Contracts with persons exempt from PST and with First Nations

Contracts with persons exempt from PST

You are exempt from PST on goods you acquire to fulfill a written contract if the contract is with the Government of Canada (unless the Government of Canada has agreed to pay the PST).

There are some federal boards, agencies and commissions that do not qualify and must pay PST. The federal entities that do not qualify are listed in Schedule I of the Federal-Provincial Fiscal Arrangements Act (Canada), and in Part I and Part II of Schedule III of the Financial Administration Act (Canada). If a federal entity is not listed on either of these schedules, they qualify for exemption.

The exemption does not extend to purchases by third parties, such as those by employees of either the federal government or an eligible federal entity.

You are also exempt from PST on goods you acquire to fulfil a written contract with the following persons if you acquire the goods in a way, or for use, that would exempt the person from PST if they were to have acquired the goods themselves at sale rather than under a real property contract:

• Persons eligible for the production machinery and equipment (PM&E) exemption (see Bulletin PST 110, Production Machinery and Equipment Exemption (PDF, 510KB)
• Qualifying aquaculturists (see Bulletin PST 103, Aquaculturists (PDF, 350KB)
• Qualifying farmers (see Bulletin PST 101, Farmers (PDF, 430KB)
• Members of the diplomatic or consular corps (see Bulletin CTB 007, Exemption for Members of the Diplomatic and Consular Corps (PDF, 190KB)

Contracts with exempt First Nations

You are exempt from PST on goods you acquire to fulfil a written contract if the contract is with a First Nations individual or band and if all of the following criteria are met:

• You obtain the goods for the purposes of fulfilling a written contract under which you are required to supply and affix, or install, affixed machinery or improvements to real property
• Under the terms of the contract, the goods will be used so that they cease to be personal property at common law (i.e. they will be incorporated into real property)
• The other party to the contract is a First Nations individual or band who would be exempt from PST if the individual or band were to purchase the goods at the same place as where the goods are used to improve the real property

For more information on documenting and claiming exemptions with First Nations, see Bulletin PST 314, Exemptions for First Nations (PDF, 370KB)

Documenting and claiming an exemption

To claim this exemption, you must have the written contract in place at or before the time you acquire the goods.

You must provide a Certificate of Exemption – Contractor (FIN 491) form completed by both you and the customer. You cannot use your PST number to claim this exemption.

Subcontractors must provide both a completed Certificate of Exemption – Subcontractor (FIN 493) (PDF, 230KB) form and a Certificate of Exemption – Contractor (FIN 491) (PDF, 410KB) form that has been completed by the general contractor and their customer who is exempt from PST.