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Managing mixed inventories

Last updated on April 1, 2025

If your work includes both fulfilling real property contracts and selling goods directly to your customers, PST applies differently to goods you purchase for each of these purposes. This is called a "mixed inventory." 

Options for managing mixed inventories

There are three options for contractors who need to manage mixed inventories of goods.

Option 1: Maintain separate inventories

You can maintain two separate inventories: one for goods you purchase for resale, and one for goods you plan to use to fulfil real property contracts. You will need to account for the PST differently depending on the inventory in which the goods are held.

Inventory of goods for resale

You do not pay PST on the goods that you purchase to hold in your resale inventory.

You must charge your customers PST on the sale of these goods, and must register for a PST number to collect and remit PST on the sale.

Inventory of goods for real property contracts

You must pay PST on the goods you purchase that you will hold in your inventory for fulfilling your contracts.

You do not charge your customers PST if the goods are used to fulfil a real property contract.

Change of use

If you purchase goods for your resale inventory and later decide that you will use some of these goods to fulfil a contract, you must self-assess PST on the value of the goods you use to fulfil the contract, unless a specific exemption applies.

If you have a PST number, you can self-assess the PST on your next PST return.

If you do not have a PST number, you can self-assess the PST using a Casual Remittance Return (FIN 405) (PDF, 260KB) The self-assessment must be made on or before the last day of the month following the month in which you identify the goods to be used in fulfilling the contract.

For example: you are a real property contractor and also sell goods to customers. You purchase ten pallets of tile in December PST exempt for resale purposes and hold them in your inventory. At the time of purchase, you are considered exempt and you do not pay PST on the tile. If later on you use five of those pallets to fulfil a real property contract, you must self-assess the PST on the value of the five pallets on your next PST return.

Option 2: Pay PST on all goods and claim refunds

If you purchase goods without knowing if you will resell or use them to fulfil contracts, you can pay the PST on all the goods at the time of purchase. Later on:

  • If you eventually use the goods to fulfil a real property contract, you have paid PST on the purchase price of the goods, as you would need to do normally
  • If you eventually resell any of the goods or incorporate them into other goods for resale, you may apply for a refund of the PST you paid on the purchase of those goods, as long as you make no use of the goods other than keeping them in storage before reselling them
  • If you eventually use the goods to fulfil a real property contract with a person who is exempt from PST (such as a member of a First Nation), you may apply for a refund of the PST you paid on the purchase of the goods

Note: you can only claim refunds on goods purchased within the last four years of the date of your claim.

Option 3: Acquire goods exempt for resale

You may acquire goods for resale without paying PST, even if you may use the goods to fulfil a real property contract at a later date.

In order to acquire goods exempt for resale, the goods need to meet the following criteria:

  • The goods must be of a type you sell at retail or wholesale and that you provide under a contract. The goods may not be of a type you acquire only for use in fulfilling contracts
  • The goods must be in your possession, and they must either be readily available for resale (For example: tile that you acquire that is displayed on store shelves or listed in your resale inventory) or be intended for incorporation into goods for resale. (For example: wood that you acquire to build tables that you will sell to customers)
  • You cannot acquire the goods for the purpose of fulfilling a specific existing contract

You must self-assess the PST on the value of goods that you acquired PST exempt but used to fulfil a contract. If you have a PST number, you must self-assess the PST on your next PST return.

If you do not have a PST number, you can self-assess using a Casual Remittance Return (FIN 405) (PDF, 260KB). The self-assessment must be made on or before the last day of the month following the month in which you identify the goods to be used in fulfilling the contract.

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