Tax payment agreements

On this page

• Definitions
• Eligible businesses
• Applying for and receiving a TPA
• Using your TPA number

Definitions

In this bulletin, acquired means:

• purchased in B.C.,
• brought or sent into B.C., or
• received in B.C.

Eligible businesses

Qualifications for all businesses

To qualify for a TPA, all businesses must meet the following four requirements:

1. You have conducted business in B.C. for at least three years.
2. You have a good compliance record with the PST over the past three years. For example, you self-assessed any PST that was due on time.
3. You maintain a suitable accounting system. For example, you have a computerized accounting system; you use International Financial Reporting Standards, Accounting Standards for Private Enterprises or other applicable accounting standards; and you have established procedures for assigning and tracking inventory.
4. You have an active PST number, which means your business is registered to collect and remit, or self-assess, PST. If you do not have an active PST number, you need to apply for one at or before the time you apply for a TPA. See Register to Collect PST for details on how to apply for a PST number.

Additional qualifications

Unless you own or operate a commercial rail service that offers interprovincial or international rail transportation of passengers or goods to members of the public for a fee, you must meet the four requirements above plus both of the requirements listed below to qualify for a TPA.

1. You qualify for the production machinery and equipment (PM&E) exemption and you regularly acquire and store goods in B.C. for use outside the province.
2. Your average annual acquisitions and leases for the last three calendar years meet one of the minimum requirements outlined below. You must meet either (a) or (b), or you can combine your acquisitions and leases of PM&E in (a) with your acquisitions of inventory for use within and outside B.C. in (b).

(a) PM&E

In the previous three calendar years, you must have acquired or leased an average per calendar year of at least $250,000 worth of machinery, equipment or software that was eligible for the PM&E exemption, or that would have been eligible for the PM&E exemption but was taxable because it was used for a taxable purpose.

Additionally, of the $250,000 in acquisitions or leases, at least $125,000 must have been acquisitions or leases for which you received the PM&E exemption.

Example
A manufacturer eligible for the PM&E exemption purchases six forklifts. The manufacturer claimed the PM&E exemption for four of the forklifts because the manufacturer will use them for a purpose that is eligible for the PM&E exemption for machinery or equipment used to transmit or distribute goods at the qualifying part of the manufacturing site. The manufacturer did not claim the exemption for the other two forklifts because they'll be used for a taxable purpose (e.g. primarily to transport goods from a first storage area to a loading area). To determine whether or not the $250,000 requirement has been met, the manufacturer includes the purchase price of all six forklifts. To determine whether or not the $125,000 additional requirement has been met, the manufacturer includes the purchase price of only four of the forklifts.

(b) Goods stored in inventory for later use within or outside B.C.

In the previous three calendar years, you must have acquired an average per calendar year of at least $250,000 worth of goods stored in inventory in B.C. for later use within or outside B.C. This includes goods stored in inventory that were eligible for a refund because they were acquired and stored in B.C. and later shipped for use outside the province.

Additionally, you must have received a refund of PST on at least $125,000 worth of those goods because the goods were acquired and stored in inventory in B.C. and later shipped for use outside the province.

Only acquisitions of inventory goods may be included in the calculation (leases must not be included).

Example
A company purchases office furniture for its B.C. and Alberta offices. Before allocating the furniture to the respective offices, the company stores all the furniture in its B.C. warehouse. When the company later ships part of the furniture outside of B.C. for use at its Alberta office, the company claims and receives a refund of PST paid on this portion of the office furniture purchase. To determine whether or not the $250,000 requirement has been met, the company includes the purchase price of all the furniture, because it's all stored in inventory in B.C. for later use within or outside B.C. To determine whether or not the $125,000 additional requirement has been met, the company only includes the portion of the office furniture for which they received a refund of PST paid because this portion was shipped out of B.C. for use outside the province.

 If you have any questions about your business' eligibility for a TPA, please contact us.

Applying for and receiving a TPA

Applying for a TPA

To apply for a TPA, you must complete an Application for Tax Payment Agreement (TPA) (FIN 384) (PDF, 319KB) . You may submit the application using any of the following options:

• In person: Visit your local Service BC Centre
• By fax, email or mail: Complete a paper form and fax, email or mail it to us

When you submit an application, you must include the following financial statements for your business for the past three years:

• Statement of Financial Position (also known as the Balance Sheet)
• Statement of Profit or Loss and Other Comprehensive Income (also known as the Income Statement)
• Statement of Cash Flows

We'll enter into only one TPA per PST number. If you require more than one TPA, you must provide a separate PST number for each TPA required.

Signing the TPA agreement and receiving a TPA number

If we approve your application, we'll send you an agreement outlining the details of the TPA, such as how to maintain your eligibility. You must sign and return the original signed copy of the agreement before the TPA is sent to you. Keep a copy of the signed agreement for your records.

We'll send you a TPA number when we receive the original signed copy of the agreement.

Using your TPA number

Prior to receiving a TPA number

You must not acquire or lease any items under your TPA agreement until you've received your TPA number. For acquisitions and leases eligible for the PM&E exemption, you must continue to complete a Certificate of Exemption – Production Machinery and Equipment (FIN 492) (PDF, 356KB) to receive a point-of-sale exemption.

After receiving a TPA number

Your agreement with us will set out the details of what types of goods, software or eligible taxable services you can acquire or lease without paying PST to collectors by using your TPA number. 

Depending on these details, you may be eligible to use your TPA number when you:

• Acquire or lease PM&E
• Acquire or lease parts and materials for PM&E
• Purchase software for PM&E
• Acquire goods to be stored in inventory in B.C. for later use within or outside the province

If you own or operate a commercial rail service that offers interprovincial or international rail transportation of passengers or goods to members of the public for a fee, you can use your TPA number to:

• Acquire or lease railway rolling stock (and parts to be installed in railway rolling stock) without paying PST
• Purchase related services to goods or services that are subject to tax under section 116 or section 117 of the Provincial Sales Tax Act in B.C. without paying PST. Note: The PST on these purchases must be self-assessed (see Self-Assessing PST).

You must not use your TPA number to purchase accommodation, legal services, telecommunication services or online marketplace services without paying PST.

Documentation requirements

To acquire or lease items under your TPA agreement, you must provide your collector with your TPA number at or before the time of sale or lease. The collector must record your TPA number on the receipt, bill, invoice or their agreement with you as part of their records to show why they did not collect PST. You must keep records to show what items you acquired or leased using your TPA number, and how you used those items.

Self-assessing PST

If you acquired or leased an item under an existing TPA without paying PST and later used that item for a taxable purpose, you must self-assess the PST due on that item.

For example, you must self-assess the PST due on:

• Acquisitions and leases of PM&E eligible for the PM&E exemption that you later used for a taxable purpose (e.g. as office equipment)
• Goods acquired to be stored in B.C. for later use within or outside the province, if you actually used those goods in B.C. for a taxable purpose

For items stored in inventory, if after 12 months (or 24 months for persons operating a commercial rail service) from the date of acquisition or lease, you do not know if you'll use an item for a taxable or exempt purpose, you must self‑assess PST on that item.

You must self‑assess the PST due on your next PST return for the reporting period in which the item was used for a taxable purpose, or for the reporting period in which the 12‑month (or 24 months for persons operating a commercial rail service) anniversary occurred. Penalties and interest may apply if you do not self-assess the PST when it's due.

Note: If you're required to self-assess PST on an inventory item because the item remained in inventory for a period of 12 months (or 24 months for persons operating a commercial rail service) and you later remove that item from inventory and use it for an exempt purpose, you can claim a refund from us for the PST paid on the exempt item. For more information, see Bulletin PST 400, PST Refunds (PDF. 471KB).

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This information is for your convenience and guidance and is not a replacement for the legislation.

References: Provincial Sales Tax Act, sections 1 “collector”, “eligible taxable services”, “lease”, “related services”, “tangible personal property”, “taxable services”, “use”, 9, 10, 12, 13, 32, 116, 117, 145 and 158; Provincial Sales Tax Exemption and Refund Regulation, sections 90-120 and 132.1; Provincial Sales Tax Regulation, sections 12‑14.