. Leasors collect this tax in addition to the PST on the lease or rental of the vehicle.

Passenger vehicle surtax: 1% to 3% on passenger vehicles with a purchase price of $55,000 and over.

Innovative Clean Energy (ICE) Fund: 0.4% levy applies to residential and commercial energy purchases of natural gas, fuel oil and propane sold on a grid system. The levy does not apply to residential and commercial purchases of electricity. Sellers collect ICE Fund levies in addition to collecting PST on sales. PST is not charged on the levy. 

Propane: purchasers of propane are required to pay tax at a rate of 2.7¢ per litre unless exempt. Exemptions include:

  • propane purchased in sealed containers holding 4 litres of propane or less, and propane purchased in pre-filled or refilled cylinders designed to hold 28 litres of propane or less (or approx. 30 lbs);
  • propane purchased for use in a residential dwelling unit; and
  • propane purchased by qualifying farmers in specified situations.

M.16 Information and References



The Canada Revenue Agency (CRA) is responsible for administration of the GST. Requests for technical information by external parties about the application of the GST should be directed to the CRA at 1 800 959-8287 or visit the GST/HST site.

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