Provincial Sales Tax Act, Part 1 - Interpretation

Division 1 — Definitions and Interpretation

Section 1 – Definitions

PST - SEC.1/Accommodation/Int.-R.1

Accommodation

References:

Act: Section 1 "purchaser", "taxable service", "tourism agent"; Section 17; Section 19; Section 26; Section 28; Section 122; Section 123; Section 123.1; Section 123.2; Section 123.3; Section 124; Section 125; Section 178; Section 192; Section 240

PSTERR: Section 78; Section 88; Section 133

PSTR: Section 2; Section 8; Section 11; Section 65; Section 66; Section 88

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "accommodation" means:

(a) lodging in a hotel, motel, resort, boarding house, rooming house or bed and breakfast establishment, other than lodging excluded by regulation (PSTR subsection 2(1) [accommodation]), and

(b) lodging in a prescribed dwelling (PSTR subsection 2(2)).

R.1 Time Share Agreements (Issued: 2014/04)

Time share agreements give persons the right to use or own real property for specified time periods during the year. Such agreements typically involve apartments or condominiums in resort areas and, depending on what they actually provide to the purchaser or lessor may be taxable or non-taxable as accommodation.

Agreements for taxable and non-taxable purchases may be written in identical formats and use similar language. They may both contain the legal description and in both, the parties may be described as lessee and lessor. As a result, each agreement must be reviewed with respect to the following criteria to determine its taxation status.

Taxable as Accommodation

If the agreement does not provide the purchaser or lessee with an ownership or lease interest in the real property that is registered or registrable at a Land Title Office, it is a prepaid lodging package and may be subject to PST and MRDT. Such an agreement may give the purchaser or lessee the right to one particular unit each year, or simply the right to use a unit each year. It will not give the purchaser or lessee a real property ownership or lease interest in the unit. The purchaser or lessee may also be required to make advance reservations, which are subject to availability. Failure to do so may result in the unit being sublet, by the operator or management, to other persons.

PST and MRDT applies to all amounts paid by the purchaser or lessee for use of the accommodation. This includes amounts paid at the time of purchase, as well as payments to be made in the future, such as annual operating charges and any extraordinary charges. Because these charges may change or may not be known at the time of purchase, PST and MRDT is payable at the time the charges are levied.

Exemption for Lodging Sold For $30 or Less Per Day

Under PSTERR paragraph 78(1)(a) [exemptions in relation to accommodation], lodging sold for $30 or less per day or $210 or less per week is exempt from tax. To determine whether charges under a particular time share agreement is exempt, the following calculations must be made.

  • Divide the purchase price by the number of years of the term of the agreement (e.g., $10,000 ÷ 99 years = $101.01).

  • Add the first year's fees and extraordinary charges ($101.01 + $120 = $221.01). The first year is used for this calculation because it is difficult to estimate future costs and it is assumed that because fees tend to rise, the first year will have the lowest annual fees. If the first year's annual fee is not stated in the agreement, it may be contained in other material given to the purchaser or estimated in the budget contained in the prospectus.

If the agreement provides for no annual fees in the first or second year, use the fee of the first year in which an annual fee occurs, provided it is representative of the annual fees the purchaser must pay.

  • Divide this figure by the number of days or weeks of one year that the purchaser may occupy the unit ($221.01 ÷ 7 days = $31.57). If the resulting figure is above the $30 per day /$210 per week exemption threshold, as in this example, the charges incurred under this agreement are taxable.

Although eligibility for exemption is calculated by prorating the purchase price over the term of the agreement, tax is applied to the total purchase price at the time of purchase, and to all annual and extraordinary charges as they are levied, including any amounts that may have been paid to a sales agent.

Not Taxable as Accommodation

Sales: If the time share sales agreement gives the purchaser an ownership interest in the real property that is registered or registrable at a Land Title Office, it is considered to be a purchase of real property and not taxable as accommodation. Non-taxable sales agreements include those that give the purchaser ownership in the real property in proportion to the amount of time/use purchased.

For example, a person purchases an interest in a specific condominium (strata unit) and will be entitled to use that condominium one week each year; that person is registered in the Land Title Office as owning 1/52 interest in the real property (strata unit).

This also applies if the ownership is of a portion of the whole resort. In this case, if there are 40 units and the purchaser buys entitlement to use a specific unit one week a year, that person may be registered as owning 1/2,080 interest (52 weeks X 40 units) in the real property.

Leases: A lease may be registrable in the Land Title Office and considered to be a lease of real property and not subject to PST and MRDT if the lessee:

  • obtains the right to occupy one unit exclusively for a specified period of time without having to make advance reservations, and

  • has the right to sublet the unit to anyone, including the resort operators.

To confirm that the lessee's interest is registrable, have the lessor or operating company obtain a letter from the appropriate district's Land Title Office stating that the agreement is acceptable for registration as a lessor. One letter may be used for all leases made under the agreement. If the agreement is changed in a manner affecting registrability, a new letter must be obtained.

Mixed Taxable and Non-Taxable Accommodation

Some time share sales or lease agreements which are registered or registrable at a Land Title Office may contain taxable accommodation components. If you encounter this type of agreement, contact your regional manager for assistance in apportioning the purchase price and annual operating and extraordinary charges of such accommodation between non-taxable real-property ownership and taxable accommodation.

Located on Reserve Land

Time share establishments located on reserve land cannot be registered at the Land Title Office, as legal title to reserve land is held by the federal government. Therefore, when determining whether the lease of such a time share is taxable it is necessary to determine whether the lessee's interest would be registrable at a Land Title Office if the property were not located on reserve land.

PST - SEC.1/Affixed Machinery/Int.-R.1

Affixed Machinery

References:

Act: Section 1 "apparatus", "improvement to real property", "related service", "tangible personal property"; Section 79; Section 80.1; Section 80.2; Section 80.5

PSTERR: Section 73; Section 77; Section 107; Section 109

PSTR: Section 10

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "affixed machinery" means machinery, equipment, or apparatus that

  • is used directly in the manufacture, production, processing, storage, handling, packaging, display, transportation, transmission or distribution of tangible personal property, or the provision of software or a service, and

  • is affixed to, or installed in, a building, a structure, or land so that it ceases to be personal property at common law.

"Affixed machinery" does not include the following:

(a) machinery, equipment or apparatus that is affixed to, or installed in, a building, a structure or land for the purpose of

(i) heating, air conditioning or lighting a building or structure,

(ii) sewage disposal for a building or a structure, or

(iii) lifting persons or freight within a building or structure, by elevator or escalator;

(b) machinery, equipment or apparatus that

(i) is of such a size that it must be constructed on the site where it is to be used,

(ii) by its nature or design, would normally be expected to remain on the site at which it is constructed for its useful life,

(iii) does not run on rails or tracks, or does not otherwise move around, on or from the site at which it is constructed, and

(iv) cannot be moved from the site at which it is constructed without

  1. dismantling the machinery, equipment or apparatus, or
  2. dismantling or causing substantial damage to the building or structure to which it is affixed or in which it is installed;

(c) other prescribed machinery, equipment or apparatus.

The Bill 2 amendment added paragraph (c) to allow for machinery, equipment or apparatus to be excluded from the definition by regulation. Currently, nothing is prescribed.

"Affixed machinery" is subject to tax under the Act because:

  • it is specifically included in the definition of "tangible personal property", and

  • it is specifically excluded from the definition of "improvement to real property".

The defined term "affixed machinery" improves upon the defined term "fixture" provided under the Social Service Tax Act by incorporating the previous SSTA/Regulation 2.52 into the definition.

Under section 79 [contractor exempt from tax under section 37 or 49], contractors are responsible for the paying tax on the tangible personal property used in a contract to supply and install affixed machinery unless the contractor and their customer agree, in writing, that the customer is liable for the tax on their purchase price of the tangible personal property.

R.1 Four-Part Test For Exclusion From Affixed Machinery (Issued: 2014/04)

Paragraph (b) of the definition of affixed machinery excludes certain machinery, equipment and apparatus from the meaning of affixed machinery. When an item is excluded as a result of this paragraph, it is an improvement to real property.

If an item is to be excluded by this paragraph, the conditions in all of subparagraphs (i) through (iv) of paragraph (b) must be met.

Some items may be described by one to three of these subparagraphs, but not by all four. Such items remain affixed machinery (and, by extension, tangible personal property).

It is also important to note that each of the four subparagraphs refers to the site where the machinery, equipment or apparatus is constructed, which may differ from the site at which the item is installed. If an item is installed at a site other than where it is constructed, it cannot be excluded from the meaning of affixed machinery by reason of paragraph (b).

PST - SEC.1/Apparatus/Int.

Apparatus

References:

Act: Section 1 "affixed machinery", "modified business vehicle"

PSTERR: Section 31; Section 35; Section 39; Section 90; Schedule 1

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "apparatus" means a complex machine or device designed to accomplish a specific purpose, consisting of an integrated assembly of parts each having a definite function.

PST - SEC.1/Assessment/Int.

Assessment

References:

Act: Section 197; Section 198; Section 199; Section 200; Section 203; Section 204; Section 206; Section 206.1; Section 210; Section 211; Section 213; Section 215; Section 221; Section 224; Section 232

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "assessment" also includes reassessment.

The definition provides the ministry with a clear legislative basis for issuing an adjusted assessment when new information is received that shows that the actual tax liability is greater than or less than the amount originally assessed.

PST - SEC.1/Associated Corporation/Int.

Associated Corporation

References:

Act: Section 103; Section 115; Section 211; Section 221

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "associated corporation" means a corporation that is associated with another corporation within the meaning of section 256 of the Income Tax Act (Canada).

PST - SEC.1/Band/Int.-R.1

Band

References:

Act: Section 80.1; Section 80.2; Section 80.5

PSTERR: Section 68.1; Section 72.1; Section 77; Section 78; Section 81; Section 88.1

Bulletin PST 314

Interpretation (Issued: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 moved the definition of "band" to section 1 of the Act from PSTERR section 1.

Concurrent amendments resulted in this term being used in the Act (refer to sections 80.1, 80.2 and 80.5) in addition to the PSTERR.

R.1 Band Councils (Issued: 2014/09)

The term "band council" is not defined or used in the Act, but is defined and used (as "council of the band") in the Indian Act (Canada). A duly constituted band council is an executive body of a band.

Occasionally, a contract between a band and another party may name the band council as a contracting party. For example, a contract to construct a health centre on First Nation land might name the band council and the general contractor as the contracting parties. When a band council is contracting on behalf of its band, the Ministry accepts that the band is the true contracting party.

Note that a "tribal council", also not defined or used in the PSTA, is not the same as a band council. The policy described above does not apply to tribal councils.

PST - SEC.1/BC Resident/Int.

BC Resident

References:

Act: Section 10; Section 41; Section 49; Section 63; Section 93; Section 106

PSTERR: Section 23

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "BC resident" means a person who:

(a) resides, ordinarily resides or carries on business in British Columbia, or

(b) enters British Columbia with the intention of residing or carrying on business in British Columbia.

PST - SEC.1/Board Member/Int.

Board Member

References:

Act: Section 165; Section 197; Section 207; Section 208; Section 209; Section 210; Section 211; Section 229; Section 233

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "board member" means:

(a) a member of a board of directors of a corporation, and

(b) a person who is deemed to be a board member of a corporation under section 209 [deemed board member] of the Act, except in section 165 [claim for refund] and section 233 [offence by corporation].

This defined term is used to support the provisions for board member's liability under Division 4 [Board Member's Liability] of Part 9 [Administration and Enforcement].

Pst Sec.1/Boat/Int.

Boat

References:

Act: Section 1 "eligible tangible personal property", "exclusive product", "fair market value", "promotional material", "small seller", "user"; Section 25; Section 30; Section 31; Section 34; Section 36; Section 52; Section 82.3; Section 100; Section 179; Section 192; Section 194

PSTERR: Section 18; Section 19; Section 20; Section 22; Section 23; Section 34; Section 48; Section 57; Section 75; Section 114; Section 125; Section 130; Section 149; Schedule 3; Schedule 4

PSTR: Section 3; Section 33; Section 51; Section 91

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "boat" means a vessel or other craft designed for transporting or drawing on water persons or things, regardless of the method of propulsion or lack of method of propulsion.

PST - SEC.1/Collection Agent/Int.

Collection Agent

References:

Act: Section 1 "customs officer", "postal agent"; Section 56; Section 57; Section 189; Section 191; Section 211

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "collection agent" means:

(a) a customs officer, and

(b) a postal agent, if an agreement is in force between the Canada Post Corporation and the government of Canada or an agent of the government of Canada providing for the collection of tax under Division 5 [Property Brought into British Columbia from Outside Canada] of Part 3 [Taxes in Relation to Tangible Personal Property] by that corporation.

PST - SEC.1/Collector/Int.

Collector

References:

Act: Section 1 "collector's return", "registrant", "reporting period", "small seller"; Section 29; Section 31; Section 32; Section 37; Section 42; Section 44; Section 49; Section 92; Section 93; Section 95; Section 97; Section 103; Section 105; Section 119; Section 123.1; Section 125; Section 127; Section 130; Section 145; Section 146; Section 147; Section 149; Section 150; Section 151; Section 152; Section 153; Section 157; Section 160; Section 166; Section 168; Section 169; Section 170; Section 171; Section 172; Section 172.1; Section 178; Section 179; Section 181; Section 186; Section 187; Section 188; Section 189; Section 190; Section 198; Section 203; Section 206; Section 237; Section 246

PSTERR: Section 9; Section 24; Section 25; Section 29; Section 31; Section 33; Section 46; Section 48; Section 49; Section 61; Section 62; Section 63; Section 66; Section 70; Section 73; Section 74; Section 75; Section 76; Section 89; Section 119; Section 125

PSTR: Section 8; Section 13; Section 72; Section 75; Section 76; Section 77; Section 84; Section 85; Section 86; Section 87; Section 88

Interpretation (Issued: 2013/03; Revised: 2016/01)

Effective September 1, 2015, Bill 10, Budget Measures Implementation Act, 2015 revised the definition of collector by adding a reference to section 172.1 [person located outside British Columbia must be registered]. This amendment provides that a person who is required to be registered under section 172.1 is a collector for the purposes of the Act, even if they are not registered. The amendment is consequential to the new mandatory registration provision in section 172.1.

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "collector" means:

(a) a registrant;

(b) a person who is not registered but is required under any of the following sections to be registered under section 168 [registration]:

  • • subsections 169(1) - (4) [vendors and lessors must be registered],
  • • section 170 [contractor must be registered if claiming exemption],
  • • section 171 [direct seller must be registered], or
  • • section 172 [person located in Canada but outside British Columbia must be registered];

(c) a person who is a vendor on ceasing to be a small seller, referred to in subsection 169(5) [vendors and lessors must be registered], during the first month in which the person is a vendor and while the person is not a registrant.

PST - SEC.1/Collector's Return/Int.

Collector's Return

References:

Act: Section 186; Section 198; Section 232

PSTR: Section 75; Section 76; Section 77; Section 78; Section 83

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "collector's return" means a return filed under section 186 [collector's returns].

PST - SEC.1/Conveyance/Int.

Conveyance

References:

Act: Section 1 "vehicle"; Section 13; Section 25; Section 37; Section 38; Section 44; Section 48; Section 54; Part 3 - Division 6; Section 81; Section 100; Section 153; Section 192; Section 238

PSTERR: Section 90; Section 149; Section 150; Section 151; Section 152

PSTR: Section 38; Section 39; Section 40; Section 41; Section 42

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "conveyance" does not include a vehicle.

PST - SEC.1/Customs Officer/Int.

Customs Officer

References:

Act: Section 1 "collection agent"; Section 55

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "customs officer" means an officer as defined in section 2 of the Customs Act (Canada) who is employed at a customs office in British Columbia.

PST - SEC.1/Dedicated Telecommunication Service/Int.-R.1

Dedicated Telecommunication Service

References:

Act: Section 1 "telecommunication service"; Section 28; Section 130; Section 131; Section 132

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "dedicated telecommunication service" means the right, whether exercised or not, to send from British Columbia or receive in British Columbia a telecommunication by using a circuit, a communications channel, a partial communications channel, or any other means of sending or receiving a telecommunication that is dedicated to the exclusive use of the purchaser of the service.

A dedicated telecommunication service is included in the definition of "telecommunication service" under paragraph (c).

R.1 Frame Relay Services (Issued: 2014/04)

Frame relay service is a network service that allows a business to transmit data between multiple locations in Canada or elsewhere in the world. Under frame relay technology, the data is divided into variable-length frames by the sending device. Each frame includes a header containing addressing information. Frames are transmitted intermittently - rather than in a continuous stream - over digital circuits and reassembled at the receiving end.

Customers of this service determine the "Committed Information Rate" (CIR) when signing up for the service. This is the minimum guaranteed throughput speed on the circuit; at a minimum, a customer's data will always be transmitted at the CIR. However, the data may exceed the CIR on a circuit if network capacity is available - (e.g., there are few or no transmissions of other customers at the same time) - at no extra charge.

Frame relay service is a dedicated telecommunication service only if the customer has exclusive use of the network lines. However, frame relay service is more often a non-dedicated service as several customers' transmissions are transmitted through the same frame relay network. In fact, whether or not there are other customers transmitting on the network at a given time will affect the data transmission rate.

PST - SEC.1/Dedicated Telecommunication System/Int.

Dedicated Telecommunication System

References:

Act: Section 131; Section 132

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "dedicated telecommunication system" means a circuit, a communications channel, a partial communications channel or any other means of sending or receiving a telecommunication that is dedicated to the exclusive use of a person as a result of that person having purchased the right to send from British Columbia or receive in British Columbia a telecommunication by that circuit, communications channel, partial communications channel or other means of sending or receiving a telecommunication.

PST - SEC.1/Designated Accommodation Area/Int.

Designated Accommodation Area

References:

Act: Section 1 "designated recipient", "eligible entity"; Section 28; Section 123; Section 123.2; Section 123.3; Section 124; Section 125; Section 240

PSTR: Section 76

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "designated accommodation area" means an area designated by regulation under paragraph 240(1)(b) [regulations in relation to accommodation].

Accommodation purchased in a designated accommodation area (i.e., participating municipalities and regional districts in British Columbia) is subject to the up to 2% tax on accommodation imposed under section 123 [tax on accommodation in designated accommodation area].

A regulation designating an area as a designated accommodation area can only be made if requested by the municipality, regional district or eligible entity. Under paragraph 240(1)(b), a regulation may designate the following as a designated accommodation area:

  • the area of a municipality,

  • all or part of the area of a regional district, or

  • an area of British Columbia.

The up to 2% tax on accommodation in designated accommodation areas has been referred to as the Municipal and Regional District Tax (MDRT) since July 1, 2010 and, prior to July 1, 2010, as the Additional Hotel Room Tax (AHRT).

Note: under section 45 [transition - regulations made under Hotel Room Tax Act] of Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013, any regulations that imposed an MRDT in an area of British Columbia immediately before the Hotel Room Tax Act was repealed on April 1, 2013 were deemed to have been made under the Provincial Sales Tax Act. This provision ensured that all the previous MRDT areas were carried over to the new legislation as "designated accommodation areas" with the same MRDT rates.

PST - SEC.1/Designated Recipient/Int.

Designated Recipient

References:

Act: Section 1 "designated accommodation area", "eligible entity"; Section 123; Section 123.2; Section 123.3; Section 125; Section 240

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "designated recipient", in relation to a designated accommodation area, means the municipality, regional district, or eligible entity designated by regulation for the purposes of the up to 2% tax imposed under subsection 123(1) [tax on accommodation in designated accommodation area], subsection 123.2(3) [tax if change in use of accommodation acquired for resale] or subsection 123.3(3) [tax if accommodation used for new purpose] in the designated accommodation area.

PST - SEC.1/Direct Seller/Int.

Direct Seller

References:

Act: Section 1 "exclusive product", "independent sales contractor", "retail sale"; Section 99; Section 168; Section 171; Section 179; Section 180; Section 202; Section 243

PSTERR: Part 8

PSTR: Section 72

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "direct seller" means a person who:

(a) does not regularly make retail sales of exclusive products in British Columbia from an established commercial premises, and

(b) sells exclusive products primarily to independent sales contractors.

PST - SEC.1/Director/Int.

Director

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "director" means a person designated by the minister to administer the Act.

The director is appointed by a letter by either the minister or a delegate of the minister (e.g., deputy minister), similar to the appointment process under the Carbon Tax Act.

PST - SEC.1/Electronic Device/Int.

Electronic Device

References:

Act: Section 1 "software", "telecommunication", "telecommunication service"; Section 105; Section 106; Section 107; Section 131; Section 134.1; Section 172

PSTERR: Section 77; Section 87; Section 153; Section 154

PSTR: Section 29

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced the definition of "electronic device".

"Electronic device" means a device by which a person may:

(a) send, receive, download, view or access a telecommunication, or

(b) use software.

PST - SEC.1/Eligible Charity/Int.

Eligible Charity

References:

Act: Section 1 "registered charity", "sale", "use"; Section 162; Section 165; Section 242

PSTERR: Section 121

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "eligible charity".

"Eligible charity" means:

(a) a registered charity, or

(b) a corporation that

(i) is incorporated under the Society Act, and

(ii) is a member of the British Columbia Association of Healthcare Auxiliaries.

Bill 2 added this definition to support the refund for medical equipment and software purchased with charity funds provided by PSTERR section 121.

PST - SEC.1/Eligible Entity/Int.

Eligible Entity

References:

Act: Section 1 "designated accommodation area", "designated recipient", Section 178; Section 240

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "eligible entity" means:

(a) an entity that

(i) is a not-for-profit business association,

(ii) has a place of business in a designated accommodation area, and

(iii) actively engages in tourism marketing, programs or projects in the designated accommodation area; or

(b) an entity that meets the prescribed qualifications.

PST - SEC.1/Eligible Tangible Personal Property/Int.

Eligible Tangible Personal Property

References:

Act: Section 1 "boat", "liquor", "small seller", "vehicle"; Section 89; Section 90; Section 91; Section 141; Section 143; Section 161

PSTERR: Section 38; Section 39; Section 40; Section 50; Section 117

PSTR: Section 89

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "eligible tangible personal property" means tangible personal property other than:

(a) a vehicle;

(b) an aircraft;

(c) a boat;

(d) liquor;

(e) other prescribed tangible personal property (currently, nothing is prescribed).

PST - SEC.1/Energy Product/Int.

Energy Product

References:

Act: Section 1 "fuel oil"; Part 3 - Division 11; Section 238

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "energy product" means:

(a) natural gas;

(b) fuel oil used for the purposes of heating, cooling or raising steam, except kerosene;

(c) propane in a vaporized form delivered

(i) by a public utility, as defined in the Utilities Commission Act,

(ii) by pipe, and

(iii) to purchasers at the place at which the propane will be used;

(d) other prescribed tangible personal property (currently, nothing is prescribed).

Energy products are subject to the additional 0.4% tax on the purchase price of energy products (also referred to as the ICE Fund tax) under section 92 [tax on purchase of energy product] and section 93 [tax if energy product brought into British Columbia for use]. The tax raises revenue for the Innovative Clean Energy (ICE) Fund special account established by the Special Accounts Appropriation and Control Act.

The ICE Fund was created by government in September 2007 as part of the BC Energy Plan to help support clean energy initiatives.

PST - SEC.1/Entry Date/Int.

Entry Date

References:

Act: Section 25; Section 29; Section 30; Section 36; Section 61.1; Section 63; Section 99; Section 100

PSTERR: Section 22

PSTR: Section 32

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "entry date", in relation to tangible personal property, means the date on which the tangible personal property is first brought or sent into or delivered in British Columbia.

PST - SEC.1/Excise Tax Act/Int.

Excise Tax Act

References:

Act: Section 24; Section 34; Section 36; Section 44; Section 49; Section 51; Section 54; Section 55; Section 62; Section 75.1; Section 80.5; Section 80.6; Section 80.7; Section 80.8; Section 100; Section 180; Section 182.1

PSTERR: Section 18; Section 19; Section 20; Section 22; Section 23; Section 56; Section 58; Section 65; Section 90; Section 123; Section 126; Section 132; Part 9

PSTR: Section 12

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "Excise Tax Act".

"Excise Tax Act" means the Excise Tax Act (Canada).

Bill 2 added this definition to reduce the need to refer to the "Excise Tax Act (Canada)" repeatedly throughout the Act.

PST - SEC.1/Exclusive Product/Int.

Exclusive Product

References:

Act: Section 1 "boat", "direct seller", "independent sales contractor", "liquor", "manufactured building", "retail sale", "vendor", "vehicle"; Section 28; Section 37; Section 99; Section 168; Section 171; Section 176; Section 180; Section 243

PSTERR: Section 38; Section 39; Section 40; Section 50; Section 117; Part 8

PSTR: Section 90

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "exclusive product" means tangible personal property that:

(a) is acquired, manufactured or produced by a direct seller, and

(b) is primarily offered to a purchaser at a retail sale by an independent sales contractor of the direct seller,

but does not include liquor, a vehicle, a boat, an aircraft or a manufactured building.

These exclusions are made to ensure the tax under the Act is imposed on those products as intended.

Exclusive products are products that are acquired, manufactured or produced by a direct seller that are primarily offered to purchasers by independent sales contractors (individuals who sell from their residence, non-business premises or temporary business premises). Examples of goods that are known to be sold as exclusive products include cosmetics, kitchen gadgets, Tupperware and adult novelties.

The Act provides for an alternate tax collection scheme for sales of exclusive products by independent sales contractors. This scheme simplifies the collection and remittance of tax by imposing the remittance obligation on the direct seller of the exclusive products, not the independent sales contractor.

PST - SEC.1/Fair Market Value/Int.

Fair Market Value

References:

Act: Section 1 "boat", "modified motor vehicle", "software", "taxable service"; Section 10; Section 26; Section 27; Section 35; Section 36; Section 40; Section 49; Section 68; Section 88; Section 100; Section 137

PSTERR: Section 152; Section 155

PSTR: Section 3; Section 87

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "fair market value" means:

(a) in relation to tangible personal property other than a boat or a modified motor vehicle, the price at which the legal and beneficial interest of the tangible personal property would, if unencumbered, be conveyed by a willing seller acting in good faith to a willing buyer acting in good faith in an arm's length retail sale in the open market. The price must be determined by:

(i) including any charges, costs or expenses referred to in paragraphs 10(2)(e) and (f) [original purchase price of tangible personal property], and

(ii) for the purposes of section 49 [tax in tangible personal property brought into British Columbia for use] and section 100 [tax on gift of vehicle, boat and aircraft given in British Columbia], by also including any costs or expenses referred to in paragraph 10(2)(f) that were incurred by the person who provided the gift;

(a.1) in relation to a boat, the price at which the legal and beneficial interest in the boat and any property, other than prescribed property (PSTR section 3 [fair market value - boats]), that, at or before the time that title to the boat passes, is, or is intended to be, attached to, stored in or used in connection with the operation of the boat, would, if unencumbered, be conveyed by a willing seller acting in good faith to a willing buyer acting in good faith in an arm's length retail sale in the open market. The price must be determined by:

(i) including any charges, costs or expenses referred to in paragraphs 10(2)(e) and (f) [original purchase price of tangible personal property] that were incurred in relation to the boat and the property, and

(ii) for the purposes of section 49 [tax in tangible personal property brought into British Columbia for use] and section 100 [tax on gift of vehicle, boat and aircraft given in British Columbia], by also including any costs or expenses referred to in paragraph 10(2)(f) that were incurred in relation to the boat and the property and were incurred by the person who provided the gift;

(a.2) in relation to a modified motor vehicle, the price of the modified motor vehicle as otherwise would be determined under paragraph (a), if that paragraph were applicable, less the portion of the price that can reasonably be attributed to those special features or modifications of the vehicle the sole purpose for which is to:

(i) facilitate the use of the vehicle by, or the transportation of, an individual using a wheelchair, or

(ii) equip the vehicle with an auxiliary driving control that facilitates the operation of the vehicle by an individual with a disability;

(b) in relation to software, the price at which the legal and beneficial interest in the software would, if unencumbered, be conveyed or provided by a willing seller acting in good faith to a willing buyer acting in good faith in an arm's length retail sale in the open market;

(c) in relation to a taxable service, the price at which the legal and beneficial interest in the taxable service would, if unencumbered, be provided by a willing seller acting in good faith to a willing buyer acting in good faith in an arm's length retail sale in the open market.

Bill 2 added paragraph (a.1) to ensure the fair market value of a boat includes property that, at or before title passes, is (or intended to be) attached to, stored in or used in connection with the operation of the boat. This definition excludes prescribed property (PSTR section 3 [fair market value - boats]).

Bill 2 added paragraph (a.2) to ensure the fair market value of a modified motor vehicle does not include that portion of the price that can be reasonably attributed to special features or modifications of a vehicle the sole purpose of which is to either facilitate the use of the vehicle by, or in the transportation of an individual using a wheelchair, or equip the vehicle with an auxiliary driving control that facilitates the operation of the vehicle by an individual with a disability.

PST - SEC.1/First Nation Individual/Int.

First Nation Individual

References:

Act: Section 80.1; Section 80.2; Section 80.5

PSTERR: Section 1 "First Nation land", "qualifying farmer"; Section 68.1; Section 72.1; Section 77; Section 78; Section 81; Section 88.1

Bulletin PST 314

Interpretation (Issued: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 moved the definition of "First Nation individual" to section 1 of the Act from PSTERR section 1.

Concurrent amendments resulted in this term being used in the Act (refer to sections 80.1, 80.2 and 80.5) in addition to the regulation.

PST - SEC.1/Fleet Licensing Date/Int.

Fleet Licensing Date

References:

Act: Section 1 "licensing date"; Section 68 "fleet licence year"; Section 69

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "fleet licensing date", in respect of vehicles licensed in a calendar year as part of a fleet, means the first date in that calendar year that the fleet vehicles licensed as such.

PST - SEC.1/Fuel Oil/Int.

Fuel Oil

References:

Act: Section 1 "energy product"

PSTERR: Schedule 2

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced the definition of "fuel oil".

"Fuel oil" means:

(a) renewable diesel fuel, as defined in Schedule 1 of the Carbon Tax Act;

(b) any liquid fuel containing any derivative of coal, petroleum or natural gas, other than the following:

(i) gasoline;

(ii) propane;

(iii) butane;

(iv) ethane;

(v) pentanes plus, as defined in Schedule 1 of the Carbon Tax Act.

Bill 2 repealed and replaced the definition to include renewable diesel fuel, consistent with similar definitions in the Carbon Tax Act and the Motor Fuel Tax Act. This ensures there will be no distinction under the Act between petroleum based diesel fuel and biodiesel.

PST - SEC.1/Improvement To Real Property/Int.

Improvement To Real Property

References:

Act: Section 1 "affixed machinery", "related service", "sale", "small seller", "tangible personal property", "use"; Section 11; Part 3 - Division 8

PSTR: Section 43; Section 44

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "Improvement to real property" excludes affixed machinery.

This exclusion is necessary because "affixed machinery" meets the ordinary meaning of "improvement to real property" because it is certain machinery, equipment or apparatus that "ceases to be personal property at common law".

PST - SEC.1/Independent Sales Contractor/Int.

Independent Sales Contractor

References:

Act: Section 1 "direct seller", "exclusive product", "small seller", "vendor"; Section 99; Section 168; Section 171; Section 176; Section 180; Section 188; Section 189; Section 190

PSTERR: Section 38; Section 39; Section 40; Section 50; Section 117; Part 8

PSTR: Section 90

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "independent sales contractor," in relation to a direct seller, means an individual who

(a) has a right to purchase exclusive products from the direct seller or from another independent sales contractor of the direct seller for the purpose of resale,

(b) is not an agent or an employee of the direct seller,

(c) purchases exclusive products referred to in paragraph (a) for resale or for the individual's own use or consumption, and

(d) sells or offers to sell the exclusive products to a purchaser only

(i) temporarily at the purchaser's established business premises,

(ii) at premises that are not business premises, or

(iii) at the individual's private residence.

For more information on the special rules that apply to independent sales contractors, see PSTA/Sec. 1 "exclusive product"/Int.

PST - SEC.1/Lease/Int.-R.3

Lease

References:

PSTR: Section 3.1

Interpretation (Issued: 2013/03; Revised: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 revised the definition of "lease" by adding paragraphs (c) and (d), to exclude the following from the meaning of lease under the Act:

  • the right to use a good that is provided with the purchase of accommodation if the good has no separate price (e.g., in-room coffee machines);

  • the right to use a good that, in certain circumstances, is merely incidental to an agreement for the right to use real property or to an agreement for the provision of services that are not subject to PST (see PSTR section 3.1).

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 introduced a definition of the term "lease".

The definition does not apply to subsection 33(2) [when consideration becomes due].

R.1 Optional Lease Buyouts Versus Conditional Sales Agreements (Issued: 2014/04)

Under paragraph (a) of the definition of "sale", sale includes conditional sales.

Where a "lease" agreement requires a transfer of title to TPP at the end of the lease term, it is a conditional sales agreement and subject to tax at the time of sale under section 37 [tax on purchase]. Tax must be collected at the inception of the agreement on the aggregate of all payments required to be made under the terms of the agreement (i.e., the purchase price of the TPP), with the exception of interest charges that are excluded from the definition of purchase price by paragraph 10(2)(e) [original purchase price of tangible personal property].

Where a lease agreement provides the customer with the use of the TPP and does not require a transfer of title to the TPP to the customer, the agreement is generally a lease. With leases, tax must be collected on the full amount of each lease payment as provided under section 39 [tax on leases].

A lease agreement that provides the lessee with an optional lease buyout to purchase the TPP during or at the end of the lease term is a lease because there is no requirement that title to the TPP pass to the customer. If the option is exercised, the buyout is a separate transaction and is subject to tax under the rules provided by section 28 [when tax is payable in respect of a purchase or lease], section 34 [rates of tax in relation to purchase price] and section 37.

Below are four scenarios outlining specific contractual arrangements. In each scenario, the lessor retains title to the equipment leased throughout the terms of the leases. At the time the lease is entered into, the equipment has a fair market value of $20,000.

Scenario A: The agreement requires the customer to make 36 payments of $500 per month and provides the customer with an option to purchase the equipment after 3 years for $5,000. This agreement is a lease under the Act and is subject to tax under section 39. The lessor must therefore collect and remit tax on each lease payment as well as on the optional lease buyout if the option is exercised.

Scenario B: The agreement is the same as in Scenario A, except that the optional lease buyout is exercisable at any time during the lease. The optional lease buyout amount is not pre-determined, but rather is the fair market value of the equipment at the time the option is exercised. As with Scenario A, this agreement is a lease under the Act and is subject to tax under section 39. The lessor must therefore collect and remit tax on each lease payment as well as on the optional lease buyout if the option is exercised.

Scenario C: The lessee is required to make 36 payments of $650, and at the end of the lease has an optional lease buyout to purchase the property for an additional payment of $1. Because title to the equipment does not automatically transfer to the lessee, this agreement is also a lease. As with Scenarios A and B, this agreement is a lease under the Act and is subject to tax under section 39. The lessor must therefore collect and remit tax on each lease payment as well as on the optional lease buyout if the option is exercised.

Scenario D: The agreement requires 36 payments of $650 each, but instead of an optional lease buyout to purchase the property at the end of the term, the agreement requires the customer to purchase the property for $1. This agreement is a conditional sales agreement because it requires a transfer of title once certain terms and conditions in the contract have been met. The amount, if any, of the mandatory buyout of the equipment does not determine the application of the Act. Under this agreement, the sale of the equipment is subject to tax under section 37. Therefore, tax must be collected at the inception of the agreement on the aggregate of all payments required to be made under the terms of the agreement, including the mandatory buyout amount, with the exception of interest charges that are excluded from the definition of purchase price by paragraph 10(2)(e).

R.2 Access Charges For Telecommunications Switching Equipment (Issued: 2014/04)

Telecommunication lines from the sites of a telecommunication service provider's various customers are generally routed to a centralized switching site maintained by the service provider. In some cases, the service provider bills their customers a separate charge for accessing the switching devices and multiplexers located at this site. The service provider may list it as a lease charge on the customer's invoice.

A lease is an agreement under which a person is generally given an exclusive right to use TPP for a fixed term in exchange for consideration, not merely any right to access or use TPP. When numerous customers' lines are routed through the same equipment (e.g., several customers' lines are connected to individual ports located on the same switch or multiplexer), the customers cannot be considered to be leasing the switching equipment or the port. They do not have the rights to use and control the equipment that are normally associated with a lease, and they are not provided exclusive use of the equipment. The service provider is considered to be using the switching equipment to deliver its telecommunication service and must pay PST on its acquisition of the equipment.

The charge for accessing the equipment is not a lease charge for the purposes of the PST, even if the service provider calls it a lease charge on the customer's bill. The charge is an "access charge" as contemplated by paragraph 21(2)(b) [original purchase price of telecommunication service] and forms part of the purchase price of the telecommunication service.

A customer is only considered to be leasing equipment that is located at a centralized switching site if all of the following conditions are met:

  • The equipment used or accessed by the customer is a separate piece of equipment (e.g., it is not simply a port that is part of a larger switching device).

  • This equipment is dedicated to one customer's exclusive use.

  • There is a charge for the equipment that is characterized as a lease charge and is separately stated from the charges for the telecommunication service.

In these circumstances, the service provider must collect PST on the lease charge but is exempt from PST under section 142 [exemptions for tangible personal property intended for lease] on its acquisition of the equipment as long as the equipment was obtained for the sole purpose of leasing that equipment to other persons.

R.3 Provision Of TPP With Operator (Issued: 2014/04)

The following table is intended to provide some basic guidelines on when a person is leasing TPP and when a person is acquiring the right to use TPP that is provided with an operator (not subject to PST as a lease) as contemplated by paragraph (a) of the definition of "lease".

Basic guidelines on when a person is leasing TPP and when a person is acquiring the right to use TPP

Scenario

Example

Application of PST

1. Bare lease

  • Lessee leases bouncy castle
  • Lessee picks up and drops off bouncy castle at lessor's place of business

This meets the definition of "lease" under the Act and is subject to PST.

2. Lease with delivery

  • Lessee leases bouncy castle.
  • Lessor drops off and picks up bouncy castle

Same as (1) above.

3. Lease of TPP includes set-up and take down of TPP

  • Lessee leases bouncy castle.
  • Lessor delivers, inflates, deflates and removes bouncy castle.

Same as (1) above.

4. Lease of TPP includes delivery, set-up /take down and start-up

  • Lessee leases bouncy castle.
  • Lessor delivers, inflates, deflates, removes, starts up and demonstrates how to use /operate bouncy castle.

Same as (1) above. This is not the provision of TPP with a person to operate the TPP because the lessor does not remain on-site for the duration of the lease period.

5. Supplying TPP with a person to supervise the use /operation of TPP

  • Person acquires right to use bouncy castle, popcorn equipment, and dunk tank.
  • Provider demonstrates how to use /operate and supervises use /operation of the various pieces of equipment.
  • Provider is present for the duration of the right to use the equipment.

Not subject to PST by the person acquiring the right to use the equipment as it is excluded from the definition of "lease" by paragraph (a). The following indicate that it is not a lease, but the supply of TPP with a person to supervise the use /operation of the equipment:

  • The provider remains on-site for the duration of the lease period (note: the provider does not need to be there when the equipment is not being operated - e.g., excavator is left "on-site" during non-working hours).
  • The provision of an operator /supervisor forms part of the agreement for the right to use the property.

Note that in this case the provider is required to pay PST on the acquisition of the TPP unless it qualifies for exemption under subsection 142(4) or 142(5) - If the acquisition qualifies for this exemption, the lessee must pay PST in accordance with section 102 [tax on leased property occasionally supplied with operator].

6. Supplying TPP with a person to operate the TPP

  • Person acquires right to use bouncy castle.
  • Provider delivers, inflates, deflates and removes bouncy castle.
  • Provider stands beside bouncy castle, opens doors and lets children in /out, makes sure children remove shoes and makes any necessary adjustments to bouncy castle.

Same as (5) above.

7. Lease with supervisor on-call

  • Lessee leases bouncy castle.
  • Lessor delivers, inflates, deflates and removes bouncy castle.
  • Lessor is also "on-call" to attend site if any problems with bouncy castle.

Same as (1) above. This is not the provision of TPP with a person to operate the TPP because the lessor does not remain on-site for the duration of the lease period.

PST - SEC.1/Lease Price/Int.

Lease Price

Reference:

Act: Part 1 - Division 2

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "lease price" means the lease price under Division 2 [Purchase Price and Lease Price] of Part 1 [Interpretation].

PST - SEC.1/Legal Services/Int.-R.12

Legal Services

References:

Act: Section 1 "original purchase price", "purchaser", "related service", "taxable service"; Section 17; Section 20; Section 28; Part 5 - Division 4; Section 135; Section 137; Section 181; Section 246

PSTERR: Part 4 - Division 4

PSTR: Section 9

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "legal services" means:

(a) services that come within the meaning of the practice of law under the Legal Profession Act,

(b) services described in section 18 of the Notaries Act, and

(c) legally related services prescribed as legal services (currently, nothing is prescribed),

The definition of "legal services" excludes services provided by a person to the person's employer in the course of employment.

Legal services are included in the definition of taxable service, along with related services, accommodation, and telecommunication services.

R.1 Patent And Trade-Mark Agents (Issued: 2014/04)

The following activities conducted by Registered Patent and Trade-Mark Agents are not legal services as contemplated by the Act and are not subject to tax:

  • Conducting searches at various patent or trade-mark offices to determine whether or not a particular trade-mark is registerable or to determine whether or not a particular invention is novel.

  • Preparing and filing applications to register trade-marks and to patent inventions.

  • Corresponding with the Patent or Trade-mark office to execute patent or trade-mark applications through to registration, amending patent and trade-mark applications as necessary, and addressing problems which arise during the execution of such patent and trade-mark applications.

  • Filing assignment documents and other title documents in the Patent or Trade-mark office.

  • Paying the various fees which are payable to the Patent office or Trade-mark office.

However, representing a client before the Patent Appeal Board or the Trade-Marks Opposition Board does come within the meaning of legal services and is subject to tax.

R.2 Registry Searches (Issued: 2014/04)

Conducting searches and submitting registrations at government registries, (e.g., Corporate, Personal Property, Ships', Manufactured Home, or Vital Statistics) are not considered legal services. Charges for such services are not subject to tax, even if performed by a lawyer or notary public.

R.3 In-House Lawyers (Issued: 2014/04)

Where accountant firms, trust companies, or other firms have in-house lawyers doing legal work as employees or partners whose advice is incorporated into the service provided to a client, tax applies as follows:

  • If services that qualify as legal services are provided directly to the client, then the services are subject to tax.

  • If services that qualify as legal services are provided by the lawyer to the firm or company in the course of employment, then the services are not subject to tax.

R.4 Government Agents (Issued: 2014/04)

When Government Agents act as commissioners for oath taking and charge a fee, the fee is taxable as a legal service. This is because administering oaths is captured under section 18 of the Notaries Act. Unlike the definition of the "practice of law" in the Legal Profession Act, the Notaries Act does not contain an exception for certain duties performed by public officers.

R.5 Legal Research (Issued: 2014/04)

Legal research that involves only the provision of factual information does not constitute a taxable legal service, even if performed by a lawyer or notary. Such services are generally provided on contract to a legal firm.

However, if the legal research also involves the provision of legal advice, the charge for legal research is part of the purchase price for the legal service on which tax applies.

R.6 Process Servers (Issued: 2014/04)

Process servers are persons, such as sheriffs, authorized by law to serve process papers on defendants. Services provided by process servers are not legal services and are not subject to tax.

R.7 Foreign Legal Consultants (Issued: 2014/04)

Under section 17 of the Legal Profession Act, persons with legal qualifications from another country may give legal advice in British Columbia on the laws in that other country without being members of the Law Society of British Columbia. However, under that Act and the rules of the Law Society, such persons must obtain permits as foreign legal consultants to conduct such practice in British Columbia.

The provision of such advice constitutes the practice of law as defined in the Legal Profession Act, notwithstanding that there are special licensing provisions for such persons. Such practice therefore meets the definition of legal services and tax applies to the purchase price of such services.

R.8 Lawyers Under Contract With The Ministry Of Justice (Issued: 2014/04)

The Ministry of Justice hires many lawyers on a contract basis. The application of tax to the legal services provided by these contractors depends on whether the lawyers are working as dependent or independent contractors.

Dependent Contractors: Lawyers working as dependent contractors work exclusively for the ministry. They are considered employees for the purposes of the Income Tax Act and the Canadian Pension Plan, but not for the purposes of employment insurance.

Dependent contractors are considered to be employees of the provincial government. As such, tax does not apply to legal services provided by dependent contractors to the Ministry of Justice.

Independent (Ad hoc) Contractors: The ministry hires a number of lawyers to provide a particular service for a short term. For example, the Criminal Justice Branch hires many lawyers to work as a Crown Prosecutor on a day or multi-day contract.

Such independent contractors are not considered to be employees of the province. Legal services provided by independent contractors are therefore subject to tax. The Ministry of Justice provides independent contractors with a billing guide that specifically advises the contractor that tax will apply to all ad hoc legal services provided by the contractor.

R.9 Preparing Documents To Maintain A Company (Issued: 2014/04)

In Law Society of British Columbia v. Julie M. Siegel (Respondent) and Society of Notaries Public (Intervenor) the British Columbia Supreme Court ruled the preparation of documents (e.g., minutes, resolutions, reports, annual reports, transitions, returns) necessary to maintain a company's registered and records office for a fee, is an activity that falls under the practice of law as outlined in section 1(b)(i) of the Legal Profession Act.

Therefore, these services meet the definition of legal services and are subject to tax.

R.10 Probate Documents And Court Applications (Issued: 2014/04)

The Legal Profession Act defines the "practice of law" to include the preparation of "a document relating to a probate or letters of administration or the estate of a deceased person". When a lawyer, hired by a client and acting as a lawyer for the client, prepares probate documents and makes an application to court for probate, the lawyer is performing taxable legal services.

However, if the lawyer is the executor of the estate and prepares the probate documents and makes the court application (these actions do not require a lawyer), the lawyer is acting as an executor and the services are not subject to tax, provided the charge does not include charges for other legal advice or services.

R.11 Prepaid Legal Services (Issued: 2014/04)

Monthly premiums paid by clients to a prepaid legal services plan are not taxable. These plans, similar to insurance plans, entitle the premium payer to receive legal services should the need arise. The Legal Profession Act defines the "practice of law" to exclude agreeing to place at the disposal of another person the services of lawyers, if the agreement is made under a prepaid legal services plan or other liability insurance program. A prepaid legal services plan thus does not itself constitute the practice of law, and the premiums charged for it are not taxable.

If a plan provider satisfies its obligations to its clients by obtaining legal services from a private firm, the fees paid by the plan provider to the firm are taxable. The plan provider is purchasing taxable legal services. If, however, an employer/employee relationship exists between the plan provider and the lawyer performing the legal services, then the services are not taxable. Services provided to a person's employer are excluded from "the practice of law". Although the plan provider's clients ultimately benefit from the lawyer's work, the lawyer is acting in the normal course of employment with the plan provider, and so the services are not taxable.

R.12 Services Related To Extraprovincial Companies (Issued: 2014/04)

Part 11, Division 2 of the Business Corporations Act provides that extraprovincial companies must generally have an attorney resident in British Columbia. The attorney is deemed to be authorized by the company to accept service of process in every legal proceeding by or against the company in British Columbia, and to receive every notice to the company. The attorney does not need to be a lawyer or a law firm. Therefore, this service does not fall within the definition of "legal services" under the Act.

PST - SEC.1/Lessee/Int.

Lessee

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "lessee" means a person who leases tangible personal property in or outside British Columbia that

(a) is for use or is used by the person in British Columbia,

(b) is for use or is used in British Columbia by another person at the first person's expense,

(c) is for use or is used in British Columbia by a principal for whom the first person acts as agent, or

(d) is for use or is used in British Columbia by another person at the expense of a principal for whom the first person acts as agent.

This definition does not apply with respect to subsection 33(2) [when consideration becomes due].

PST - SEC.1/Lessor/Int.

Lessor

Reference:

Act: Section 1 "lessee"

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced the definition of "lessor".

"Lessor" means a person, including an assignee, liquidator, administrator, receiver, receiver manager, trustee, or similar person,

(a) who, in the ordinary course of the person's business, leases or offers to lease tangible personal property to a lessee, and

(b) who does one or more of the following:

(i) carries on business in British Columbia;

(ii) enters into leases in British Columbia with a lessee;

(iii) leases, to a lessee or any other person referred to in the definition of "lessee", tangible personal property that is in British Columbia at a time the lease is entered into;

(iv) transfers possession of or delivers the tangible personal property to a lessee, or any other person referred to in the definition of "lessee", in British Columbia.

PST - SEC.1/Licensing Date/Int.

Licensing Date

References:

Act: Section 1 "fleet licensing date", "vehicle", "vehicle licence period"

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "licensing date" means the fleet licensing date in respect of a vehicle that is licensed as part of a fleet.

PST - SEC.1/Liquor/Int.

Liquor

References:

Act: Section 1 "eligible tangible personal property", "small seller"; Section 34; Section 36; Section 55; Section 98; Section 137; Section 182; Section 182.1

PSTERR: Section 42; Section 52

PSTR: Section 86

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that the definition of "liquor" has the same meaning as in the Liquor Control and Licensing Act.

PST - SEC.1/Liquor Permit/Int.

Liquor Permit

References:

Act: Section 1 "small seller"; Section 98; Section 182; Section 189; Section 190

PSTERR: Section 3.2; Section 86; Section 88.1

Bulletin PST 001; Bulletin PST 003; Bulletin PST 119; Bulletin PST 300; Bulletin PST 304; Bulletin PST 314; Bulletin PST 320; Bulletin PST 400

Interpretation (Issued: 2017/09)

Effective January 23, 2017, Bill 27, Liquor Control and Licensing Act, 2015, brought into force by B.C. Reg. 241/2016, amended section 1 by adding "liquor permit" as a defined term.

The amendment was consequential to a full rewrite of the Liquor Control and Licensing Act. As part of this rewrite, the "special occasion licence" used under the previous Liquor Control and Licensing Act for short-term events such as festivals, weddings, and community gatherings, was replaced by the liquor permit.

PST - SEC.1/Manufactured Building/Int.

Manufactured Building

References:

Act: Section 1 "exclusive product", "manufactured mobile home", "manufactured modular home", "portable building"; Section 34; Section 35; Section 36; Section 55

PSTERR: Section 58; Section 73

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed the definition of "manufactured home" and replaced it with the definition of "manufactured building".

"Manufactured building" means a manufactured mobile home, a manufactured modular home or a portable building.

These three types of buildings have reduced tax rates. The reduced tax rates are generally intended to reflect the value of materials incorporated into the building, to attempt to treat the buildings in a manner similar to real property (where only the materials are subject to tax).

PST - SEC.1/Manufactured Mobile Home/Int.-R.1

Manufactured Mobile Home

References:

Act: Section 1 "fair market value", "manufactured building", "portable building"; Section 34; Section 35; Section 36; Section 55

PSTERR: Section 58; Section 73

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "manufactured mobile home" means:

(a) a mobile home manufactured to Canadian Standards Association Standard Z240, or

(b) any other mobile home that is similar in design and construction to a mobile home constructed to Canadian Standards Association Standard Z240,

if the home is in all essential features completely constructed before delivery from the factory, but does not include the following:

(c) a recreational vehicle,

(d) a travel trailer, including a Park Model travel trailer manufactured to Canadian Standards Association Standard Z240,

(e) a slide-on camper, a chassis-mounted camper or other similar camper, or

(f) a prescribed structure, vehicle or component of a vehicle used for a prescribed use (currently, nothing is prescribed).

The tax rate payable on manufactured mobile homes is:

  • 7% of the amount equal to 50% of the purchase price of the manufactured mobile home, under subsection 34(7) [rates of tax in relation to purchase price];

  • 7% of the amount equal to 50% of the fair market value of the manufactured mobile home, under subsection 36(7) [rates of tax in relation to gifts];

The effective tax rate payable on manufactured mobile homes is 3.5% (i.e., 50% of 7%) of the purchase price or fair market value of the manufactured mobile home, as applicable.

The reduced tax rate is generally intended to reflect the value of materials incorporated into manufactured mobile homes, to attempt to treat manufactured mobile homes in a manner similar to real property (where only the materials are subject to tax).

R.1 CSA Standards - Definitions (Issued: 2014/04)

The following are excluded from the definition of "manufactured mobile home":

  • recreational vehicles

  • travel trailers, including Park Model travel trailers manufactured to Canada Standards Association (CSA) Standard Z240

  • slide-on campers, chassis-mounted campers or other similar campers

The CSA provides the following definition in the CSA Z240 RV Series for recreational vehicle:

Recreational Vehicle - A structure designed to provide temporary living accommodation for travel, vacation, or recreation use and to be driven, towed, or transported. Except for fifth-wheel trailers, it has an overall length not exceeding 12.5m and an overall width not excluding 2.6m, where the width is the sum of the distances from the vehicle centreline to the outermost projections on each side. These dimensions exclude safety-related equipment such as side safety and warning lights and entry and exit handholds. Also excluded are water spray suppression attachments, load-induced tire bulge, and equipment use to secure cargo on a vehicle. These excluded items are allowed to extend not more than 100mm when the vehicle is folded or stowed for transit. For a fifth-wheel trailer the maximum overall length is 11.3m taken from the rear extremity to the front of the main body, measured at the floorline. Such structures include travel trailers, slide-in campers, camping trailers, motor homes, and fifth-wheel trailers.

The CSA defines a standard for "Park Model" travel trailers, CSA Z241. Under this standard, "park model" trailers are defined as recreational units, built on a single chassis, mounted on wheels, designed to facilitate relocation from time to time, have a width greater than 2.6m in the transit mode, and have a floor area of less than 50 m2, including lofts when in the setup mode. These units are designed for seasonal use. Although these units are larger than "recreational vehicles", they do not qualify as manufactured mobile homes.

Prior to December 1992, travel trailers shorter than 12.5m and narrower than 2.6m were sometimes referred to as "park model" travel trailers. These units are not park model trailers as defined by CSA Z241. However, these units are recreational vehicles as defined in CSA Standard Z240. These units are excluded from the definition of "manufactured mobile home".

PST - SEC.1/Manufactured Modular Home/Int.-R.1

Manufactured Modular Home

References:

Act: Section 1 "fair market value", "manufactured building", "portable building"; Section 34; Section 35; Section 36; Section 55

PSTERR: Section 58; Section 73

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "manufactured modular home" means:

(a) a modular home manufactured to Canadian Standards Association Standard A277, or

(b) any other modular home built to a standard required by the National Building Code of Canada and qualifying for Canada Mortgage and Housing Corporation financing,

if each module is in all essential features completely constructed before delivery from the factory.

The tax rate payable on manufactured modular homes is:

• 7% of the amount equal to 55% of the purchase price of the manufactured modular home, under subsection 34(8) [rates of tax in relation to purchase price];

• 7% of the amount equal to 55% of the fair market value of the manufactured modular home, under subsection 36(8) [rates of tax in relation to gifts];

The effective tax rate payable on manufactured modular homes is 3.85% (i.e., 55% of 7%) of the purchase price or fair market value of the manufactured modular home, as applicable.

The reduced tax rate is generally intended to reflect the value of materials incorporated into manufactured modular homes, to attempt to treat manufactured modular homes in a manner similar to real property (where only the materials are subject to tax).

R.1 Kit Homes (Issued: 2014/04)

In order to be a manufactured modular home, each unit or each module must be, in all essential features, completely constructed prior to delivery from the factory. Therefore, kit homes, where individual components must be assembled after delivery, do not qualify as manufactured modular homes. Kit homes that are supplied and affixed, or installed, by a real property contractor are subject to the real property rules.

PST SEC.1/Meal/Int.

Meal

References:

Act: Section 1 "accommodation"; Section 19; Section 26; Section 240

PSTR: Section 4; Section 8; Section 11

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "meal".

"Meal" does not include a prescribed meal (PSTR section 4 [meal]).

Currently, under PSTR section 4, the following meals are prescribed:

(a) a continental breakfast;

(b) a snack.

This definition is used to support the calculation of the purchase price of accommodation under PSTR section 8 [purchase price if accommodation purchased with other services] and PSTR section 11 [purchase price of accommodation if bundled purchase with meals].

For information on how the purchase price of accommodation is calculated where meals and prescribed services are provided, see PSTR/Sec. 8/Int.

For information on how the purchase price of accommodation is calculated where meals are provided, see PSTR/Sec. 11/Int.

PST - SEC.1/Modified Business Vehicle/Int.

Modified Business Vehicle

References:

Act: Section 1 "apparatus", "multijurisdictional vehicle", "passenger vehicle", "original purchase price"; Section 10; Section 34; Section 35; Section 117

PSTR: Section 87

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "modified business vehicle".

"Modified business vehicle" means a passenger vehicle, other than a multijurisdictional vehicle,

(a) that, for business use, is brought or sent into British Columbia, delivered in British Columbia, purchased or leased, and

(b) that is modified by the addition of equipment or apparatus that

(i) enables the vehicle to be used for a specific business purpose, and

(ii) is not related to the operation of the vehicle as a vehicle.

An example of a modified business vehicle is a car with a hat added so it looks like a hot dog to promote a particular brand or product.

The original purchase price of a modified business vehicle is the purchase price of the modified business vehicle under section 10 [original purchase price of tangible personal property] less the portion of that purchase price that can reasonably be attributed to the modifications referred to in paragraph (b) above.

The reduction provided for in the definition of original purchase price impacts the determination of the tax rate, but not the purchase price on which the rate applies.

For example, a modified business vehicle is purchased in British Columbia from a motor vehicle dealer for $60,000, including the modifications. The portion of the purchase price attributable to the modifications is $5,000. Therefore, the original purchase price is $55,000, and under paragraph 34(6)(b) [rates of tax in relation to purchase price], the tax rate is 8%. The 8% tax rate applies to the purchase price of $60,000.

A similar rule applies for leased modified business vehicles under section 35 [rates of tax in relation to lease price]. See PSTA/Sec. 35/Int.

PST - SEC.1/Modified Motor Vehicle/Int.

Modified Motor Vehicle

References:

Act: Section 1 "fair market value", "motor vehicle", "multijurisdictional vehicle", "original purchase price"; Section 9; Section 10; Section 12; Section 34; Section 35

PSTR: Section 87

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "modified motor vehicle"

"Modified motor vehicle" means a motor vehicle, other than a multijurisdictional vehicle, that

(a) is manufactured or modified to facilitate the use of the vehicle by, or the transportation of, an individual using a wheelchair, or

(b) is equipped with an auxiliary driving control to facilitate the operation of the vehicle by an individual with a disability.

An example of a modified motor vehicle is a vehicle with a wheelchair lift. Modified Motor Vehicles that are Passenger Vehicles

The original purchase price of a modified motor vehicle that is a passenger vehicle is the purchase price of the modified motor vehicle under section 10 [original purchase price of tangible personal property] less the portion of that purchase price that can reasonably be attributed to the modifications referred to in paragraphs (a) or (b) above.

The reduction provided for in the definition of original purchase price impacts the determination of the tax rate.

Unlike modified business vehicles, the purchase price of a modified motor vehicle is also reduced. The purchase price of a modified motor vehicle under section 9 [purchase price of tangible personal property] is the purchase price less the portion of that purchase price that can reasonably be attributed to the modifications referred to in paragraphs (a) or (b) above. The reduction provided for in the calculation of purchase price impacts the purchase price on which the applicable tax rate applies.

For example, a modified motor vehicle that is a passenger vehicle is purchased in British Columbia from a motor vehicle dealer for $60,000, including the modifications. The portion of the purchase price attributable to the modifications is $5,000. Therefore, the original purchase price is $55,000, and under paragraph 34(6)(b) [rates of tax in relation to purchase price], the tax rate is 8%. The 8% tax rate applies to the section 9 purchase price of $55,000.

Modified Motor Vehicles that are not Passenger Vehicles The original purchase price of a modified motor vehicle that is not a passenger vehicle is the purchase price of the modified motor vehicle under section 10 [original purchase price of tangible personal property]. The definition of original purchase price does not provide for a reduced purchase price for the purposes of section 10. The resulting original purchase price has no effect on the determination of the tax rate because the tax rate for non-passenger vehicles is either 7% (subsection 34(5)) or 12% (subsection 34(3)).

The purchase price of a modified motor vehicle under section 9 [purchase price of tangible personal property] is the purchase price less the portion of that purchase price that can reasonably be attributed to the modifications referred to in paragraphs (a) or (b) above. The reduction provided for in the calculation of purchase price impacts the purchase price on which the applicable tax rate applies.

For example, a modified motor vehicle that is not a passenger vehicle is purchased in British Columbia from a motor vehicle dealer for $60,000, including the modifications. The portion of the purchase price attributable to the modifications is $5,000. The tax rate on a non-passenger vehicle purchased from a dealer is 7%. The 7% tax rate applies to the section 9 purchase price of $55,000.

Similar rules apply for leased modified motor vehicles under section 35 [rates of tax in relation to lease price]. See PSTA/Sec. 35/Int.

PST - SEC.1/Month/Int.

Month

References:

PSTERR: Section 1

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that the definition of "month" means a calendar month.

This definition ensures that the Interpretation Act definition of month (i.e., a period calculated from a day in one month to a day numerically corresponding to that day in the following month, less one day) is not applicable for the purposes of the Act, except as provided below.

Definition of "Month" under the PSTERR

The definition of "month" under section 1 of the Act does not apply to the PSTERR because of PSTERR subsection 1(2) [definitions]. Therefore, for the purposes of the PSTERR, the applicable definition of "month" is the definition of that term under the Interpretation Act. This ensures that provisions such as the exemption for accommodation provided for a continuous period of more than one month under PSTERR paragraph 78(c) [exemptions in relation to accommodation] apply in the intended manner.

Definition of "Month" under the PSTR

For the purposes of the PSTR, the definition of "month" under section 1 of the Act applies, except in PSTR section 16 [calculation and payment of tax in respect of vehicles used in petroleum or natural gas exploration or development].

PST - SEC.1/Motor Vehicle/Int.

Motor Vehicle

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "motor vehicle" has the same meaning as in the Motor Vehicle Act.

PST - SEC.1/Multijurisdiction Al Vehicle/Int.

Multijurisdictional Vehicle

References:

Act: Section 1 "short term rental vehicle"; Section 25; Section 38; Section 48; Section 54; Part 3 - Division 7; Section 100; Section 153; Section 192; Section 238

PSTERR: Section 55; Section 73; Part 7

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "multijurisdictional vehicle" means a vehicle in respect of which tax is payable under subsection 69(1) [tax if multijurisdictional vehicle licensed].

PST - SEC.1/Non-Resident/Int.

Non-Resident

References:

Act: Section 30; Section 50; Section 52; Section 106

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "non-resident".

"Non-resident" means a person who does not reside, ordinarily reside or carry on business in British Columbia and who

(a) owns real property in British Columbia, or

(b) leases, as lessee, real property in British Columbia if the term of the lease,

including the cumulative total of all options and rights to extend or renew that lease, is at least 5 years.

PST - SEC.1/Non-Taxable Component/Int.

Non-Taxable Component

References:

Act: Section 1 "software", "taxable component"; Section 26; Section 137; Section 241

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "non-taxable component" means property, software, or a service that, if purchased separately from a taxable component, would not be subject to tax under the Act, or would be exempt from tax under the Act.

PST - SEC.1/Original Lease Price/Int.

Original Lease Price

References:

Act: Section 13; Section 22

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "original lease price", in relation to tangible personal property, means the lease price of the tangible personal property under section 13 [original lease price of tangible personal property].

PST - SEC.1/Original Purchase Price/Int.

Original Purchase Price

References:

Act: Section 1 "fair market value", "modified business vehicle", "modified motor vehicle", "passenger vehicle", "taxable service"; Section 10, Section 10.1, Section 15; Section 18; Section 19; Section 20; Section 21; Section 34; Section 117

Interpretation (Issued: 2013/03; Revised: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 amended the definition of "original purchase price" by repealing and replacing paragraphs (a), (a.1) and (a.2). This amendment is consequential to the addition of section 10.1 of the Act [original purchase price of certain vehicles].

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 introduced a definition of the term "original purchase price".

PST - SEC.1/Parents' Advisory Council/Int.

Parents' Advisory Council

References:

Act: Section 162; Section 165; Section 242

PSTERR: Section 1 "francophone school", "Part 4 software", "Provincial school"; Section 122

Bulletin PST 402

Interpretation (Issued: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 added a definition of "parents' advisory council" to section 1 of the Act.

Concurrent amendments resulted in this term being used in the Act (refer to sections 162, 165 and 242) in addition to the PSTERR.

PST - SEC.1/Passenger Vehicle/Int.-R.3

Passenger Vehicle

References:

Act: Section 1 "modified business vehicle", "motor vehicle", "original purchase price"; Section 34; Section 35; Section 36; Section 40; Section 43; Section 49; Section 100; Section 117

PSTR: Section 5

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "passenger vehicle" means:

(a) a motor vehicle designed primarily as a means of transport for individuals, other than a motor vehicle excluded by regulation (PSTR subsection 5(1) [passenger vehicle]), and

(b) a prescribed vehicle (PSTR subsection 5(2)).

R.1 Passenger Vehicles Over 3/4 Ton (Issued: 2014/04)

A truck or a van does not qualify as a passenger vehicle if it is larger than 3/4 ton.

The common and ordinary meaning of truck is that it is a strong automotive vehicle for the hauling or transporting of TPP.

Some vehicles over 3/4 ton are passenger vehicles and subject to graduated tax rates.

An SUV may be larger than 3/4 ton and still qualify as a passenger vehicle because it does not meet the common and ordinary meaning of a truck.

For example, Hummers have several different models, each of which is greater than 3/4 ton. Of their various models, the 4 passenger wagons which have an enclosed cargo area are passenger vehicles and therefore are subject to the graduated tax rates.

Two of the Hummer models are 4 passenger vehicles that resemble a conventional pick-up truck and have a full-size exterior cargo box or a pickup bed (with a midgate) at the rear of the vehicle, separate from the passenger area. While the remaining two Hummer models are designed to carry four passengers, they also have an open cargo box at the rear, separate and distinct from the passenger area. These two models resemble conventional extended cab pick-ups and come within the ordinary meaning of trucks. Therefore, they are excluded from the definition of passenger vehicle.

R.2 Snowmobiles And All Terrain Vehicles (Atvs) (Issued: 2014/04)

While snowmobiles and ATVs qualify as motor vehicles under the Motor Vehicle Act, they are not considered to meet the definition of "passenger vehicle" for the purposes of the Provincial Sales Tax Act. Snowmobiles and ATVs are primarily recreational vehicles and are not designed primarily as a means of transport for individuals.

R.3 Limousines (Issued: 2014/04)

Limousines that meet the definition of buses under the Motor Vehicle Act are excluded from the definition of passenger vehicle by PSTR paragraph 5(1)(e) [passenger vehicle]. A bus is defined under section 1 of the Motor Vehicle Act as "a motor vehicle designed to carry more than 10 persons" (this includes the driver). Therefore, a limousine with a seating capacity of over 10 persons is taxed as a bus. Those with a seating capacity of 6-10 are taxed as passenger vehicles.

To determine seating capacity, the passenger commercial vehicle formula is based on subsection 6(10) of the Commercial Transport Act. Seating capacity is calculated by dividing the difference between the gross and net vehicle weight in kilograms by 80 - both of these weights are contained on ICBC transfer/tax forms. For example, 2484 kg - 1764 kg (720 kg) divided by 80 equals 9 persons.

For the purposes of the PST, this formula applies to both commercial and non-commercial vehicles.

PST - SEC.1/Portable Building/Int.-R.5

Portable Building

References:

Act: Section 1 "manufactured building", "manufactured mobile home", "manufactured modular home", "portable floating structure"; Section 34; Section 35; Section 36; Section 55

PSTERR: Section 58; Section 73

PSTR: Section 6

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "portable building".

"Portable building" means a building that:

(a) is in all essential features completely constructed before delivery, and

(b) is designed to be moved from location to location as a whole building without being self-propelled,

including a portable floating structure, but does not include the following:

(c) a manufactured mobile home;

(d) a manufactured modular home;

(e) a building that is principally designed for use as a building ancillary to a residence;

(f) a prescribed building (PSTR section 6 [portable building]).

The tax rate payable on portable buildings is:

  • 7% of the amount equal to 45% of the purchase price of the portable building, under subsection 34(8.1) [rates of tax in relation to purchase price];

  • 7% of the amount equal to 45% of the fair market value of the portable building, under subsection 36(8.1) [rates of tax in relation to gifts];

The effective tax rate payable on portable buildings is 3.15% (i.e., 45% of 7%) of the purchase price or fair market value of the portable building, as applicable.

The reduced tax rate is generally intended to reflect the value of materials incorporated into portable buildings, to attempt to treat portable buildings in a manner similar to real property (where only the materials are subject to tax).

R.1 Cargo Containers And Other Structures Designed For Transportation (Issued: 2014/04)

Cargo containers are excluded from the definition of "portable building" under PSTR paragraph 6(c) [portable building]. A cargo container designed to be used for shipping products via truck or ship does not qualify as a portable building even if it is used as a mini-warehouse to be rented to the general public. A "portable building" means a structure that is designed to be used as a building rather than as a means of transportation.

R.2 Single-Person, Portable Toilets Are Not Portable Buildings (Issued: 2014/04)

Single-person, self-contained portable toilets, such as those frequently used on construction or special events sites, are excluded from the definition of portable building by PSTR paragraph 6(d) [portable building]. Although these units have four walls and a roof, their small size (their base is approximately 4 feet square) and lack of any other features common to buildings, such as utility hookups, mean that they cannot properly be considered to be buildings.

Larger portable toilets that are designed for use by more than one person (e.g. approximately 8 feet square and insulated, plumbed, heated, and wired) can qualify as portable buildings.

R.3 Fabric Structures (Issued: 2014/04)

Fabric structures are not "buildings" in the conventional sense. They are not constructed like conventional buildings or made out of rigid building materials. Therefore, they are excluded from the definition of portable building under PSTR paragraph 6(a) [portable building].

For a fabric structure to become real property on installation, all of the following criteria must be met:

  • It is of a size that it must be constructed at the location where it is to be used and cannot be moved from the location at which it is constructed and installed without being completely dismantled.

  • It is substantially affixed to land by being securely bolted or anchored into the land or is attached to heavy concrete or similar blocks whose weight is integral and necessary to the structural integrity of the structure.

  • It is, by virtue of its design, intended to remain at the location where it is installed for its useful life as warranted.

If all of these criteria are met, the tax application for the fabric structures is the same as for all other improvements to real property.

The criteria for a fabric structure to become real property on installation are intended to provide comparable treatment to fabric structure manufacturers regardless of engineering differences. For example, some manufacturers do not physically bolt or anchor fabric buildings to the land as the engineered design of the building does not require such attachment to land. Instead, the fabric is attached to large, heavy concrete blocks which both anchor the structure and are required for the structural integrity of the structure. This is a different design than the more common one where fabric structures are bolted or anchored to the land, generally with bolts that are three or more feet long.

R.4 Fold-A-Way Buildings (Issued: 2014/04)

"Fold-A-Way" buildings are modular, reconfigurable, re-locatable structures that can be folded flat for transport and then set up using a crane and lifting sling. They are normally erected on site and used for storage space. These structures qualify as portable buildings.

R.5 Fibreglass Storage Units (Issued: 2014/04; Revised: 2020/06)

Large (e.g., 8' X 8' X 12') fibreglass storage units are excluded from the definition of portable building under PSTR paragraph 6(b) [portable building]. These containers are similar to those carried on flat bed trucks and are free-standing units not attached to real property.

The storage units are generally leased to customers either to be left on the owner’s site for use as a stationary storage unit or are moved and used on the customer’s site.  Regardless of where the storage unit is located, the transaction is a lease of TPP and subject to tax.

PST - SEC.1/Portable Floating Structure/Int.

Portable Floating Structure

Reference:

Act: Section 1 "portable building"

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "portable floating structure".

"Portable floating structure" means a floating structure that:

(a) is not designed as a means of transportation or to be self-propelled, and

(b) is sold as a unit consisting of

(i) a building that covers most of the surface of the platform or barge referred to in subparagraph (ii), and

(ii) a platform or barge, the primary purpose of which is the floatation of the building.

This definition supports the definition of "portable building".

PST - SEC.1/Postal Agent/Int.

Postal Agent

References:

Act: Section 1 "collection agent"; Section 55

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "postal agent" means the Canada Post Corporation established under the Canada Post Corporation Act and its officers, employees, and agents.

PST - SEC.1/Promotional Distribution/Int.

Promotional Distribution

References:

Act: Section 1 "promotional distributor", "promotional material", "sale", "use", "user"; Section 9; Section 14; Section 16; Section 17; Section 137; Section 158

PSTERR: Section 3

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced the definition of "promotional distribution".

"Promotional distribution" means the provision by a person to another person of promotional material for which:

(a) the purchase price paid by the person providing the promotional material exceeds the amount of the payment specifically made for that promotional material by the person to whom it is provided, or

(b) a purchase price is not specifically charged to and required to be paid by the person to whom that promotional material is provided.

PST - SEC.1/Promotional Distributor/Int.

Promotional Distributor

References:

Act: Section 1 "promotional distribution", "promotional material", "user"; Section 16

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "promotional distributor" means a person who provides, by way of promotional distribution to another person, promotional material.

PST - SEC.1/Promotional Material/Int.-R.1

Promotional Material

References:

Act: Section 1 "boat", "promotional distribution", "sale", "software", "telecommunication service", "vehicle", "user"; Section 9; Section 14; Section 16

PSTERR: Section 15

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "promotional material".

"Promotional material" means tangible personal property, software or a telecommunication service that is provided for one or more of the following purposes:

(a) to describe, or to promote or encourage the purchase, use, or consumption of tangible personal property, software, services, or real property;

(b) to provide or distribute to a person a catalogue, directory, listing, or compilation of persons, places, prices, services, commodities, or places of business in respect of the purchase, use, or consumption of tangible personal property, software, services, or real property;

(c) a prescribed purpose (currently, nothing is prescribed), but does not include a vehicle, boat or aircraft that is provided for one or more of the purposes referred to in paragraphs (a) to (c).

R.1 Composters And Recycling Bins Sold Below Cost By Municipalities (Issued: 2014/04)

Municipalities and regional governments may purchase composters and recycling bins and sell them below cost to residents living in the municipality or regional district. The municipality or regional government is not required to pay PST on its purchase of the composters or bins because they are acquired for resale. However, they must charge PST on the sale price charged to the residents.

The municipality or regional district is not required to pay PST on the difference between its purchase price and the actual selling price if it is providing the composters or bins to encourage recycling and reduction in the use of its garbage collection services. This is because the composters and recycling bins do not meet the definition of promotional material in the Act. Promotional material includes TPP that is provided for the purpose of describing, promoting or encouraging the purchase, use or consumption of TPP, software, services, or real property. The provision of the TPP to encourage recycling and garbage reduction does not fall within any of the purposes included in the definition of promotional material.

PST - SEC.1/Prototype/Int.

Prototype

References:

Act: Section 25; Section 85; Section 113; Section 141; Section 192

PSTERR: Section 41; Section 69

PSTR: Section 54

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "prototype" means the first full-scale functional form of a new type or a new construction of tangible personal property, but does not include software or prescribed tangible personal property.

Currently, no tangible personal property is prescribed.

PST - SEC.1/Purchase Price/Int.

Purchase Price

Reference:

Act: Part 1 - Division 2

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "purchase price" means the purchase price under Division 2 [Purchase Price and Lease Price] of Part 1 [Interpretation].

PST - SEC.1/Purchaser/Int.-R.3

Purchaser

References:

Act: Section 1 "accommodation", "legal services", "related service", "software", "telecommunication service", "tourism agent"

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "purchaser" means:

(a) in relation to tangible personal property, a person who acquires tangible personal property at a sale

(i) for the person's own use or consumption,

(ii) for use or consumption by another person at the expense of the person acquiring the property,

(iii) for use or consumption by a principal for whom the person acquiring the property acts as agent, or

(iv) for use or consumption by another person at the expense of a principal for whom the person acquiring the property acts as agent;

(b) in relation to software, a person who agrees to pay or is otherwise obliged to pay consideration for software

(i) provided to the person for the person's own use or benefit,

(ii) provided to another person for that person's use or benefit at the expense of the person who agrees to pay or is otherwise obliged to pay consideration for the software,

(iii) provided to a principal for whom the person acts as agent for the use or benefit of that principal, or

(iv) provided to another person for that person's use or benefit at the expense of a principal for whom the person agreeing to pay or otherwise obliged to pay consideration for the software acts as agent;

(c) in relation to a related service, legal services, or a telecommunication service, a person who agrees to pay or is otherwise obliged to pay consideration for a related service, legal services, or a telecommunication service

(i) provided to the person for the person's own use or benefit,

(ii) provided to another recipient for that recipient's use or benefit at the person's expense,

(iii) provided to a principal for whom the person acts as agent for the use or benefit of that principal, or

(iv) provided to another recipient for that recipient's use or benefit at the expense of a principal for whom the person acts as agent;

(d) in relation to accommodation, a person who agrees to pay or is otherwise obliged to pay consideration for accommodation

(i) provided to the person for the person's own use or benefit,

(ii) provided to another recipient for that recipient's use or benefit at the person's expense,

(iii) provided to a principal for whom the person acts as agent for the use or benefit of that principal,

(iv) provided to another recipient for that recipient's use or benefit at the expense of a principal for whom the person acts as agent, or

(v) if the person is a tourism agent and the accommodation is for inclusion in a tourism service provided or to be provided by the tourism agent.

R.1 Employee /Employer Reimbursements (Issued: 2014/04)

If an employer is purchasing a taxable service (e.g., cellular telephone service) and/or TPP for the use of an employee, the employer is the purchaser of the taxable service and/or TPP, even if the employee reimburses the employer for some or all of the cost of the service or TPP. The employee is the purchaser in accordance with subparagraph (a)(iii) (TPP) or (c)(iii) (cellular telephone service).

The company must pay PST on the purchase of the taxable services or TPP. The employee is not required to pay PST to the employer for the reimbursement of the taxable service or TPP.

In this situation, the employer is acting as an agent for the employee. This only applies if:

  • there is no additional charge or mark-up (just a straight reimbursement) for the taxable service or TPP, and

  • the relationship is between an employer and an employee.

If the relationship is not between an employer and an employee, the parties must establish that there is an agency relationship. However, there is an implied agency relationship between the employer and employee when the employee reimburses the employer for taxable services or TPP.

If the employer imposes additional charges or mark-ups for the taxable service or TPP, the employee is purchasing the taxable service or TPP from the employer and the employer is required to register and charge PST.

For example, an employer provides an employee with a mobile phone for work purposes. However, the employee is responsible for reimbursing the employer for personal long distance calls they make with the phone. The employer pays PST to the telecommunication service provider on the full purchase price of the phone plan. When the employee reimburses the employer for the long distance calls they make, they employer is not required to charge and remit PST on the reimbursement.

R.2 Booking Agents For Accommodation (Issued: 2014/08)

Hotels and other providers of accommodation sometimes enter into arrangements whereby an online booking agent, a tourist information centre, or some other agent (collectively, an "agent") will book accommodation at the hotel for tourists or other users of accommodation.

An online booking agent provides accommodation booking services using the Internet, and allows customers to book accommodation according to their preferences. For example, a person can use features on the website to indicate that they would like a room with two beds in a downtown Vancouver hotel with an indoor pool; the operator of the website then books the accommodation on behalf of the person.

A person is acting as an agent in respect of the purchase of accommodation if: (1) the person is not the provider of the accommodation (e.g., they do not operate the hotel in which the unit of accommodation is provided), and (2) the person is not reselling a unit of accommodation that they have, at some prior time, purchased for the purpose of resale.

When the agent books a room for the customer, the accommodation provider invoices the room charge to the agent. The agent adds a mark-up to the charge and invoices the marked-up charge to the customer.

The agent meets the definition of "purchaser" because they are paying, or they are obliged to pay, for accommodation that they are acquiring on behalf of a principal (the customer). As a result, the accommodation provider should collect and remit tax on the amount that it bills the agent for the room, as this is the purchase price paid to the accommodation provider for the accommodation. The agent's mark-up is considered to be an administrative fee for the service of arranging the accommodation.

The agent should not collect or show tax on its invoice to the customer as it is not selling accommodation. The agent may charge its own "tax recovery charge" but it must take care to invoice such that it is not collecting an amount as PST.Because an agent is not selling accommodation, it should not allege, for the purposes of section 123.1, that it is purchasing accommodation for resale.

R.3 Purchasers Of Funeral Merchandise (Issued: 2014/08)

Bulletin PST 140 explains how PST applies to sales made by funeral providers. There are a number of reasons why the customer of a funeral provider is generally held to be the purchaser of goods (e.g., caskets) associated with funeral services:

Statutory meaning of "purchaser"

When a customer of a funeral provider purchases TPP, they are generally described by both of subparagraph (a)(i) and (a)(ii) of the definition of "purchaser" in the Act.

The customer is a purchaser under subparagraph (a)(i) in the sense that they are afforded control over funeral merchandise. For example, they may dictate that a casket should be displayed at a viewing, and will also decide whether the casket will be interred or cremated. Additionally, the customer selects and agrees to pay consideration for particular items of TPP (e.g., one particular model of casket over another model of casket).

The customer is a purchaser under subparagraph (a)(ii) in the sense that the funeral merchandise is also used by the funeral provider in the course of providing funeral services. The use of the TPP is at the expense of the customer.

When funeral providers acquire funeral merchandise at wholesale, they are not statutory purchasers because they are purchasing the merchandise for the sole purpose of resale. They are not purchasing the TPP for their own use: they are excluded by reason of subparagraph (a)(xiii) of the PSTA definition of "use". Although funeral providers are aware that they will likely use the merchandise at some point in the course of providing their funeral services, the use does not occur until after the TPP is appropriated for the purpose of reselling the merchandise to their customer.

Contract requirements under the Business Practices and Consumer Protection Act

Under paragraphs 34(1)(a) and 36(1)(a) of the Business Practices and Consumer Protection Act (BPCPA), funeral contracts and preneed funeral services contracts (respectively) are required to contain all of the elements set out in section 19 of the BPCPA. Paragraph 19(f) of the BPCPA requires these contracts to contain "an itemized purchase price for the goods…to be supplied under the contract."

By implication, TPP supplied under a funeral contract or preneed funeral services contract at a particular purchase price is TPP that is sold from the funeral provider to the customer of the funeral provider.

Funeral providers have no enduring claim on TPP

Although caskets and urns that are interred are normally left undisturbed, the lack of any long-term intention to exercise any powers of ownership over a casket or urn as an item of TPP does not mean that the TPP does not have an owner. The funeral provider does not retain any interest in caskets or urns; rather, ownership of such items of TPP vests in the customer of the funeral provider.

Exception: sole-use cremation containers

Bulletin PST 140 provides an administrative definition for "sole-use cremation containers." These are containers that are used only for the purpose of transporting and cremating human remains, and not for any other purpose (e.g., they are not displayed at viewings or in funeral services). Often, these containers are made from cardboard, plywood, or some other lower-cost material. However, they may also be higher-cost caskets that conform to the requirements of section 10 of the Cremation, Interment and Funeral Services Regulation. Materials and cost are not determinative of the status of container as a sole-use cremation container; rather, the status of a container is determined strictly according to use.

Customers of funeral providers are not purchasers of sole-use cremation containers, as they do not take ownership of the containers. Sole-use cremation containers are purchased by funeral providers for use in providing their services-namely those of transporting and cremating human remains. Accordingly, funeral providers are purchasers of sole-use cremation containers and must pay PST on such purchases.

However, when a cremation container is not a sole-use cremation container (e.g., it is displayed at a viewing or in a funeral service), the customer of the funeral provider is the purchaser.

PST - SEC.1/Registered Charity/Int.

Registered Charity

References:

Act: Section 1 "eligible charity", "sale", "use"

PSTERR: Section 9; Section 19; Section 57

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "registered charity" has the same meaning as in subsection 248(1) of the Income Tax Act (Canada).

PST - SEC.1/Registrant/Int.

Registrant

References:

Act: Section 1 "Excise Tax Act"; Section 168

PSTERR: Section 73; Section 134

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "registrant", except when used in relation to a registrant under Part IX of the Excise Tax Act, means a person who is registered under section 168 [registration] and whose registration is not suspended or cancelled.

PST - SEC.1/Registration Number/Int.

Registration Number

References:

Act: Section 37; Section 49; Section 92; Section 93; Section 123.1; Section 130; Section 168; Section 177

PSTERR: Section 31; Section 33; Section 62; Section 63; Section 70; Section 73; Section 89

PSTR: Section 74; Section 75; Section 86; Section 88

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "registration number" means a registration number issued under subsection 168(3) [registration].

A registration number may be referred to as the registrant's "PST registration number" or "PST number", in the format "PST-1234-5678".

PST - SEC.1/Related Individual/Int.

Related Individual

References:

Act: Section 103; Section 115; Section 221

PSTERR: Section 18

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "related individual" has the same meaning as in the Property Transfer Tax Act.

PST - SEC.1/Related Service/Int.-R.5

Related Service

References:

Act: Section 1 "affixed machinery", "improvement to real property", "legal services", "original purchase price", "purchaser", "software", "taxable service", "use"; Section 17; Section 18; Section 28; Section 34; Section 119; Section 120; Section 120.1; Section 121; Section 135; Section 141; Section 178; Section 192

PSTERR: Section 73; Section 74; Section 75; Section 76; Section 77; Section 103; Section 107; Section 109; Section 113; Section 115; Section 119; Section 124; Section 129; Section 130; Section 131

PSTR: Section 63; Section 64

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced the definition of "related service".

"Related service" means, except in the definition of "legal services", any service provided to tangible personal property or any service provided to install tangible personal property, but does not include the following services:

(a) a service provided to install tangible personal property that will become affixed machinery or an improvement to real property on installation;

(b) a service provided by a person to the person's employer in the course of employment;

(c) a service provided to manufacture tangible personal property that is fundamentally different from the tangible personal property from which it was manufactured;

(d) a service provided to software, or to install software, that is subject to tax or is exempt from tax under Part 3 [Taxes in Relation to Tangible Personal Property].

R.1 Computer Scanning (Issued: 2014/04)

Computer scanning is where documents or images are optically scanned into a computer. The service of computer scanning is not a related service.

R.2 Diving Services (Issued: 2014/04)

Charges for diving services provided in relation to the performance of a taxable related service such as underwater welding for a boat are subject to PST as part of the purchase price of the related service. Diving charges provided in relation to inspection only are not subject to PST.

R.3 Guard And Monitoring Services (Issued: 2014/04)

Services to guard or to monitor TPP (e.g., security guard services or security system monitoring services) are not related services.

R.4 Items Ruled Taxable As Installation Of TPP (Issued: 2014/04)

The following items remain TPP when installed and therefore services to these items (including installation) are related services. Therefore, the total charge to the customer for the supply and installation of such items is subject to PST. This list should be viewed in conjunction with the lists in Bulletin PST 502.

  • Bulletin boards

  • Compressors (unless qualifying as affixed machinery or an improvement to real property). Portable and one-piece units that are typically used in garages and service stations for cleaning parts, operating pneumatic tools and inflating tires are TPP.

  • Dental chairs

  •  Drapes (but not the tracks or rails, which are improvements to real property)

  • Television antennae, aerials (house type)

R.5 Services Provided By Temporary Staffing Agencies (Issued: 2014/04)

The tax application to temporary staffing placement services provided by an employment agency depends on the nature of the contract between the agency and its client.

When an employment or placement agency provides a worker to a client, and the substance of the contract is such that the agency is providing human resources (as opposed to related services), no tax is payable on the value of the contract. In this case, the worker is under the direction of the client, even though the worker remains an employee of the agency.

When a contract between an agency and its client stipulates that related services will be provided, and the agency is responsible for the completion of the services being provided, PST is due on the value of the services. In this case, the worker is under the direction of the agency, and the agency is providing related services to the client. The agency is required to charge, collect and remit tax.

PST - SEC.1/Related Service/R.1-R.6

(A) AFFIXED MACHINERY AND IMPROVEMENTS TO REAL PROPERTY

R.1 Electrical, Telecommunication, And Computer Cables (Issued: 2014/04)

When electrical, telecommunication, computer, and other similar cables or wiring are built into walls, they become an improvement to real property.

The installation of such cables into walls is not a related service and is not subject to PST.

Cables that are not built into real property remain TPP on installation. For example, the installation of computer cables in an office, where the cables are distributed from a wall-mounted Ethernet jack to hardware (routers, computers, printers, etc.) and the cables are loose, hidden by covers, or run through modular office furniture, is an installation of TPP. The installation of such cables is a related service and is subject to PST.

R.2 Plants And Gardens (Issued: 2014/04)

The installation (planting) or maintenance of plants (e.g., pruning, fertilizing, watering) in the ground or in containers that qualify as real property, such as built-in planters, is not subject to PST as the plants are part of real property. This applies regardless of whether the plants are indoors or outdoors.

The installation or maintenance of plants in containers that are not real property (indoors and outdoors) is a related service and subject to PST. This applies to plants in hanging baskets, pots, planters that rest upon the ground by their own weight (regardless of size), and to other containers that are not real property. Such plants remain TPP because they are installed in TPP.

R.3 Guardrails And Road Dividers (Issued: 2014/04)

Concrete guardrails and road dividers are typically 6 to 10 feet long and may be attached to each other with metal strapping, bolts or hooks. Where the guardrails or dividers simply rest in place by their own weight, they are TPP and their installation and maintenance are related services and are subject to PST. Such free-standing guardrails and dividers remain TPP even if they are connected together with metal strapping, bolts, or hooks.

Wooden or metal guardrails or dividers that are embedded into the earth become real property, and installation and maintenance to these guardrails or dividers are not related services.

R.4 Real Estate Signs (Issued: 2014/04)

The installation of real estate signs or sign posts is a related service and is subject to PST. Installation comprises pushing the sign or sign post into the ground, or affixing it to a building. While real estate signs are typically minimally attached to real property, they do not cease to be TPP because the attachment is for the better use of the sign as a sign.

R.5 Dust Control (Issued: 2014/04)

The application of dust control chemicals, such as calcium chloride, to roads and similar surfaces is not a related service as the chemicals cease to be TPP once they have been applied. These chemicals bond with dust/dirt particles and prevent them from rising into the air. The treated dust/dirt particles are then compacted on the road over time, making a hard surface for the road.

R.6 Sanding And Salting Of Roads (Issued: 2014/04)

The application of sand or salt to roads and similar surfaces is not a related service as the method of dispersion results in the sand or salt ceasing to be TPP upon application.

PST - SEC.1/Related Service/R.1-R.2

(B) SERVICES PROVIDED BY EMPLOYEES

R.1 Employee - Definition (Issued: 2014/04)

A person is an employee if they are an employee for the purposes of the Income Tax Act (Canada). If the employer is responsible for deducting income tax from the person and remitting it to Canada Revenue Agency, that person is an employee.

R.2 Contract Workers (Issued: 2014/04)

Charges for related services performed by contract workers are subject to PST. Services provided by contract workers are not excluded from the definition of related service because contract workers are not employees. If a contract worker ordinarily sells, offers to sell, provides, or offers to provide related services, they are required to register as collectors and levy and collect PST.

PST - SEC.1/Related Service/R.1-R.6

(C) SERVICE TO MANUFACTURE TPP

R.1 Exclusion For Service To Manufacture TPP (Issued: 2014/04)

The definition of "related service" specifically excludes a service provided to manufacture tangible personal property that is fundamentally different from the TPP from which it was manufactured.

Because this exclusion is made in a definition in section 1 [definitions] of the Act, the term "manufacture" in this exclusion is not affected by the definition of "manufacture" in PSTERR section 90 [definitions].

R.2 Firing Ceramics (Issued: 2014/04)

When ceramics are fired, particles in the clay are fused together and mineral components of the clay undergo chemical changes. A service to fire ceramics is a service to manufacture TPP that is fundamentally different from the TPP from which it was manufactured. As a result, it is excluded from the definition of related service and is not subject to PST.

R.3 Drying Lumber (Issued: 2014/04)

A service to dry lumber (either by air or in kilns) is a service to manufacture TPP that is fundamentally different from the TPP from which it was manufactured. Although the visual appearance of dried lumber may be no different from the lumber before it was dried, removing moisture from wood alters the wood in a way similar to how clay is altered when fired. Dried lumber does not shrink and is used in building applications where shrinkage cannot occur.

R.4 Steel Hardening (Issued: 2014/04)

A service to harden steel is a service to manufacture TPP that is fundamentally different from the TPP from which it was manufactured. Although the visual appearance of hardened steel may be no different from the steel before it was hardened, the hardening process results in fundamental physical changes to the steel.

R.5 Photocopying And Printing (Issued: 2014/04)

A service to photocopy or to print documents is not a related service, and is considered to be a service to manufacture TPP that is fundamentally different from the TPP from which it was manufactured.

However, photocopies are subject to PST as a sale of TPP unless the customer supplies the paper used to make the photocopies.

R.6 Taxidermy (Issued: 2014/04)

Some services provided by taxidermists are related services, while others are not.

Repair services to mounts (e.g., repairing broken or damaged antlers) are related services and are subject to PST.

"Full service" taxidermy (e.g., cleaning, curing, and mounting an animal) is a service to manufacture TPP (a preserved, mounted likeness of an animal) that is fundamentally different from the TPP from which it was manufactured (the remains of an animal plus taxidermy supplies). When a taxidermist provides full service taxidermy, no PST applies to the service but PST does apply to the sale of TPP (e.g., wire, foam, glass eyes, plaques, etc.) incorporated into the finished mount.

PST - SEC.1/Related Service/R.1-R.2

(D) SERVICE TO SOFTWARE

R.1 Exclusion For Services To Software (Issued: 2014/04)

If a service is provided in relation to Part 3 software, the service is not a related service due to paragraph (d) of the definition of "related service." If a service is provided in relation to Part 4 software, the service is not a related service because it is not a service to TPP.

R.2 Making, Reorganizing, And Removing Directories (Issued: 2014/04)

A service to make, reorganize, or remove computer directories is a service to software and is not subject to PST.

PST - SEC.1/Reporting Period/Int.-R.1

Reporting Period

References:

Act: Section 1 "collector"; Section 32; Section 159; Section 160; Section 185

PSTR: Section 14; Section 20; Section 23; Section 28; Part 6; Section 72; Section 74; Section 77

Notice 2015-003

Interpretation (Issued: 2013/03; Revised: 2015/07)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "reporting period" means the period specified by the director, in relation to a collector or in relation to a person who enters into an agreement with the director under section 32 [tax payment agreements in relation to tangible personal property and software].

R.1 Default Reporting Periods For Late Registrants (Issued: 2015/07)

If a collector registers at or before the time required by Division 1 [Registration] of Part 8 [Registration and Tax Collection], the director's specification of a reporting period occurs as part of the registration process. The following information regarding default reporting periods does not apply to collectors who register on time.

Under the definition of the term collector, a person who is required to be registered under section 168 [registration], but who is not registered, is still a collector. By extension, such a person is required by subsection 179(1) [collection and remittance of tax by collector] to levy and collect tax, by subsection 179(2) to remit the tax, and by subsection 186(1) [collector's returns] to file a collector's return. Deadlines for remitting tax and filing collector's returns are established by PSTR subsection 72(1) [prescribed date for remitting tax] and PSTR subsection 77(1) [prescribed date for filing collector's return], both of which rely on the existence of a reporting period.

In May 2015, Notice 2015-003, Late PST Registrations, was issued. By issuing this notice, the director specified a reporting period for all persons who fail to register on time. This specification results in the following default reporting periods:

  • For sales and leases before June 1, 2015, a reporting period begins April 1, 2013 or on the date of the collector's first taxable sale or lease, whichever is later, and ends May 31, 2015.

  • For sales and leases on or after June 1, 2015, the collector has a monthly reporting period.

Collectors who fail to register on time may be issued collector's returns that are past due at the time of registration. The application of penalties to such returns is determined according to the policy set out in PSTA/Sec. 205/R.1.

These default reporting periods, and the remittance and filing due dates associated with them, also affect the application of interest under section 206 [interest until notice of assessment issued] because an amount is not owing to government until such time that the amount is required to be remitted or paid.

PST - SEC.1/Resident Taxpayer/Int.

Resident Taxpayer

References:

Act: Sections 55-58; Section 191

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "resident taxpayer" means an individual who:

(a) resides, ordinarily resides or carries on business in British Columbia, and

(b) brings or sends into British Columbia, or receives delivery of in British Columbia, tangible personal property for use or consumption by:

(i) the individual,

(ii) another individual at the first individual's expense,

(iii) another individual for whom the first individual acts as agent, or

(iv) another individual at the expense of a principal for whom the first individual acts as agent.

PST - SEC.1/Retail Sale/Int.

Retail Sale

References:

Act: Section 1 "direct seller", "exclusive product", "fair market value", "small seller", "software", "taxable service", "vendor"; Section 88; Section 113; Section 141; Section 169; Section 178

PSTERR: Section 10; Section 37; Section 43; Section 58; Section 115

PSTR: Section 84; Section 85; Section 87; Section 88; Section 91

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "retail sale" means:

(a) in relation to tangible personal property, a sale of tangible personal property to a purchaser for purposes of use or consumption and not for resale;

(b) in relation to software, a sale of software to a purchaser for purposes of use or benefit and not for resale;

(c) in relation to a taxable service (i.e., a related service, accommodation, legal service or telecommunication service), a sale of the taxable service to a purchaser for purposes of use or benefit and not for resale.

PST - SEC.1/Reusable Container/Int.

Reusable Container

References:

Act: Section 1 "use"; Section 28; Section 29; Section 37; Section 101; Section 141

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "reusable container" means:

(a) a container in which a product is packaged or delivered, or

(b) a pallet on which a product is packaged or delivered, and that is capable of being returned and reused.

Pst Sec.1/Sale/Int.-R.10

Sale

References:

Act: Section 1 "affixed machinery", "improvements to real property", "promotional distribution", "promotional material", "registered charity", "software", "taxable service"

PSTR: Section 7

Interpretation (Issued: 2013/03; Revised: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 revised the definition of "sale" by adding paragraphs (n) and (o), to exclude the following from the meaning of sale under the Act:

  • the provision of tangible personal property in specified circumstances (e.g. tangible personal property provided at no separate price with a purchase of accommodation). In relation to a purchase of accommodation, examples are soap and toothpaste;

  • the provision of a paper invoice to the person being invoiced. Note that this applies regardless of whether there is a separate price for the invoice.

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 introduced a definition of the term "sale" for purposes of the Act.

R.1 Coins, Bank Notes And Postage Stamps (Issued: 2014/04)

Postage stamps are not subject to tax when they are uncancelled and are sold at or below face value. This includes commemorative and definitive stamps, booklets, corner blocks, panes, souvenir sheets and stamps sold in quarterly packs.

Sales of the following are subject to tax:

  • cancelled stamps

  • collectors' items (e.g. official first day covers and Collection Canada albums)

  • uncancelled stamps, coins and bank notes sold for more than face value

  • permanent postage stamps sold for more than the current domestic postage rate

If stamped envelopes or cards are sold and the value of the envelopes or cards is separately stated from the value of the stamps, tax only applies to the selling price of the envelope or postcard. Where there is no separate price, the bundled sales rules under section 26 [purchase price if bundled purchase] apply.

R.2 Amalgamations And Cooperatives - School Districts (Issued: 2014/04)

Where two school districts are dissolved and replaced by a new school district to which the TPP of the old school districts is transferred, the transfer is not subject to tax.

Under the School Act, each school district is a corporation. Under the amalgamation provisions of the School Act, when a new school district is created out of multiple old districts, it takes on the liabilities of the old districts, as well as the assets. While this is not exactly the same as a formal amalgamation under the Business Corporations Act, section 176 of the School Act has the same effect as such an amalgamation. Therefore, these transactions are treated as amalgamations.

R.3 Amalgamations And Cooperatives - Cooperatives (Issued: 2014/04)

A "cooperative association" qualifies as a "corporation" under section 29 of the Interpretation Act of British Columbia. Where two or more cooperative associations amalgamate under the amalgamation provisions of the Cooperative Association Act, no tax is payable with respect to the acquisition of assets by the new cooperative association from the initial parties to the amalgamation. The new association is liable, however, for all debts and obligations of the former associations.

R.4 Amalgamations And Cooperatives - Conversion Of A Society To A Company (Issued: 2014/04)

Section 74 of the Society Act permits a society which does not have a charitable purpose to be converted to a company with the consent of the Registrar of Companies provided the requirements of sections 266 (other than subsections (1), the words "if it has the consent of the minister to do so, and", (3)(b) and (6)), 267 and 268 of the Business Corporations Act are complied with. Although a society has been converted to a corporation, it is still the same entity. Only its status has changed. Accordingly, there is no transfer of TPP from one entity to another, and no tax is payable.

Under section 268 of the Business Corporations Act, a conversion does not affect any debts, liabilities, obligations, or contracts entered into by, to, with, or on behalf of, the society before the conversion. The corporation is therefore liable for all the debts and obligations of the former society.

R.5 Amalgamations And Cooperatives - Non-Profit Corporations (Issued: 2014/04)

Non-profit organizations without share capital are incorporated at the federal level under Part II of the Canada Corporations Act. This includes both charitable corporations and membership corporations. Members are prohibited from receiving monetary gain. Their purpose is not to make money for members, but rather to carry on some activity of a national, patriotic, religious, philanthropic, charitable, scientific, artistic, social, professional or sporting character. The two basic components of non-profit organizations are that they have a board of directors and members.

Non-profit organizations authorized to engage in the same activities may amalgamate to benefit from a pooling of interests under section 16(1)(b.1) of the Canada Corporations Act. In order to have the same effect as a formal amalgamation under the Canada Business Corporations Act, the taxpayer must provide sufficient evidence that the predecessor corporations continue into the amalgamated corporation. The evidence must show that:

  • the amalgamating corporations are authorized to engage in the same activities in their letters patent, and have amalgamated to benefit from a pooling of interests;

  • the Boards of Directors and the respective memberships of all corporations involved have unanimously voted, and approved the transfer of all assets and liabilities, and all memberships to the new corporation so that all of the property, interests, rights and liabilities become those of the amalgamated corporation; and

  • the predecessor corporations no longer exist as a result of the re-organization and are dissolved within a reasonable time.

If the evidence sufficiently demonstrates that a continuation has taken place, the transfer of assets is not considered a sale of TPP, and tax does not apply to the transaction.

R.6 Gifts Between Non-Profit Societies (Issued: 2014/04)

Generally, TPP transferred from one non-profit society to another in British Columbia, where there is no money or consideration received by the donor, is exempt from tax. However, a vehicle, boat or aircraft gifted to a registered charity in British Columbia is only exempt from tax under specific circumstances (see PSTERR section 19 [registered charities]).

Gifts of TPP, not including a vehicle, boat, or aircraft, received outside British Columbia and brought into the province by a non-profit society are not subject to tax if specific exemption requirements are met under PSTERR section 17.1 [gifts]. Gifts of vehicles, boats and aircraft from outside British Columbia are exempt for registered charities under specific circumstances (see PSTERR section 19).

R.7 Accommodation Provided For No Consideration (Issued: 2014/04)

A sale has not occurred in the following situations, provided that no consideration whatsoever is received in return for providing the accommodation.

  • The room is provided at no charge to a person who is not providing a service (e.g., a friend, relative or employee).

  • The room is provided at no charge to a prospective client inspecting the facilities to determine whether to hold a convention or other event there at a later date.

  • The operator donates the use of a room at no charge as a contest prize (e.g., a certificate for a free weekend). This applies whether the vendor donates the prize to an organization holding a convention at the establishment or to an organization that is not also renting rooms.

  • The room is rented at no charge to a media representative.

R.8 Charitable Donations (Issued: 2014/04)

When a person or organization donates TPP to a registered charity and in return receives a tax receipt that can be used for income tax purposes, the donation is not a sale, and the tax receipt is not consideration.

The same principle applies where the person or organization donates the right to use TPP to a registered charity (i.e., this is not a lease).

Therefore, the donor does not have to self-assess tax on the amount of the future income tax benefit (if any) of the tax receipt.

However, if the person or organization is donating inventory obtained exempt from tax solely for resale or leasing purposes, the person or organization must self-assess tax under section 81 [tax if change in use of property acquired for resale].

R.9 Continuation Of A Business In Another Jurisdiction (Issued: 2014/07)

A continuation occurs when an incorporated company continues its incorporation from BC into another jurisdiction. For instance, a BC corporation moves to Alberta. From the date of continuance, the corporation is treated as if it had been incorporated in Alberta.

Because a new company is not created, the continuation process is considered to be a corporate restructuring with no transfer of title or sale of assets. The company is the same legal entity with the same assets, liabilities and obligations, even though it operates with a different corporation number since it is based in another jurisdiction. There are therefore no PST implications when a corporation continues in another jurisdiction.

Once a corporation is continued outside British Columbia, it may continue to conduct business in British Columbia. If it does, the company would need to register extra-provincially in British Columbia pursuant to the Business Corporations Act if it maintains a place of business under its control within the province, but not if it simply solicits sales in the province.

R.10 Oil And Gas Self-Consumed By Producer (Issued: 2014/07)

Under common law, oil and gas (and minerals) are considered to be part of the land. Where a company has acquired the right to remove such substances from the land, it is a contract granting an interest in the land. It is not a sale of the substances in the land, and therefore not a sale of TPP. Therefore, PST does not apply to oil and gas that is self-consumed by the producer (however, carbon tax and motor fuel tax may apply.

PST - SEC.1/Short Term Rental Vehicle/Int.

Short Term Rental Vehicle

References:

Act: Section 1 "multijurisdictional vehicle", "vehicle licence period"; Section 39; Section 78

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "short term rental vehicle" means a multijurisdictional vehicle that, during a vehicle licence period,

(a) is leased primarily for periods of 28 days or less, and

(b) is made available to the public for leasing referred to in paragraph (a).

PST - SEC.1/Small Seller/Int.

Small Seller

References:

Act: Section 1 "affixed machinery", "boat", "eligible tangible personal property", "improvement to real property", "independent sales contractor", "lessor", "liquor", "liquor permit", "software", "taxable service", "vehicle", "vendor", “vapour product; Section 89; Section 90; Section 91; Section 112; Section 114; Section 121; Section 135; Section 136; Section 161; Section 168; Section 169; Section 170; Section 171; Section 172; Section 175; Section 182.2; Section 183; Section 186; Section 246

Interpretation (Issued: 2013/03; Revised: 2017/09; Revised 2021/07)

Effective January 1, 2020, Bill 45, Taxation Statutes Amendment Act, 2019, revised the definition of small seller by adding “vapour products” to paragraph (b.1). This amendment provides that a person selling, in the ordinary course of business, vapour products is excluded from being a small seller.

Effective April 11, 2019, Bill 5, Budget Measures Implementation Act, 2019 revised the definition of small seller by adding paragraph (b.4), which provides that someone who has knowingly made a wholesale sale in the previous 12 months does not qualify as a small seller. The amendment mirrors administrative practice since the Act came into force.

The word “retail” was also added to paragraph (f) before “sales” to align paragraph (f) with paragraph (e).

Effective October 17, 2018, section 159 of the Cannabis Control and Licensing Act, brought into force by B.C. Reg. 528/2018, added paragraph (b.3), which provided that someone who sells cannabis as defined in the Cannabis Control and Licensing Act cannot be a small seller.

Effective January 23, 2017, Bill 27, Liquor Control and Licensing Act, 2015, brought into force by B.C. Reg. 241/2016, revised the definition of small seller by replacing the term "special occasion licence" with the new term "liquor permit". The amendment was consequential to a full rewrite of the Liquor Control and Licensing Act.

Effective March 25, 2015, Bill 10, Budget Measures Implementation Act, 2015 revised the definition of small seller by removing the reference to section 172 [person located in Canada but outside British Columbia must be registered]. This amendment corrected a drafting error. The reference to section 172 in paragraph (h) was unnecessary because it excluded persons who must be registered under section 172 from qualifying as small sellers. However, small sellers must be located in British Columbia and a person that must be registered under section 172 is located in Canada but outside British Columbia.

Effective June 23, 2014, Bill 8, Budget Measures Implementation Act, 2014 amended paragraph (b.2) of the definition of "small seller", to provide that a person is not excluded from being a small seller if the person sells liquor by auction.

The rules regarding liquor sold by auction were made originally under OIC 505/2013, effective November 22, 2013, as an amendment to the Provincial Sales Tax Transition Regulation under the authority of the Provincial Sales Tax Transitional Provisions and Amendments Act. Those rules were effected under section 182.2 [collection of tax on liquor sold at auction] and subsection 186(1) of the Act on June 23, 2014 under OIC 395/2014.

This amendment to the definition of "small seller" ensures that this activity (i.e. the sale of liquor by auction) does not, on its own, exclude a person from acting as a small seller in relation to other activities. For example, a charity might qualify to operate as a small seller. As the result of this amendment, a wine auction staged by the charity will require that the charity levy and collect PST at the auction, but will not jeopardize the charity's ongoing status as a small seller.

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 introduced a definition for the term "small seller". A small seller is a person who meets all the criteria in the definition.

Small sellers have the option of registering under the Act. If a small seller chooses to register, they are no longer a small seller because of paragraph (h) of the definition of "small seller".

Small sellers who choose not to register must pay tax on their purchases (including purchases for resale), and do not charge tax to their customers, even if the tangible personal property, software or taxable services sold would normally be subject to tax.

PST - SEC.1/Software/Int.-R.4

Software

Interpretation (Issued: 2013/03; Revised 2021/10)

Effective April 1, 2013, Bill 2, Budget Measures Implementation Act, 2018, revised the definition of “software” by adding paragraph (c) to clarify the long-standing interpretation that software includes a right under an optional software maintenance agreement to receive unscheduled software updates if they become available over the agreement period.  It does not include a mandatory warranty or service support requirements, which are taxable as part of the purchase price of the taxable software.

The amendment was retroactive to the day the Provincial Sales Tax Act came into force, April 1, 2013, in order to clarify that it applies to all agreements entered into since the PST was re-implemented.

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 introduced a definition for the term “software”. 

Software that is purchased in a tangible format (e.g., software sold on a CD or DVD or with computer hardware) is subject to tax under Part 3 [Taxes in Relation to Tangible Personal Property]. Software that is purchased in an intangible format (e.g., downloaded over the Internet, or used through remote access) is subject to tax under Part 4 [Taxes in Relation to Software], and will be referred to in the Tax Interpretation Manual as "Part 4 software". Section 104 [Application of this Part] ensures that depending on the format of the software purchased, either Part 3 or Part 4 will be applicable to the purchaser; double taxation will not occur.

R.1 SSL/TLS Certificates (Issued: 2014/04)

SSL (Secure Sockets Layer) certificates are related to security over the Internet. SSL certificates are files, not software. Therefore, they are not subject to PST.

The same applies to Transport Layer Security (TLS) certificates. These are a newer type of certificate that is similar to SSL certificates.

Any software that may be provided together with the certificates is subject to PST, unless a specific exemption applies.

R.2 Online Gift Cards (Issued: 2014/04)

Many retailers sell a variety of cards that can be redeemed online (through the Internet) for online gaming, music, videos and other online purchases.

Generally, under the Act, the purchase of a gift certificate or gift card is not subject to PST as it is a purchase of store credit to be redeemed at a later date (e.g., a $50 gift certificate to a department store). When the card or certificate is redeemed, PST applies as if the card is cash. In these cases, the application of PST depends on the nature of the item(s) purchased. This same principle applies to cards that may be redeemed online. If the gift card is in a specific dollar amount and is redeemable online as if it were cash (e.g., $50 iTunes gift card), PST does not apply to the purchase of the gift card.

However, this principle does not apply to other types of gift cards.

Software

In many cases, the purchaser of an online gift card is purchasing software. The definition of software includes "the right, whether exercised or not, to use a software program that is delivered or accessed by any means". Under section 105 [tax on software], purchases of software are subject to PST when the purchaser is in BC and purchases the software for use on an electronic device ordinarily situated in BC.

The following examples are purchases of software and are subject to PST when purchased for use on or with an electronic device ordinarily situated in BC:

  • A gift card that provides the purchaser with access to an online video game for a specified period of time (e.g., $30 for a World of Warcraft 60 day online game card).

  • A gift card is purchased for $20 that provides the purchaser with a specified number of "points" (e.g., 2,000 points). These points can redeemed online for software to be downloaded (e.g., apps) or access to online software (e.g., video game memberships).

Telecommunication Service

In some cases, the purchaser of an online gift card is purchasing a telecommunication service. The definition of a telecommunication service includes the right, whether exercised or not, to download, view or access, by utilizing a telecommunication system, one or more of a specified list of telecommunications by means of an electronic device that is ordinarily situated in BC. This list of specified telecommunications includes audio books, audio programs, music, ring tones and videos.

Under section 130 [tax on telecommunication service], the purchase of a telecommunication service is subject to PST. The following examples are subject to PST as purchases of a telecommunication service when purchased for use on an electronic device ordinarily situated in BC:

  • A gift card is purchased for $25 that provides the purchaser with the right to download five movies.

  • A gift card is purchased for $50 that provides the purchaser with the right to access a database of videos that the purchaser can stream over the Internet for a period of six months.

R.3 Application Utilities (Issued: 2014/07)

Add-on application utilities, such as spreadsheet template macros, applets or plug-ins, are "software." Upgrades to application utilities are also "software."

R.4 Sale Of Information (Issued: 2014/07)

The sale of information, such as client lists, credit risk data, pricing analytics or consumer purchasing patterns, is not in itself a sale of software. Such a sale is simply the sale of information. However, the sale of such data may include, or be part of, the sale of software to track, generate or assess the information.

PST - SEC.1/Substantially/Int.

Substantially

References:

Act: Section 113; Section 187

PSTERR: Section 3; Section 14; Section 47; Section 64; Section 78; Section 90-104; Section 111; Section 112; Section 114

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced the definition of "substantially".

"Substantially" means more than 90%.

Note: The definition of "substantially" does not apply to the definition of "manufacture" in PSTERR subsection 90(1) [definitions] because of PSTERR subsection 90(2).

PST - SEC.1/Tangible Personal Property/Int.-R.3

Tangible Personal Property

References:

Act: Section 1 "affixed machinery", "improvement to real property"

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "tangible personal property" means:

(a) personal property that can be seen, weighed, measured, felt or touched, or that is in any other way perceptible to the senses, and includes natural or manufactured gas;

(b) electricity;

(c) heat;

(d) affixed machinery;

(e) an improvement to real property or part of an improvement to real property that is removed from the site at which it is affixed or installed, while it is removed from that site.

R.1 Currency (Issued: 2014/08)

Although currency (i.e. coins or bank notes) meets the definition of TPP, acquiring currency at its face value is not a sale of TPP and is not subject to PST.

The purchase of currency at more than its face value (not including exchange rate premiums or surcharges) is a purchase of TPP and is subject to PST. For example, the purchase of collectibles coins at more than face value is subject to PST.

R.2 Propane Storage Tanks (Issued: 2014/08)

Residential propane storage tanks are TPP when they rest on their own weight and are attached to land or a building only by a hose. These tanks remain TPP even if they are strapped or bolted to the ground for additional stability or security.

If a propane seller leases these types of propane tanks to a customer, the seller may purchase the tanks without paying PST in accordance with section 142 [Exemptions for tangible personal property intended for lease] because the seller purchased the tanks for the sole purpose of leasing the tanks to their customers.

R.3 Compressed Air (Issued: 2014/08)

The sale of compressed air is a sale of TPP and is subject to PST.

PST SEC.1/Tax/Int.

Tax

Interpretation (Issued: 2013/03; Revised: 2016/01)

Effective March 25, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amended the definition of "tax." The amendment clarifies that, in section 199, tax does not include the other amounts owing. The amendment is intended to ensure that all amounts are only assessed once. Each amount is provided its own assessment provision. The amendment eliminates the risk that an amount will be assessed as tax and as a different type of amount owing.

The amendment also clarifies the cross reference to section 222 by specifically referring to section 222(4).

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "tax", in relation to tax under the Act, includes

(a) an amount a person must pay to the government under subsection 187(2) [certificate required for bulk transaction], and

(b) an amount for which a person is personally liable to the government under section 222 [responsibility of person having control of property].

PST - SEC.1/Taxable Component/Int.

Taxable Component

References:

Act: Section 1 "non-taxable component"; Section 26; Section 137; Section 241

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "taxable component" means tangible personal property, software or a taxable service that would be subject to tax under the Act if purchased separately from other property or services.

PST - SEC.1/Taxable Service/Int.

Taxable Service

References:

Act: Section 1 "accommodation", "legal services", "related service", "telecommunication service"; Section 17; Part 5; Section 116; Section 117; Section 135; Section 136

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "taxable service" means any of the following:

(a) services described in paragraph 116(2)(b) [tax if contract for property conversion related to purchase] that are provided under the contract referred to in that provision;

(b) services described in paragraph 117(2)(b) [tax if contract for modification of purchased property] that are provided under the contract referred to in subparagraphs 117(2)(a)(i) or (ii);

(c) a related service;

(d) accommodation;

(e) legal services;

(f) a telecommunication service.

PST - SEC.1/Taxpayer Return/Int.

Taxpayer Return

References:

Act: Section 29; Section 30; Section 31; Section 42; Section 192; Section 193

PSTR: Section 80; Section 81; Section 83; Section 91

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "taxpayer return" means a taxpayer return under section 193 [taxpayer return].

PST - SEC.1/Telecommunicati On/Int.

Telecommunication

References:

Act: Section 1 "dedicated telecommunication service", "dedicated telecommunication system", "electronic device", "telecommunication service", "telecommunication system", "use"; Section 132; Section 134.1; Section 134.2

PSTERR: Section 83; Section 85

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced the definition of "telecommunication".

"Telecommunication" means signs, signals, writing, images, sound or intelligence of any nature.

PST - SEC.1/Telecommunicati On Service/Int.-R.4

Telecommunication Service

References:

Act: Section 1 "dedicated telecommunication service", "electronic device", "taxable service", "telecommunication", "telecommunication system"; Section 21; Part 5 -Division 5

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced the definition of "telecommunication service".

"Telecommunication service" means any of the following:

(a) the right, whether exercised or not, to utilize a telecommunication system to send or receive a telecommunication by means of an electronic device that is ordinarily situated in British Columbia;

(b) the utilization of a telecommunication system to send or receive a telecommunication by means of an electronic device that is ordinarily situated in British Columbia;

(c) a dedicated telecommunication service;

(d) the right, whether exercised or not, to download, view or access, by utilizing a telecommunication system, one or more of the following telecommunications by means of an electronic device that is ordinarily situated in British Columbia:

(i) an audio book;

(ii) an audio program;

(iii) music;

(iv) a ring tone (includes text tones);

(v) a television program, motion picture or other video.

R.1 Radio Frequency Usage Fees (Issued: 2014/04)

Generally, charges for the usage of radio frequencies are purchases of telecommunication services and are subject to PST because they provide the purchaser with the right to utilize a telecommunication system to send or receive a telecommunication.

To provide such a service, a company must hold a radio frequency licence granted by Industry Canada under the authority of the Radiocommunication Act (Canada). The licence grants the holder exclusive use of a radio frequency within a specified area. The company owns and operates transmission equipment that powers an electrical transmission of a signal resulting in electromagnetic waves. The fee for the radio frequency licence is not subject to PST.

The users of the service, who are the licence holder's customers, are typically small businesses who have a number of vehicles on the road (e.g. transport companies, couriers) who need access to a citizens' band radio frequency for communication among their mobile units. These users are purchasing telecommunication services.

Paging companies may also purchase access to a radio frequency from a licence holder to deliver its paging service. The paging company is required to pay the tax on its purchase of telecommunication services from the licence holder.

R.2 Fax On Demand (Issued: 2014/04)

Fax on demand, also known as fax back and interactive fax response, allows a business' customers to dial a telephone or fax number to request a facsimile transmission containing specific information (e.g., information on a company's products). In some cases, this service is offered by a third-party provider who sends the fax from equipment maintained at their premises directly to the caller's fax machine.

The business whose information is being provided does not transmit the faxes.

Purchases of this service by a business from a third-party provider are not subject to PST because the business is not purchasing the right to send or receive a telecommunication. The business is purchasing a service that is provided by means of a telecommunication service purchased by the third-party provider.

Generally, the third-party provider must pay PST on its purchase of any telecommunication services, software and equipment used to provide the service unless a specific exemption applies.

R.3 Advertising Time (Issued: 2014/04)

Television and radio stations earn revenue by selling advertising time or space on their broadcasts.

When a person is purchasing the placement of advertising on a television or radio station, they are not purchasing the right to utilize a "telecommunication system" to send a "telecommunication"; they are purchasing blocks of advertising time from the station. This service is not subject to PST. The television or radio station is the user of the telecommunication service in providing their advertising service because they utilize the telecommunication system to send telecommunications to viewers or listeners.

R.4 Internet Faxing (Issued: 2014/07)

Internet faxing, also known as e-fax or fax by email, is the sending of a fax through the Internet instead of the traditional phone system. Some service providers offer Internet faxing, allowing individuals or companies to have a fax number that they can provide to their customers without owning a fax machine or incurring long distance charges. When a fax is sent to the assigned fax number, the service provider's server will receive the fax on the client's behalf, convert the fax to a PDF or similar file and email the PDF file to the client. A client can also send an email which will be converted to a fax and delivered by the service provider's fax machine to the customer's fax machine, utilizing the assigned fax number.

An internet faxing service is subject to PST as a telecommunication service when purchased for use on an electronic device ordinarily situated in BC. The customer is purchasing the right to utilize a telecommunication system to send or receive telecommunications.

PST - SEC.1/Telecommunicati On System/Int.-R.1

Telecommunication System

References:

Act: Section 1 "telecommunication", "telecommunication service"; Part 5 - Division 5

Interpretation (Issued: 2013/03)

Effective February 28, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added the definition of "telecommunication system".

"Telecommunication system" means a wire, cable, radio, optical or other electromagnetic system, or a similar technical system, for the transmission, emission or reception of a telecommunication.

R.1 Microwave Transmission (Issued: 2014/04)

A microwave is a comparatively short electromagnetic wave. Systems that transmit microwaves meet the definition of a telecommunication system because they are electromagnetic systems.

PST - SEC.1/Tourism Agent/Int.

Tourism Agent

References:

Act: Section 1 "accommodation", "purchaser", "vendor"

PSTERR: Section 78; Section 133

Bulletin PST 120

Interpretation (Issued: 2013/03; Revised: 2014/04)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "tourism agent" means a person who

(a) purchases accommodation from a vendor, and

(b) for payment, makes all or any part of that accommodation available for use by one or more persons as part of a tourism service.

A tourism agent includes businesses that arrange tour packages containing accommodation and other services, such as transportation and ticket passes to local events or facilities. For example, a tourism agent in Ireland may arrange a skiing package that would include transportation from Ireland to Whistler, accommodation in local facilities, and ski lift fees.

PST - SEC.1/Trailer/Int.

Trailer

References:

Act: Section 1 "vehicle"; Section 50; Section 52; Section 54; Section 68

PSTERR: Section 24; Section 30; Section 55; Section 57; Section 78

PSTR: Section 2

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "trailer" has the same meaning as in the Motor Vehicle Act.

PST Sec.1/Use/Int.-R.7

Use

References:

Act: Section 1 "accommodation", "affixed machinery", "improvement to real property", "promotional distribution", "promotional distributor", "registered charity", "related service", "software", "taxable service", "telecommunication", "telecommunication service", "telecommunication system"; "Section 158.1"

Interpretation (Issued: 2013/03; Revised: 2016/01; Revised 2021/10)

Effective April 1, 2013, Bill 2, Budget Measures Implementation Act, 2018, revised the definition of “use” to clarify the long-standing interpretation that the use of software includes a right under an optional software maintenance agreement to receive unscheduled software updates if they become available over the agreement period.

The amendment was retroactive to the day the Provincial Sales Tax Act came into force, April 1, 2013, in order to clarify that it applies to all agreements entered into since the PST was re-implemented. The amendment was consequential to the addition of paragraph (c) to the definition of software.

Effective February 18, 2015, Bill 10, Budget Measures Implementation Act, 2015 amended the definition of "use".

This amendment corrects a drafting oversight, ensuring that the use of TPP described in subparagraphs (a)(x), (a)(xi), and (a)(xii) is not considered "use" under the PSTA, regardless of how the TPP enters the province.

This amendment also excludes TPP, other than reusable containers, if the resulting TPP is transported outside BC for the purpose of fulfilling a contract for the supply and installation of affixed machinery or improvements to real property situated outside BC.

This amendment has the effect of imposing PST on TPP that a contractor brings, sends or delivers into BC for the purpose of processing, fabricating, manufacturing into or attaching to or incorporating into other TPP if the other TPP will be transported outside BC for the purpose of fulfilling a contract for the supply and installation of affixed machinery or improvements to real property situated outside BC. This ensures that the tax treatment is the same for TPP whether the contractor purchases the TPP in BC or brings, sends or delivers the TPP into BC. In either case the TPP is subject to PST.

Section 158.1 [property used to improve real property situated outside British Columbia] provides a refund of the PST paid by the contractor as described above if specific conditions are met.

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides a definition for "use".

R.1 Capital Cost Allowance is not Evidence Of Use (Issued: 2014/04)

Where there is a claim and deduction of capital cost allowance for income tax purposes, this is not necessarily conclusive proof of use as, in certain cases, capital cost allowance may be taken on inventory for resale.

R.2 Purchase And Training Of Horses for Resale (Issued: 2014/04)

The Act's definition of "use" excludes "the storing, keeping or retaining of TPP for the sole purpose of resale". Consequently, TPP is not subject to tax if it is purchased solely for resale.

The purchase of horses for the purpose of training and subsequent resale is subject to tax. At the time of the purchase, title to and possession of the horses are transferred to the purchaser. If the horses receive training for jumping, racing, showing, or any other purpose, the horses are used as part of the purchaser's business, and are not purchased solely for resale.

R.3 Demonstration And Display (Issued: 2014/07)

The definition of "use" in the Act excludes "the storing, keeping or retaining of TPP for the sole purpose of resale". Consequently, the purchase of TPP is not subject to PST if it is purchased solely for resale.

When TPP held for the sole purpose of resale is used by the retailer or their employees for demonstration and display purposes, this use is considered integral to the resale process and meets the criteria of "storing, keeping or retaining of TPP for the sole purpose of resale" provided that the TPP remains available for sale (i.e. the TPP remains in inventory for resale). For example:

  • A clothing retailer maintains an inventory of sweaters at their retail store. Most of the sweaters are found on display racks; however, some of the sweaters are worn by mannequins for display to potential customers. As a matter of convenience, customers normally try-on and purchase sweaters from the display racks. However, customers looking for specific sizes may purchase one of the sweaters worn by the mannequins. The sweaters on the mannequins remain available for sale and qualify for exemption.

  • An electronics retailer maintains a showroom inventory of television models that are turned on for demonstration purposes. Customers may purchase a television in an unopened box or the display model. As these floor models remain available for sale, they qualify for exemption.

  • A vendor sells books and furniture at their retail store, and displays the books on the furniture. The books and the furniture are available for sale as separate items. If a customer purchases a bookshelf, the vendor requests a day or two to remove the books from the bookshelf for relocation. Although the bookshelf cannot be immediately removed from the store, it qualifies for exemption as it remains available for sale.

PST applies to TPP used for demonstration or display purposes that does not remain available for sale. For example:

  • A retailer has a set of specialized knives that the retailer uses to demonstrate the knives to potential customers. Customers who wish to purchase a set receive an unused set; the demonstration set is not available for sale (the retailer needs this set for further display to potential customers). The retailer must pay PST on their cost of the set used for demonstration purposes.

  • A clothing retailer displays clothing on mannequins, but will not sell the display clothing. Once the store runs out of inventory, customers are either referred to another store, or may make a special order for the item. The clothing retailer must pay PST on the articles of clothing used for display on the mannequins as they are not available for sale.

  • A custom furniture maker maintains a showroom to display its products to potential customers. PST applies to the display models if the furniture maker will not sell these specific models but instead takes orders to manufacture identical units.

  • An appliance retailer maintains a showroom to display its products to potential customers. Once the customer selects a specific model, an identical unit is ordered from their warehouse or from the manufacturer for delivery to the customer. The display models are not available for sale if the retailer refuses to sell these display models until the specific product line is discontinued.

TPP that is purchased PST exempt for the sole purpose of resale and is subsequently used for display and demonstration purposes, without the option for customers to purchase the TPP, is subject to PST. The business must self-assess tax under section 81 [tax if change in use of property acquired for resale] on the full cost of the TPP because section 25 [depreciated purchase price of tangible personal property] cannot be used to depreciate the purchase price of TPP that is subject to PST under section 81.

When TPP held for resale is used by the retailer or the retailer's employees for any business or personal use other than demonstration or display, the retailer is required to pay PST on his cost of the TPP. PST must also be collected if the item is subsequently resold.

For example, if a furniture retailer uses floor stock for office furniture, the furniture is subject to PST because it is being used for a purpose other than demonstration or display.

R.4 Business Machines Used For Demonstration (Issued: 2014/07)

Computer equipment and other business machines that are used solely for demonstration or display purposes while being held and available for sale are not subject to PST as described in R.3 above. However, where such equipment is used for any purpose other than demonstration and display, such as for testing a customer's system or for training personnel, the retailer is the user of the equipment and must pay PST on its purchase price. PST must also be collected if the item is subsequently resold.

R.5 Samples (Issued: 2014/07)

For TPP to not be subject to PST as described in R.3 above, the actual TPP being used for demonstration or display must be held for resale. For example, carpet sample books and pieces, drapery sample books and swatches, etc. are not purchased and held for resale. Such samples are purchased by retailers for their own use in selling other merchandise (e.g., carpets and drapes), but the samples themselves are not held for resale. As a result, the samples are subject to PST.

R.6 Motor Vehicles Used For Demonstration And Display While Being Held For Resale (Issued: 2014/07)

No PST is payable on the purchase of a motor vehicle by a dealership if the motor vehicle is held for resale and, during this time, is used solely for demonstration and/or display as described in R.3 above. However, if a motor vehicle is used by the dealer or by any officer, salesman or employee for any other purpose, including business or personal use, PST is payable in accordance with section 84.1 [tax if dealer or manufacturer changes use of motor vehicle], or, if section 84.1 does not apply, PST is payable in accordance with section 81 [tax if change in use of property acquired for resale].

R.7 Contract Terms Restricting Resale (Issued: 2016/06)

As a result of section (1)(xiii) "use", TPP purchased for the sole purpose of resale is not subject to PST. This rule applies regardless of whether the seller is generally in the wholesale industry or the retail industry.

In some situations, an ostensible reseller may purchase resale TPP from a seller who only intends to engage in retail sales. Frequently, the seller is unaware that the reseller intends to resell the TPP. In these situations, the contract between the original seller and the purported reseller often contains a term prohibiting the reseller from reselling the goods. This is a common term in many retail smart phone and computer sales contracts. Such terms are generally intended to ensure that a manufacture's product is only sold from an authorized dealer.

From the ministry's perspective, whether a person has breached such a term by reselling the TPP is simply a matter between the parties to the contract. However, such a term may be relevant when the ministry considers a refund application from a party claiming a refund on the basis that the TPP was purchased solely for resale.

In the absence of other clear evidence regarding an actual resale of the TPP, if a person enters into a contract containing a term prohibiting resale, the ministry will consider the contract term as determinative evidence that the TPP was not resold. However, if the refund applicant can provide written documented evidence of an actual resale of the TPP, then the ministry will generally accept that the TPP was resold despite the contract evidence indicating the reseller was prohibited from reselling the TPP.

Example #1: Company A enters into a contract with Company B for the purchase of 20 smart phones. The contract specifies that the smart phones are for the use of Company A and are not for resale. Company B levies and collects PST from Company A on the purchase price of the smart phones. Company A applies to the ministry for a refund of the PST claiming they purchased the smart phones from Company B for the sole purpose of resale. Company A provides a verbal statement that the smart phones were resold. In such situations, the ministry will generally consider the initial purchase contract terms as determinative evidence that the smart phones were not resold.

Example #2: Company A engages X as an agent. As agent for Company A, X enters into a contract to purchase a gaming console from Company B. The contract specifies that the console is for X's use and is not for resale. Company B levies and collects PST from X. X applies to the ministry for a refund of the PST claiming that the console was purchased on behalf of their principal for the sole purpose of resale. X provides a document created by Company A that purports to show a resale. The document does not show the type of TPP sold or to whom it was sold. Generally, the ministry will consider the contract terms as determinative evidence that the console was not resold because the evidence claiming to show a resale is unclear.

Example #3: Company A enters into a contract with Company B for the purchase of 20 tablets. The contract specifies that the tablets are for the use of Company A and are not for resale. Company B levies and collects PST from Company A on the purchase price of the tablets. Company A applies to the ministry for a refund of the PST. Company A provides clear resale invoices for 20 tablets of the same make as the ones purchased from Company B. Where this type of evidence is presented, the ministry will generally accept that the tablets were purchased solely for resale despite the evidence that the resale is inconsistent with the agreement between Company A and Company B.

PST SEC.1/User/Int.-R.1

User

References:

Act: Section 1 "accommodation", "promotional distribution", "promotional distributor", "promotional material", "software"; Section 13; Section 25; Section 64; Part 3 - Division 9; Section 110

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 effective February 28, 2013 provides that "user" means:

(a) a person who utilizes in British Columbia tangible personal property

(i) for the person's own use or consumption,

(ii) for the use or consumption of another person at the expense of the person utilizing the property,

(iii) for the use or consumption of a principal for whom the person utilizing the property acts as agent, or

(iv) for the use or consumption of another person at the expense of a principal for whom the person utilizing the property acts as agent;

(b) a person who utilizes in British Columbia software

(i) for the person's own use or benefit,

(ii) for the use or benefit of another person at the expense of the person utilizing the software,

(iii) for the use or benefit of a principal for whom the person utilizing the software acts as agent, or

(iv) for the use or benefit of another person at the expense of a principal for whom the person utilizing the software acts as agent;

(c) a promotional distributor who provides promotional material by way of promotional distribution;

(d) a person who utilizes in British Columbia accommodation

(i) for the person's own use or benefit,

(ii) for the use or benefit of another person at the expense of the person utilizing the accommodation,

(iii) for the use or benefit of a principal for whom the person utilizing the accommodation acts as agent, or

(iv) for the use or benefit of another person at the expense of a principal for whom the person utilizing the accommodation acts as agent.

R.1 Donations Of TPP (Issued: 2014/04)

A person who makes a gift of TPP to another person is considered to have used that TPP. The donor is therefore required to pay tax on the purchase price.

PST - SEC.1/Vehicle/Int.

Vehicle

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "vehicle" has the same meaning as in the Motor Vehicle Act.

PST - SEC.1/Vehicle Licence Period/Int.

Vehicle Licence Period

References:

Act: Section 1 "short term rental vehicle", Part 3 - Division 7

PSTERR: Part 7

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "vehicle licence period", in respect of a vehicle, means the period beginning on a date on which a licence is issued for the vehicle and ending on the expiry date for the licence established on that licensing date.

PST - SEC.1/Vehicle Registration

Legislation/Int.

VEHICLE REGISTRATION LEGISLATION

References:

Act: Section 30; Section 39; Section 40; Section 45; Section 50

PSTERR: Section 24

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "vehicle registration legislation" means the Commercial Transport Act, Motor Vehicle Act or the Motor Vehicle (All Terrain) Act.

PST - SEC.1/Vendor/Int.-R.2

Vendor

References:

Act: Section 1 "collector", "small seller", "tourism agent"; Section 168; Section 169

Interpretation (Issued: 2013/03)

Effective December 1, 2012, Bill 54, Provincial Sales Tax Act, 2012 provides that "vendor" means the following:

(a) in relation to tangible personal property, a person, including an assignee, liquidator, administrator, receiver, receiver manager, trustee or similar person, who, in the ordinary course of the person's business, in British Columbia, sells, offers to sell, provides or offers to provide tangible personal property to a purchaser at a retail sale in British Columbia, but does not include

(i) a small seller, or

(ii) an independent sales contractor, but only in relation to the sale of exclusive products to a purchaser at a retail sale in British Columbia;

(b) in relation to software, a person, including an assignee, liquidator, administrator, receiver, receiver manager, trustee or similar person, who, in the ordinary course of the person's business, in British Columbia, sells, offers to sell, provides or offers to provide software to a purchaser at a retail sale in British Columbia, but does not include a small seller;

(c) in relation to a taxable service other than accommodation, a person, including an assignee, liquidator, administrator, receiver, receiver manager, trustee or similar person, who, in the ordinary course of the person's business, in British Columbia, sells, offers to sell, provides or offers to provide a taxable service to a purchaser at a retail sale in British Columbia, but does not include a small seller;

(d) in relation to accommodation, a person, including an assignee, liquidator, administrator, receiver, receiver manager, trustee or similar person, who, in the ordinary course of the person's business, in British Columbia, sells, offers to sell, provides or offers to provide accommodation to a purchaser at a retail sale in British Columbia, but does not include a tourism agent.

R.1 Determining Business Location (Issued: 2015/04)

On its face, the definition of "vendor" is extremely broad and could capture persons physically located outside British Columbia if they have retail sales in British Columbia. However, the existence of section 172 and section 172.1 mean that the legislature must have intended something narrower for the definition of "vendor." Otherwise, if "vendor" could include a person located outside British Columbia, then it would fully subsume the types of person's sections 172 and 172.1 are attempting to capture. Accordingly, "vendor" must have an implied "in British Columbia" location test.

Since section 172 also has an explicit Canadian specific location test, the resulting interaction with the definition of "vendor" means that a person who does not meet the definition of "vendor" and is located outside Canada has no registration obligation (and therefore no collection obligation) unless they fall into the special section 172.1 category.

Because both "vendor" and sections 172 and 172.1 are tied to location, the interpretation of the words "located in British Columbia", "located in Canada", and "outside British Columbia" is vital to the entire registration scheme of the PSTA.

The Ministry interprets these phrases as follows:

1. A business is located in British Columbia if:

a. The business has a physical presence in British Columbia including:

i. a store front, factory, mill, branch, office or other physical place of business (does not include use of temporary space such as trade-show booths);

ii. a place of extraction such as a mine, oil and gas well, or logging site;

iii. real property, such as a warehouse or yard, that is leased or owned (not including contractual arrangements with another person to store inventory such as contracts with fulfillment houses);

b. The business's management and control is in British Columbia; or

c. The business has agents or employees physically located in British Columbia.

2. A business is located in Canada if:

a. The business has a physical presence in Canada including:

i. a store front, factory, mill, branch, office or other physical place of business (does not include use of temporary space such as trade-show booths);

ii. a place of extraction such as a mine, oil and gas well, or logging site;

iii. real property, such as a warehouse or yard, that is leased or owned (not including contractual arrangements with another person to store inventory such as contracts with fulfillment houses);

b. The business's management and control is in Canada; or

c. The business has agents or employees physically located in Canada.

3. A business is located outside British Columbia if:

a. The business does not have a physical presence in British Columbia including:

i. a store front, factory, mill, branch, office or other physical place of business (does not include use of temporary space such as trade-show booths);

ii. a place of extraction such as a mine, oil and gas well, or logging site;

iii. real property, such as a warehouse or yard, that is leased or owned (not including contractual arrangements with another person to store inventory such as contracts with fulfillment houses);

b. The business's management and control is not in British Columbia; and

c. The business does not have agents or employees physically located in British Columbia.

Management and control being in British Columbia means that the persons who are in control of the business make their decisions regarding the business substantially in British Columbia.

For a company, the management and control is generally in British Columbia if the members of the board of directors meet and hold their meetings substantially in British Columbia.

For a trust, the management and control is generally in British Columbia if the trustee makes decisions regarding the trust in British Columbia. However, each trust must be looked at to determine where management and control resides for that particular trust because depending on how the trust is arranged the management and control could actually be with the settlor, trustee or beneficiaries.

The management and control of a partnership will generally be where the partners make their decisions. With corporate partners, the Ministry looks to where the board of directors for the corporate partners meet.

The key aspect is that the Ministry considers the actual exercise of the management and control of the business. So, for example, if a company's directors meet outside British Columbia, but a shareholder exercises actual management and control in British Columbia the Ministry could still consider the business to be "inside British Columbia."

R.2 Sellers At Trade Shows (Issued: 2015/04)

Goods and services are often sold at trade shows that take place in British Columbia. The Ministry does not consider a temporary trade show booth to be a physical presence in British Columbia. Therefore, if the business's management and control is not in the province and it has no employees or agents in British Columbia (other than the person at the trade show), the business will not be considered to be "inside British Columbia." Accordingly, the person is not a "vendor."

However, in many cases the person will still be required to register under section 172 or 172.1. Having a trade show booth is a means of soliciting sales to persons in British Columbia. Accordingly, a business located outside British Columbia but inside Canada will be required to register when they make sales at a trade show in British Columbia to persons in British Columbia and cause the goods to be delivered into British Columbia. If the trade show seller has the TPP in British Columbia at the time the sale occurs, they may be required to register under section 172.1 if they are making the sales in the ordinary course of their business.

PST - SEC.1/Vendor/R.1

(A) TPP

R.1 Persons Possessing TPP For The Purpose Of Sale (Issued: 2014/04)

Persons in possession of TPP for the purpose of sale are vendors with respect to sales of the TPP to purchasers. This includes motor vehicle dealers, pawnbrokers, auctioneers, consignees, and bailiffs or others selling property to enforce a lien thereon.

It is the responsibility of the vendor in all such cases to register and to charge and remit PST on the sales. PST does not apply to any payout to a consignor, as the PST must be remitted by the vendor.

PST - SEC.1/Vendor/R.1-R.2

(D) ACCOMMODATION

R.1 Property Management Companies (Issued: 2014/04)

To qualify as a vendor and be required to levy tax on the purchase price of accommodation, a person does not have to own the accommodation that is being rented.

Accordingly, a business that manages and rents other individuals' property on a short term basis (e.g., condos or chalets) in the normal course of their business is a vendor under the Act. Such a business is required to register, levy and remit tax on the purchase price of the accommodation, unless vendor only provides accommodation that is exempt from tax under the Act (e.g., the vendor offers fewer than 4 units of accommodation in British Columbia).

It is important when determining whether a business qualifies as a vendor to examine the specific structure of the business and the services it provides. For instance, an Internet business is not a vendor if it only markets accommodation on its website and processes credit card transactions, but leaves all the other arrangements, such as setting rates and booking the accommodation, to the owner of the accommodation. If the Internet business does not qualify as a vendor, any owner of accommodation with four or more units for sale on the Internet business's website (and on other sites) must be registered to collect the tax.

R.2 Regular Sales Of Gifted Rooms By Non-Profit Organizations (Npos) (Issued: 2014/04)

Hotels often donate the use of rooms at no charge to NPOs for their use in events or contests that they may be running. In most instances, the NPO will provide the room to individuals at no cost. However, in some cases, the NPO may collect a nightly fee on the use of the room.

If the NPO regularly sells accommodation that it has received free of charge from a vendor and retains the proceeds for itself, the NPO may be required to register as a vendor and collect and remit tax on its sales of accommodation. In this instance, the NPO would meet the definition of a vendor under the Act.

For example, an NPO organizes an annual cultural festival. A local hotel provides the NPO with rooms free of charge. The NPO charges festival staff a nightly fee for the rooms and retains all the sales proceeds. In this situation, the NPO is required to register as a vendor and collect and remit the tax on sales of accommodation because it sells accommodation as part of its normal business.

Note: The NPO is selling the accommodation, but is not providing the accommodation. Therefore, for the purposes of applying the exemption under PSTERR paragraph 78(1)(d) [exemptions in relation to accommodation] for accommodation that is provided by a person who offers fewer than 4 units of accommodation, it is the number of units provided by the actual accommodation provider that must be considered, not the units sold by the NPO. Therefore, it is extremely unlikely that this exemption will apply where the NPO is selling accommodation provided by an established accommodation provided.

Section 2 – Proof Of Residence In British Columbia

PST - SEC.2/Int.

References:

Act: Section 1 "BC resident", "resident taxpayer"; Section 120; Section 126; Section 127

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 2 that for the purposes of the Act, any of the following is proof, in the absence of evidence to the contrary, that an individual resides in British Columbia:

(a) the receipt by the individual of a grant under section 2 of the Home Owner Grant Act;

(b) the receipt by a person of a grant in respect of the individual's residence and for the individual's benefit under section 3, 4 or 5 of the Home Owner Grant Act;

(c) the enrollment of the individual as a beneficiary under the medical services plan continued under the Medicare Protection Act.

Section 3 – Deemed Expenses Of A Person

PST - SEC.3/Int.

References:

Act: Section 1 "software", "taxable service"

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under subsection 3(1) that for the purposes of the Act, a person who, for the use or consumption by another person, acquires at a sale, leases as lessee, utilizes, brings or sends into British Columbia, or receives delivery of in British Columbia, tangible personal property

(a) is deemed to have done so at the first person’s expense, or

(b) if the first person acts on behalf of or as an agent for a principal, is deemed to have done so at the expense of the principal,

unless the other person acquires the tangible personal property at a sale or is given the right to use the tangible personal property under a lease.

Subsection 3(2) provides that for the purposes of the Act, a person who, for the use or benefit of another person, agrees to pay or is otherwise obliged to pay consideration for software or a taxable service

(a) is deemed to have done so at the first person’s expense, or

(b) if the first person acts on behalf of or as an agent for a principal, is deemed to have done so at the expense of the principal,

 unless the other person agrees to pay or is otherwise obliged to pay consideration for the software or taxable service.

Section 4 – Transactions Deemed To Be Transfer Of Possession

PST - SEC.4/Int.

References:

Act: Section 1 "sale"

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under subsection 4(1) that for the purposes of the definition of "sale", the director may determine that a transaction in relation to tangible personal property was in place of a transfer of title, exchange or barter.

Subsection 4(2) provides that if the director makes a determination under subsection 4(1), for the purposes of the definition of "sale", the transaction is deemed to be a transfer of possession of the tangible personal property under a contract.

Section 5 – Carrying On Business In British Columbia

PST - SEC.5/Int.-R.1

References:

Act: Section 1 "BC resident"; Section 107

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 5 that for the purposes of the Act, a person is deemed to be carrying on business in British Columbia if

(a) the person's name, or any name under which the person carries on business, is listed in a telephone directory

(i) for any part of British Columbia, and

(ii) in which an address or telephone number in British Columbia is given for the person,

(b) the person's name, or any name under which the person carries on business, appears or is announced in any advertisement in which an address or telephone number in British Columbia is given for the person, or

(c) the person has, in British Columbia,

(i) employees or other representatives, or

(ii) a warehouse, office or place of business.

R.1 Registered Or Records Offices (Issued: 2014/07)

Section 5 establishes a series of rules that result in a person having "carrying on business" status in BC without need for further enquiry.

Subparagraph 5(c)(ii) refers to the presence of an "office" in BC. An office need not be a place where significant activities take place, or where business is conducted by a person. Rather, the reference to an office is broad and inclusive.

If a corporation is incorporated in BC, it is required to maintain a registered office and a records office in BC. Because of the broad and inclusive nature of the reference to an office in subparagraph 5(c)(ii), a corporation that maintains a registered or records office in BC is deemed to be carrying on business in BC. This applies even in cases where a company has no other activities of note in BC, and in cases where the registered or records office is simply the address of the person who incorporated the company (e.g., a lawyer).

Section 6 – Deemed Use Of Tangible Personal Property Or Software In The Course Of Business

PST - SEC.6/Int.

References:

Act: Section 1 "software"

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 6 that for the purposes of this Act, a person is deemed to use tangible personal property or software in the course of the person's business if

(a) the tangible personal property or software is used

(i) by another person at the first person's expense,

(ii) by a principal for whom the first person acts as agent, or

(iii) by another person at the expense of a principal for whom the first person acts as agent, and

(b) the use by the other person referred to in paragraph 6(a) is intended to assist the business of the first person referred to in that paragraph.

Section 7 – How Tax Is To Be Calculated

PST - SEC.7/Int.

References:

Act: Section 1 "software", "taxable service"

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under subsection 7(1) that the tax imposed under the Act must be:

(a) calculated separately on every sale or lease of tangible personal property or every sale of software or a taxable service, and

(b) computed to the nearest cent, with 1/2 cent counted as one cent.

Subsection 7(2) provides that for the purposes of paragraph 7(1)(a), if two or more items of tangible personal property are sold or leased on the same occasion or as part of one transaction and the items are subject to tax imposed under the Act at the same rate, the total of the sales or leases is deemed to be one sale or lease.

Subsection 7(3) provides that for the purposes of paragraph 7(1)(a), if two or more items of software are sold on the same occasion or as part of one transaction and the items are subject to tax imposed under the Act at the same rate, the total of the sales is deemed to be one sale.

Subsection 7(4) provides that for the purposes of paragraph 7(1)(a), if two or more taxable services are sold on the same occasion or as part of one transaction and the taxable services are subject to tax imposed under the Act at the same rate, the total of the sales is deemed to be one sale.

R.1 Elimination Of The Penny (Issued: 2013/11)

In the spring of 2012, the Government of Canada announced that it will eliminate the penny from Canada’s coinage system. The federal Minister of Finance announced that the Royal Canadian Mint will stop distributing the penny on February 4, 2013.

The elimination of the penny has no bearing on the calculation of tax under any of the consumption tax acts. Tax will continue to be calculated on the value of consideration (e.g., the purchase price). The elimination of the penny also does not affect the collection or remittance obligations related to any of British Columbia’s consumer taxes.

The majority of payments such as credit/debit card transactions, cheques, online payments etc. will not be impacted by the elimination of the penny. These transactions will continue to be settled to the cent.

However, under the federal rules, cash transactions must be rounded to the nearest five-cent increment. British Columbia consumer taxes must be calculated before rounding cash transactions.

Amounts ending in 1 cent, 2 cents, 6 cents and 7 cents are rounded down to the nearest 5-cent increment. For example, $1.01 is rounded to $1.00 and $29.97 is rounded to $29.95.

Amounts ending in 3 cents, 4 cents, 8 cents and 9 cents are rounded up to the nearest 5-cent increment. For example, $14.13 is rounded to $14.15 and $125.68 is rounded to $125.70.

Amounts ending in 0 and 5 cents remain unchanged.

Example

Example

Laundry detergent

$6.99

7% PST

0.49

Total amount

$7.48

If payment is by:

  • cash: the 8 is rounded up to the nearest 5-cent increment and the payment amount is $7.50

  • cheque, credit or debit: the amount is $7.48 (no rounding)

Section 8 – Liability Of Other Persons

PST - SEC.8/Int.

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under subsection 8(1) that if there is more than one purchaser of tangible personal property, software or a taxable service subject to tax under the Act, each purchaser is jointly and severally liable for the tax.

Subsection 8(2) provides that if there is more than one lessee of tangible personal property subject to tax under the Act, each lessee is jointly and severally liable for the tax.

Section 8.1 – Registration Number of Principal 

PST - SEC.8.1/Int.

References: 

Act: Section 1 “registration number”; Section 30.1; Section 37; Section 49; Section 92; Section 93; Section 123.1; Section 130; Section 168; Section 177; Section 179

Bulletin PST 208

Interpretation (Issued: 2021/10)

Effective April 21, 2021, Bill 4, Budget Measures Implementation Act, 2021, added section 8.1 to clarify that an agent acting for a principal who is a registrant should provide the principal’s registration number.

Specifically, section 8.1 provides that if a person acts as an agent of a principal who is a registrant, a reference in the legislation to the person’s registration number is a reference to the registration number of the principal.

Division 2 — Purchase Price and Lease Price

Section 9 – Purchase Price Of Tangible Personal Property

PST - SEC.9/Int.

References:

Act: Section 1 "modified motor vehicle"; Section 10; Section 11; Section 16; Section 22; Section 23; Section 24; Section 25; Section 26; Section 80; Section 80.3

PSTR: Section 10

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 9 that the purchase price of tangible personal property is as follows:

(a) subject to paragraphs (b) to (f), the purchase price of the tangible personal property under section 10 [original purchase price of tangible personal property];

(b) subject to paragraphs (c) to (f), if subsection 22(1) [reduced purchase price] applies in respect of the purchase, the purchase price of the tangible personal property under that subsection;

(c) subject to paragraphs (d) to (f), if section 23 [purchase price if coupon accepted] applies in respect of the purchase, the purchase price of the tangible personal property under that section;

(d) subject to paragraphs (d.1) to (f), if section 24 [purchase price if trade-in allowed on purchase of tangible personal property] applies in respect of the sale, the purchase price of the tangible personal property under that section;

(d.1) subject to paragraphs (d.2) to (f), if section 26 [purchase price if bundled purchase] applies in respect of the tangible personal property, the purchase price of the tangible personal property under that section;

(d.2) subject to paragraphs (e) and (f), if section 16 [purchase price of promotional material acquired or received by promotional distribution] applies in respect of the tangible personal property, the purchase price of the tangible personal property under that section;

(e) subject to paragraph (f), if section 25 [depreciated purchase price of tangible personal property] applies in respect of the tangible personal property, the purchase price of the tangible personal property under that section;

(f) if the tangible personal property is a modified motor vehicle, the purchase price of the modified motor vehicle under paragraphs (a) to (e) less the portion of the price that can be reasonably be attributed to those special features or modifications of the vehicle the sole purpose for which is to

(i) facilitate the use of the vehicle by, or the transportation of, an individual using a wheelchair, or

(ii) equip the vehicle with an auxiliary driving control that facilitates the operation of the vehicle by an individual with a disability.

Where multiple purchase price provisions apply (e.g., a coupon and a bundled purchase), section 9 sets out the order in which the provisions are applied in determining the purchase price of tangible personal property.

Section 10 – Original Purchase Price Of Tangible Personal Property

PST - SEC.10/Int.-R.9

References:

Act: Section 1 "BC resident", "boat", "fair market value", "software"; Section 9

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 10 that the purchase price of tangible personal property is as follows:

Subsection 10(1) provides that the purchase price of tangible personal property is equal to the total value of the consideration that the seller or the person from whom the tangible personal property passes accepts as the price or on account of the price of the tangible personal property covered by the sale.

Subsection 10(2), without limiting subsection 10(1), includes the following in the purchase price of tangible personal property:

(a) a price in money accepted by the seller or the person from whom the tangible personal property passes as the price or on account of the price of the tangible personal property covered by the sale;

(b) the value of services accepted by the seller or the person from whom the tangible personal property passes as the price or on account of the price of the tangible personal property covered by the sale;

(c) the value of the tangible personal property or software exchanged or acquired by the seller or the person from whom the tangible personal property passes as the price or on account of the price of the tangible personal property covered by the sale;

(d) in the case of tangible personal property that is repossessed, the value of the tangible personal property;

(e) any charges for:

(i) transportation or delivery of the tangible personal property sold, or

(ii) interest, finance, service, customs and excise charges in relation to the tangible personal property sold

that are incurred at or before the time that title to the tangible personal property covered by the sale passes under that sale, whether or not those charges are shown separately on any record of the sale, but does not include interest charges on a conditional sale contract if the amount of those charges is segregated on the record of sale or billed separately to the purchaser, and is payable over the term of the contract;

(f) if the tangible personal property is purchased, manufactured, processed or otherwise acquired outside British Columbia and subsequently brought or sent into or received in British Columbia for use or consumption in British Columbia, the costs and expenses incurred by the user, or a person who is not a BC resident and who brought or sent into British Columbia, or received delivery of in British Columbia the tangible personal property, before the use of the tangible personal property in British Columbia, including

(i) costs and expenses for materials, labour and other manufacturing and processing costs and expenses, and

(ii) costs and expenses for service, customs, excise and transportation;

(f.1) in relation to the purchase of a boat, the total value of the consideration that is payable by the purchaser for any property that, at or before the time that title to the boat covered by the sale passes under that sale, is, or is intended to be, attached to, stored in or used in connection with the operation of the boat, whether or not shown separately on any record of the sale or billed separately;

(g) in relation to the purchase of ready-mixed concrete that is to be delivered by or on behalf of the seller to the place where the purchaser intends to use it, the total value of the consideration that is payable by the purchaser to have it delivered to that place;

(h) any charge, including a royalty or licence fee, relating to:

(i) the use of the tangible personal property, or

(ii) the use of knowledge required to use the tangible personal property,

whether incurred before, at or after the time that title to the tangible personal property covered by the sale passes under that sale;

(i) any charge relating to a warranty made with respect to the tangible personal property, or any charge relating to the maintenance of or service to the tangible personal property, that the purchaser must pay or agree to pay in order to obtain title to the tangible personal property covered by the sale, whether or not those charges are shown separately on any record of the sale or billed separately.

Note: The marginal note to section 10 includes the phrase "original purchase price". However, the defined term "original purchase price" does not appear in section 10. The only provisions in which the defined term "original purchase price" is used in relation to tangible personal property are provisions related to the tax rates of passenger vehicles under section 34 [rates of tax in relation to purchase price], section 49 [tax if tangible personal property brought into British Columbia for use] and section 117 [tax if contract for modification of purchased property].

R.1 Shipping And Other Charges Incurred On Subsequent Entries (Issued: 2014/04)

Under section 51 [tax if tangible personal property brought into British Columbia for temporary use], the depreciated purchase price of TPP subject to the temporary use formulas is calculated as of the "first" entry date for that TPP. The same depreciated purchase price must be used for all subsequent 12-month periods (i.e. the depreciated purchase price cannot be recalculated by increasing the depreciation rate).

Also, the costs and expenses that must be included in the purchase price of TPP entering BC for use under paragraph 10(2)(f) only apply with the first entry of the TPP into BC. This is because these costs are only included in the purchase price provided that they are incurred before the use of the TPP in BC.

Therefore, tax only applies to customs, excises, freight and other transportation related costs associated with the first entry of TPP into the province. Customs, excises, freight and other charges incurred for subsequent entries are not factored into the temporary use calculations because they were incurred after the equipment has been used in BC.

R.2 Lien And ICBC Search Fees (Issued: 2014/04)

When a customer trades in a used vehicle as full or partial consideration on the purchase of another vehicle, the dealer may conduct a lien search and ICBC accident history search on the trade-in vehicle. Because the customer is required to pay the lien and ICBC search charges in order to complete the sale and obtain title to the vehicle, such charges form part of the purchase price of the vehicle being purchased and are subject to tax.

However, such charges are not subject to tax when they are not related to the purchase of taxable TPP (e.g., when a customer requests and pays for an ICBC accident history search on a vehicle they already own).

R.3 Transmitting And Transforming Electricity (Issued: 2014/04)

When transmitting or transforming electricity are provided as part of a purchase of electricity and these services are performed before title to the electricity passes to the purchaser, the charge for these services is taxable as part of the purchase price for the electricity. This applies whether or not the charges are separately stated. Where these services are performed after title to the electricity passes, these services are not subject to tax.

R.4 Power Loss (Issued: 2014/04)

If the amount of electricity received and paid for by the customer is less than the amount initially transmitted by the seller because of power lost during transmission, the seller is not required to pay tax on the electricity that is lost during transmission. Such power losses are not considered to be a taxable use by the seller.

If title to the electricity passes before transmission, the customer pays tax on the amount that left the seller and not the lesser amount of electricity that actually arrived at the customer's location. In this situation, title to the lost power has passed to the customer, and the customer has already paid tax on the purchase of this electricity.

R.5 TPP That Forms Part Of The Purchase Price Of A Passenger Vehicle (Issued: 2014/04)

The purchase price of a passenger vehicle includes charges for items that are installed on, or are attached to the passenger vehicle at the time of sale.

This means that charges for items such as the following form part of the total purchase price of the passenger vehicle:

  • alarm systems
  • audio/video equipment
  • canopies
  • cargo shares
  • custom parts (e.g., custom hoods)
  • deflectors
  • GPS units
  • hitch attachments
  • mirrors
  • roof racks
  • satellite radio equipment
  • seat covers
  • side vents
  • splash guards
  • steps
  • sun roofs
  • tinted windows
  • tire caps and rims
  • trim

For example, a pick-up truck is purchased and a canopy is attached at the time of sale. The charge for the canopy forms part of the purchase price of the pick-up truck. This means that if the price for the pick-up truck was $54,500 and the price for the canopy was $2,000, the purchase price of the pick-up truck is $56,500 and is taxed at 9%, even though the pick-up truck would have been taxed at 7% if it had been sold without the canopy.

R.6 Demurrage Charges (Issued: 2014/04)

If delivery charges or other transportation charges are taxable, tax may also apply to additional charges for delaying delivery. For example, if a contract specifies that an additional charge applies during the entire time a delivery truck waits for the recipient to receive the goods at the delivery location, tax is due on the additional charge.

R.7 Fuel Surcharges (Issued: 2014/04)

When a vendor charges a fuel surcharge in addition to a delivery charge, the fuel surcharge is merely an increase in the price of the delivery charge. The fuel surcharge applies in the same way as it would a delivery charge (see Bulletin PST 302).

Therefore, if a vendor collects tax on the delivery charge, they would also collect tax on the fuel surcharge. Alternatively, if the delivery charge is not subject to tax, then neither is the fuel surcharge.

R.8 Common Charges Included In And Excluded From The Purchase Price Of A Vehicle (Issued: 2014/07)

Purchase agreements for vehicles typically detail a number of costs that, in aggregate, determine the amount payable by a purchaser. The core cost subject to PST is typically referred to in purchase agreements as the "base vehicle," "manufacturer's suggested retail price (MSRP)", or "price of vehicle".

Charges for additional TPP are addressed in PSTA/Sec. 10/R.5.

The application of PST to warranties, service contracts, and maintenance agreements is detailed in Bulletin PST 303.

In addition to the charges noted above, purchase agreements also typically include a number of charges that are not described in connection to any particular item of TPP. The following lists describe common charges that are included in and excluded from the purchase price of a vehicle, respectively:

Included in Purchase Price (subject to PST)

  • Administration fee
  • Advance disposal fee (typically for tires)
  • Air (conditioning) tax/levy (note that this is properly a charge levied by dealers to recover a federal tax cost incurred and passed on by manufacturers)
  • Dealer prep
  • Detailing
  • Documentation fee
  • Freight and pre-delivery inspection (PDI)
  • Propane equipment test

Excluded from Purchase Price (not subject to PST)

  • Disability insurance
  • Gap insurance
  • Life insurance
  • Personal Property Security Act (PPSA) fee (to register a lien for financing purposes)

R.9 Lien Registration Fees Under The Personal Property And Security Act (PPSA) (Issued: 2017/05)

Whether lien registration fees under the PPSA are subject to PST depends on whether the lien registry fees are charged in relation to a "sale" or a "lease".

The difference in the application of PST to PPSA lien registration fees is a consequence of the language used in the definitions of "purchase price" in section 10 of the PSTA and the definition of "lease price" in section 13 of the PSTA.

"Purchase price" is defined by section 10(1) of the PSTA in terms of the "total value of the consideration that the seller…accepts as the price or on account of the price of the tangible personal property covered by the sale."

The PPSA lien registration fee is not consideration paid "on account of" the TPP. Therefore, it does not form part of the purchase price paid for the TPP. The PPSA lien registration fee is paid (if at all) as part of the arrangements to finance a vehicle only (to secure the lender's interest in the vehicle), not as part of the "purchase price" for the vehicle itself from the seller.

Just as late payment or finance/interest charges for TPP do not form part of the "purchase price" for TPP (unless the interest charges are incurred prior to title transferring), neither do PPSA lien registration charges form part of the "purchase price" for goods.

However, the PPSA lien registration fee does form part of the "lease price", as defined by section 13 of the PSTA. The definition of "lease price" is more "all-inclusive" than the definition of "purchase price":

13(1) For the purposes of this Act, the lease price of tangible personal property is equal to the total value of the consideration accepted by the person leasing the tangible personal property to the lessee for the right to use the tangible personal property.

The lessee cannot gain a "right to use" the TPP without the lien being registered against it to secure/protect the lessor's interest in the TPP. As such, the PPSA lien registration fee is part of the "lease price" for the TPP, in the same way that late payment or finance/interest charges are as well.

Section 10.1 - Original Purchase Price of Certain Vehicles

PST - SEC.10.1/Int.

References:

Act: Section 1 "original purchase price"

Interpretation (Issued: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 added section 10.1 to the Act. The new section provides for the original purchase price of a passenger vehicle, a modified business vehicle, and a modified motor vehicle that is a passenger vehicle if there is a reduced purchase price or if a coupon is accepted as consideration for the purchase.

The amendment results in both the purchase price and the tax rate being adjusted (as applicable) following a price reduction or manufacturer's rebate.

Section 11 – Purchase Price Of Tangible Personal Property Related To Affixed Machinery And Improvements To Real Property

PST - SEC.11/Int.

References:

Act: Section 9; Section 10; Section 79; Section 80; Section 80.2; Section 80.3; Section 80.5; Section 80.6

Bulletin PST 104

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under subsection 11(1) that despite section 9 [purchase price of tangible personal property] and section 10 [original purchase price of tangible personal property], for the purposes of subsection 80(2) [tax on tangible personal property used to improve real property if contractor exempt], the purchase price of tangible personal property is equal to the greater of the following:

(a) the purchase price payable by the contractor for the tangible personal property;

(b) the purchase price of the tangible personal property set out in the agreement referred to in paragraph 79(1)(c) [contractor exempt from tax under section 37 or 49] or paragraph 79(2)(c).

Subsection 11(2) provides that despite section 9 and section 10, for the purposes of subsection 80.3(2) [tax on tangible personal property used to improve real property if contractor obtained refund], the purchase price of tangible personal property is equal to the greater of the following:

(a) the purchase price payable by the contractor for the tangible personal property;

(b) the purchase price of the tangible personal property set out in the agreement referred to in paragraph 80.2(1)(d) [refund of tax paid by contractor under Division 5].

Subsection 11(3) provides that despite section 9 and section 10, for the purposes of subsection 80.6(2) [transitional tax on tangible personal property used to improve real property], the purchase price of tangible personal property is equal to the greater of the following:

(a) the purchase price payable by the contractor for the tangible personal property;

(b) the purchase price of the tangible personal property set out in the agreement referred to in paragraph 80.5(6)(a) [transitional tax on tangible personal property used by contractor to improve real property].

Section 11 provides the purchase price of tangible personal property that will be used so that it ceases to be personal property at common law under a contract to supply and affix, or install, affixed machinery or improvements to real property, where the contractor and their customer have agreed, in writing, that the customer is responsible for paying the tax. Provided that the contract between the contractor and their customer meets the requirements of either section 79, section 80.2 or section 80.5, the customer is subject to tax under subsection 80(2), subsection 80.3(2) or subsection 80.6(2), as applicable, on the tangible personal property that will be used so that it ceases to be personal property at common law under the contract.

Under section 11, the purchase price is the greater of the amount paid by the contractor for the tangible personal property, and the customer’s purchase price of the tangible personal property as set out in their contract with the contractor. This provision ensures that contractors and their customers cannot artificially reduce the purchase price of tangible personal property used in contracts to supply and affix, or install, affixed machinery or improvements to real property to reduce the tax payable.

Section 12 – Lease Price Of Tangible Personal Property

PST - SEC.12/Int.

References:

Act: Section 1 "modified motor vehicle"; Section 13; Section 22; Section 23

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 12 that the lease price of tangible personal property is as follows:

(a) subject to paragraphs (b) to (d), the lease price of the tangible personal property under section 13 [original lease price of tangible personal property];

(b) subject to paragraphs (c) and (d), if subsection 22(2) [reduced lease price] applies in respect of the lease, the lease price of the tangible personal property under that section;

(c) subject to paragraph (d), if section 23 [lease price if coupon accepted] applies in respect of the lease, the lease price of the tangible personal property under that section;

(d) if the tangible personal property is a modified motor vehicle that is leased, at the time the lease is entered into, for a period of one year or more, the lease price of the modified motor vehicle under paragraphs (a) to (c) less the portion of the price that can be reasonably be attributed to those special features or modifications of the vehicle the sole purpose for which is to

(i) facilitate the use of the vehicle by, or the transportation of, an individual using a wheelchair, or

(ii) equip the vehicle with an auxiliary driving control that facilitates the operation of the vehicle by an individual with a disability;

Paragraph 12(d) provides that the value of certain modifications to accommodate a person with a disability are not included in the calculation of the lease price of a vehicle where the vehicle is leased for a period of one year or more.

Where multiple lease price provisions could apply (e.g., a coupon and a price reduction), section 12 sets out the order in which the provisions are applied in determining the lease price of tangible personal property.

Section 13 – Original Lease Price Of Tangible Personal Property

PST - SEC.13/Int.-R.9

References:

Act: Section 1 "lease", "lease price", "lessee", "original lease price"; Section 41; Section 45; Section 61; Section 61.1; Section 62; Section 82.01

Interpretation (Issued: 2013/11; Revised: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 amended subsection 13(3) of the Act by adding paragraph (f). The amendment provides for the attribution of amounts across rental periods under a lease for purposes of section 82.01 [tax if leased property used for new purpose] of the Act.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 set out under section 13 the rules to determine the lease price of TPP.

Subsection 13(1) sets out the general rule to determine the lease price of TPP.

For greater certainty, subsection 13(2) clarifies the types of payment, consideration and charge (e.g. licence fee, royalty fee, down payment, membership fee, customs and excise amounts) included in the lease price of TPP for the purposes of the Act.

Subsection 13(3) provides that, where an amount of a payment, consideration or charge included in the lease price of tangible personal property is not attributed to a rental period under a lease, that amount is to be attributed equally across all rental periods under the lease in the specified circumstances.

R.1 Standby Charges (Issued: 2014/04)

Standby charges are charges paid by a lessee to a lessor to hold TPP, such as equipment or machinery, "ready and available for use" at a time chosen by the lessee. Because they confer on the lessee the right to use the TPP on the lessee (i.e., during that time it cannot be used by anyone else), such charges form part of the lease price under the Act and are subject to tax.

This application is consistent with the 1987 British Columbia Supreme Court decision Finning Tractor and Equip. Co. v. B.C. (Minister of Finance) (1988), 30 B.C.L.R. (2d) 249 which found that, while it may be inferred from the word "standby" that the equipment may not be used, the right to use the equipment remains with the customer. This decision was upheld by the British Columbia Court of Appeal in 1988.

R.2 Repossession Costs (Issued: 2014/04)

When a lessor charges a lessee for repossession costs paid by the lessor to recover TPP, including bailiff charges, transporting TPP to a storage facility, storage charges, auctioneer charges and legal fees, these charges are not considered to be related to the right to use the leased TPP. Accordingly, tax does not apply to charges to a lessee for recovery of repossession costs incurred by the lessor.

R.3 Security Deposits On Leases (Issued: 2014/04)

A security deposit, paid at the time a lease is entered into, does not fall within the definition of lease price and is therefore not taxable. The term "lease price" includes those payments that, at the time of payment, are to be irrevocably paid to the lessor for the right to use the leased TPP.

Although security deposits on leases are typically equal to one month's lease payment plus tax, they are a refundable amount, separate from a payment for use.

Deposits are generally paid with the understanding that, if there have been no defaults during the term of the lease, the deposit will be applied to the final month's lease payment. However, even if this is the case, tax is not payable until the time the deposit is actually applied to a lease payment.

R.4 Deductible Payments For Insured Leased TPP (Issued: 2014/04)

In many lease agreements, the lessee is required to obtain insurance on the leased TPP, naming the lessor or financing company as the beneficiary. If the leased TPP is damaged or destroyed, the lessee is often required to pay a deductible amount for the insurance. This deductible amount does not fall under the definition of lease price (or purchase price), and is not subject to tax.

R.5 Leased TPP And Rebuild Charges (Issued: 2014/04)

Where the charge for leased TPP is based on a daily or monthly usage charge plus rebuild charges based on the amount of wear to the TPP while used by the customer, the total charge is subject to tax. This applies even if the rebuilding or repair of the TPP occurs out of province.

For example, tax applies to the daily charge for jackhammer drill bits used in British Columbia, plus the charge for retooling the drill bits after they are returned to the lessor for repair, whether this is in or out of the province.

R.6 Destroyed And Leased TPP And Insurance Proceeds (Issued: 2014/04)

Proceeds Paid to Lessor: Where a lessor receives payment from an insurance company for the value of TPP leased to a third party lessee which were stolen or destroyed, the payment is not subject to tax because there is no sale or lease of TPP to the insurance company. However, if damaged TPP is transferred to the insurance company in return for the payment, a sale of that TPP has occurred, and tax applies to the payment unless the insurance company either provides its PST registration number or a Certificate of Exemption (FIN 490) as documentation that the TPP will be resold.

Excess Proceeds Paid to Lessee: Insurance companies generally pay the lessor the fair market value of the TPP when it is stolen or destroyed. In some cases, this amount may be greater than the residual value of the lease. The residual value is the value of the lease payments that would have been paid during the balance of the lease if the TPP was not stolen or destroyed, plus the buyout charge. When the insurance proceeds exceed the residual value of the lease, the lessor may pay the difference to the lessee. For example, if the residual value of the lease is $3,000 and the insurance company pays the lessor the market value of $5,000 for the TPP, the lessor may pay the $2,000 difference to the lessee. This payment from the lessor to the lessee is not subject to tax because there is no sale of TPP.

Lessees are eligible for a partial refund of the tax paid on previous lease payments in cases where excess insurance proceeds are paid to the lessee. This applies if the parties consider the payment to be a partial refund of part of the lease price of the previous lease payments made under the lease. Although the tax paid by the lessee during the course of the lease, before the TPP is lost or destroyed, is properly due on the lease payments for each rental period in accordance with the requirements of section 28 [when tax is payable in respect of a purchase or lease], section 35 [rates of tax in relation to lease price] and section 39 [tax on leases] and the definition of "lease price", section 151 [refund or credit of lease price] allows a collector to refund the portion of the tax paid attributable to the refund or credit provided to the lessee in respect of the lease price.

Shortage in Proceeds Payable by Lessee: If the proceeds paid by the insurance company to the lessor are less than the residual value of the lease, and the lessor charges the lessee for the difference, tax does not apply to the amount billed to the lessee. For example, if the residual value of the lease is $25,000 and the insurance company pays the lessor the market value of $20,000 for the TPP, the lessor is not required to collect and remit tax on the $5,000 difference that is charged to the lessee. The amount billed to the lessee does not form part of the taxable lease price for the right to use the TPP.

R.7 Leased TPP That Is Damaged, Destroyed, Lost Or Stolen (Issued: 2014/04)

Under the Act, "lease price" is defined to include the total consideration paid by the lessee for each rental period under a lease for the right to use the leased TPP. Generally, any charges that are irrevocably paid to the lessor for the right to use leased TPP form part of the taxable lease price. These include early termination charges, financing charges, and delivery charges, even if such charges are separately stated.

However, charges for lost, damaged, or stolen TPP are paid to the lessor to replace or repair the leased TPP. They are not paid as part of the right to use the leased TPP during the rental period. Accordingly, these charges do not meet the definition of lease price and are not subject to tax.

However, where damaged TPP is repaired, and the repairs are paid for by the lessee, the repair services are taxable to the lessee if the services to repair the TPP are taxable related services. This is because in this case, the lessee is purchasing a related service and not a non-taxable replacement fee. Such services are taxable to the lessee, regardless of whether the lessee pays for the repairs directly or is billed by the lessor.

R.8 Non-Sufficient Funds Fees (Issued: 2014/07)

Non-sufficient funds (NSF) fees are not included in the lease price. The lease price of TPP is equal to the total value of the consideration accepted by the lessor from the lessee for the right to use the TPP. NSF fees are penalties for non-payment rather than consideration for the right to use the TPP.

R.9 Lien Registration Fees Under The Personal Property And Security Act (PPSA) (Issued: 2017/05)

Whether lien registration fees under the PPSA are subject to PST depends on whether the lien registry fees are charged in relation to a "sale" or a "lease".

The difference in the application of PST to PPSA lien registration fees is a consequence of the language used in the definitions of "purchase price" in section 10 of the PSTA and the definition of "lease price" in section 13 of the PSTA.

The PPSA lien registration fee does form part of the "lease price", as defined by section 13 of the PSTA. The definition of "lease price" is more "all-inclusive" than the definition of "purchase price":

13(1) For the purposes of this Act, the lease price of tangible personal property is equal to the total value of the consideration accepted by the person leasing the tangible personal property to the lessee for the right to use the tangible personal property.

The lessee cannot gain a "right to use" the TPP without the lien being registered against it to secure/protect the lessor's interest in the TPP. As such, the PPSA lien registration fee is part of the "lease price" for the TPP, in the same way that late payment or finance/interest charges are as well.

On the other hand, "purchase price" is defined by section 10(1) of the PSTA in terms of the "total value of the consideration that the seller…accepts as the price or on account of the price of the tangible personal property covered by the sale." The PPSA lien registration fee is not consideration paid "on account of" the TPP. Therefore, it does not form part of the purchase price paid for the TPP. The PPSA lien registration fee is paid (if at all) as part of the arrangements to finance a vehicle only (to secure the lender's interest in the vehicle), not as part of the "purchase price" for the vehicle itself from the seller.

Just as late payment or finance/interest charges for TPP do not form part of the "purchase price" for TPP (unless the interest charges are incurred prior to title transferring), neither do PPSA lien registration charges form part of the "purchase price" for goods.

Section 14 – Purchase Price Of Software

PST - SEC.14/Int.

References:

Act: Section 1 "software"; Section 15; Section 16; Section 22; Section 23; Section 26; Part 4

Bulletin PST 105

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 14 that the purchase price of software is as follows:

(a) subject to paragraphs (b) to (e), the purchase price of the software under section 15 [original purchase price of software];

(b) subject to paragraphs (c) to (e), if subsection 22(3) [reduced purchase price] applies in respect of the purchase, the purchase price of the software under that section;

(c) subject to paragraphs (d) and (e), if section 23 [purchase price if coupon accepted] applies in respect of the purchase, then the purchase price of the software under that section;

(d) subject to paragraph (e), if section 26 [purchase price if bundled purchase] applies in respect of the software, the purchase price of the software under that section;

(e) if section 16 [purchase price of promotional material acquired or received by promotional distribution] applies in respect of the software, the purchase price of the software under that section.

Where multiple purchase price provisions could apply (e.g., a coupon and a bundled purchase), section 14 sets out the order in which the provisions are applied in determining the purchase price of tangible personal property.

Section 15 – Original Purchase Price Of Software

PST - SEC.15/Int.

References:

Act: Section 1 "software"

Bulletin PST 105

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 15 that the purchase price of software is as follows:

Subsection 15(1) provides that the purchase price of software is equal to the total value of the consideration accepted by the seller or person from whom the software is acquired as the price or on account of the price of the software.

Subsection 15(2), without limiting subsection 15(1), includes in the purchase price of software the following, accepted by the seller or person from whom the software is acquired, as the price or on account of the price of the software:

(a) a price in money;

(b) the value of services rendered;

(c) the value of the software or tangible personal property exchanged or acquired by the seller or person from whom the software passes as the price or on account of the price of the software covered by the sale;

(c.1) in the case of the software that is repossessed, the value of the software;

(d) any charge, including a royalty or licence fee, relating to:

(i) the use of the software, or

(ii) the use of knowledge required to use the software,

whether incurred before or after the time that the software is acquired;

(e) any payment or part of a payment or consideration that is, or is expressed to be, a down payment;

(f) any payment of consideration, including a membership fee, that includes the substantial benefit of a reduction in the purchase price of the software;

(g) any payment of part of a payment or consideration that is based or calculated on a measure of the use made of the software;

(h) any charge relating to a warranty made with respect to the software, or any charge relating to the maintenance of or service to the software, that the purchaser must pay or agree to pay in order to obtain the software covered by the sale, whether or not those charges are shown separately on any record of the sale or billed separately.

Section 16 – Purchase Price Of Promotional Material Acquired Or Received By Promotional Distribution

PST - SEC.16/Int.

References:

Act: Section 1 "promotional distribution", "promotional distributor", "promotional material", "software", "telecommunication service"; Section 9; Section 14; Section 17; Section 27

Bulletin PST 311

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 16 that the purchase price of promotional material acquired or received by promotional distribution is as follows:

Subsection 16(0.1) provides the following definition:

"initial price" means the following:

(a) in relation to tangible personal property, the purchase price of the tangible personal property under paragraphs 9(a) to (d.1) [purchase price of tangible personal property];

(b) in relation to software, the purchase price of the software under paragraph 14(a) to 14(d) [purchase price of software];

(c) in relation to a telecommunication service, the purchase price of the telecommunication service under paragraph 17(a) to (d) [purchase price of taxable service].

Subsection 16(1) provides that, in relation to promotional material that is to be provided by way of promotional distribution by a promotional distributor, the promotional distributor’s purchase price of promotional material is equal to the amount by which the initial price of the promotional material paid by the promotional distributor exceeds the amount of consideration specifically provided for the promotional material by the person to whom that promotional material is provided.

Subsection 16(2) provides that, in relation to promotional material that is received by way of promotional distribution, the recipient’s purchase price of the promotional material is equal to the amount of any consideration specifically provided for the promotional material by the person to whom that promotional material is provided.

For example, a wine seller acquires a particular wine at $40 a bottle and, in an effort to promote greater sales, offers the wine to preferred customers for $30 a bottle. Under the Act, the purchase price for the preferred customers is $30 (under subsection 16(2)) and the purchase price for the wine seller is equal to $40 - $30 = $10 (under subsection 16(1)).

Section 17 – Purchase Price Of Taxable Service

PST - SEC.17/Int.

References:

Act: Section 1 "taxable service"; Section 16; Section 18; Section 19; Section 20; Section 21; Section 22; Section 23; Section 26

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 17 that the purchase price of a taxable service is as follows:

(a) subject to paragraphs (b) to (e), the purchase price of the taxable service under section 18 [related service], section 19 [accommodation], section 20 [legal services], or section 21 [telecommunication service];

(b) subject to paragraphs (c) to (e), if subsection 22(4) [reduced purchase price] applies in respect of the purchase, the purchase price of the taxable service under that section;

(c) subject to paragraphs (d) and (e), if section 23 [purchase price if coupon accepted] applies in respect of the purchase, the purchase price of the taxable service under that section;

(d) subject to paragraph (e), if section 26 [purchase price if bundled purchase] applies in respect of the taxable service, the purchase price of the taxable service under that section;

(e) if section 16 [purchase price of promotional material acquired or received by promotional distribution] applies in respect of the telecommunication service, the purchase price of the telecommunication service under that section.

Where multiple purchase price provisions could apply (e.g., a coupon and a bundled purchase), section 17 sets out the order in which the provisions are applied in determining the purchase price of a taxable service.

Section 18 – Original Purchase Price Of Related Service

PST - SEC.18/Int.

References:

Act: Section 1 "original purchase price", "related service"

Bulletin PST 301

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 18 that the purchase price of a related service is as follows:

Subsection 18(1) provides that the purchase price of a related service is equal to the total value of the consideration accepted by the seller of the service or the person from whom the related service is acquired as the price or on account of the price of the related service.

Subsection 18(2), without limiting subsection 18(1), the purchase price of a related service includes a price in money and the value of services rendered.

Section 19 – Original Purchase Price Of Accommodation

PST - SEC.19/Int.-R.1

References:

Act: Section 1 "accommodation", "meal"; Section 26; Section 240

PSTR: Section 4; Section 8

Bulletin PST 120

Interpretation (Issued: 2013/11; Revised: 2014/09)

Effective February 19, 2014, Bill 8, Budget Measures Implementation Act, 2014 amended subsection 19(3) to expand the application of a bundling rule respecting the purchase price of accommodation to circumstances in which any other services are included as part of a combination with accommodation and meals (e.g. spa services). Prior to February 19, 2014, the rule applied to circumstances in which only prescribed services (e.g. the services of a guide, the provision of horseback riding equipment, etc.) were included as part of a combination with accommodation and meals.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 set out under section 19 the rules to determine the purchase price of accommodation.

Subsection 19(1) sets out the general rule to determine the purchase price of accommodation.

For greater certainty, subsection 19(2) clarifies the types of payment, consideration and charge (i.e. price in money, value of services rendered) included in the purchase price of accommodation for the purposes of the Act.

Subsection 19(3) provides for the application of a rule respecting the purchase price of accommodation to circumstances where accommodation is purchased as part of a combination of accommodation, meals and certain other services provided for a single price. See also PSTR Section 8.

R.1 Rooms Provided To Person Performing A Service (Issued: 2014/04; Revised: 2017/05)

Under section 19, the purchase price of accommodation is "equal to the total value of the consideration accepted by the seller of the accommodation or person from whom the accommodation is acquired as price or on account of the price of accommodation". The purchase price "includes the following accepted by the seller of the accommodation or person from who the accommodation is acquired as the price or on account of the price of the accommodation:

(a) a price in money;

(b) the value of services rendered."

This means that if a vendor provides a room at no charge to a person who is performing a service for the establishment (e.g. tradesperson, entertainer, etc.), then tax must be collected by the accommodation provider on the normal price of the room.

To determine the price of a room provided to persons performing a service for the hotel, the following guidelines apply.

  • Preferred Rates: Hotels frequently offer varying rates for a particular room when occupied by a particular client and/or during a particular timeframe. When this is the case, it is reasonable to assume that the entertainer, tradesperson, etc. would qualify for the preferred rate. The price of the room for the purpose of calculating tax due would therefore be the lowest rate for the particular room occupied during that timeframe.

  • Value of Room Stated in Contract: When the person providing the service for the hotel has a contract stating that a room of a particular value is to be provided, then the value stated in the contract will be considered the price of the room.

  • Rooms Never Rented to Regular Guests: In some cases, the rooms provided to entertainers, tradespersons, etc. are never rented to other guests due to the condition or location of the room (e.g., above the bar). When a vendor claims this to be the case, the auditor must review the sales records over a reasonable period of time in order to verify this claim. If it can be established that the room occupied by the entertainer, tradesperson, etc. is never rented to other guests, then no tax would be due on the use of the room as there is no purchase price for that particular accommodation.

For example, a hotel contracts with a service provider to service the hotel's free standing televisions located in guest rooms. The service provider normally charges $1000 for the service. However, the parties agree that the hotel will provide the service provider one night of accommodation plus $800 as consideration for the service. The contract does not state the value of the room. The hotel typically offers the room at rates between $200/night and $300/night.

The service provider is purchasing accommodation. The preferred rate in this scenario is $200/night. Therefore, the service provider must pay PST on 8% of $200 and, where applicable, 2% or 3% MRDT.

The hotel is purchasing a taxable related service (television repair). The hotel must pay PST on the total consideration paid for the service. In this situation, the total consideration for the service is $1000 ($800 in money and $200 in accommodation). Therefore, the hotel must pay $70 in PST (7% of $1000).

Section 20 – Original Purchase Price Of Legal Services

PST - SEC.20/Int.

References:

Act: Section 1 "legal services"

PSTR: Section 9

Bulletin PST 106

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 20 that the purchase price of legal services is as follows:

Subsection 20(1) provides that the purchase price of legal services is equal to the total value of the consideration provided by the purchaser for the provision of the legal services.

Subsection 20(2), without limiting subsection 20(1), includes the following in the purchase price of legal services:

(a) the fees and charges, other than those prescribed as excluded (currently, PSTR section 9 [purchase price of legal services – excluded fees and charges] provides that fees and charges for the transmission, printing or copying of documents are prescribed as excluded if the amount of the fees or charges is reasonably related to the cost of the transmission, printing or copying of documents incurred by the person providing the legal services),

(b) disbursements for legal research or secretarial and other support services, and

(c) other prescribed disbursements (currently, nothing is prescribed)

that are billed or otherwise charged to a purchaser for or in relation to the legal services.

Section 21 – Original Purchase Price Of Telecommunication Service

PST - SEC.21/Int.-R.2

References:

Act: Section 1 "telecommunication service"

Bulletin PST 107

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 21 that the purchase price of a telecommunication service is as follows:

Subsection 21(1) provides that the purchase price of a telecommunication service is equal to the total value of the consideration accepted by the seller or person from whom the telecommunication service is acquired as the price or on account of the price of the telecommunication service.

Subsection 21(2), without limiting subsection 21(1), includes the following in the purchase price of a telecommunication service:

(a) sign-up charges;

(b) access charges;

(c) airtime charges;

(d) usage charges;

(e) service charges;

(f) any charge, including a royalty or licence fee, relating to

(i) the use of the telecommunication service, or

(ii) the use of knowledge required to use the telecommunication service,

whether incurred before or after the time that the telecommunication service is acquired;

(g) in respect of a transaction that is in part an acquisition of the right or authority to exhibit a motion picture to others, the purchase price includes the total value of the consideration that

 (i) is paid to the person with whom the exhibitor entered into the transaction, and

(ii) is not otherwise included under section 21 in the purchase price of the telecommunication service.

R.1 Access Id Codes (Issued: 2014/04)

For a separate charge, a company provides a client with access ID codes that are used as part of a telecommunication service that is also provided by that company. The access codes are available to clients where there are multiple users of the telecommunication service, and provide a means of restricting or expanding user access to various telecommunication service options available to the client. For example, with access ID codes, a corporate client may restrict certain employees to making local calls only. The codes may also enable call screening privileges and remote access identification, and facilitate the billing process. The access codes may be individual user codes, or there may be one access code for a specific network.

The access codes form part of the purchase price of a telecommunication service because they are an "access charge" as contemplated by paragraph 21(2)(b), even if the charges are separately stated on an invoice.

R.2 Access, Sign-Up Fees And Monthly Service Fees Charged By Long Distance Telephone Services Providers (Issued: 2014/04)

Where a telecommunication service provider sells only long distance telecommunication services to a customer, PST applies to all charges paid by the customer to acquire the long distance service, including any sign-up fees, monthly service fees, and per-call charges. The exemption for residential services under PSTERR paragraph 83(2)(d) [telephone and communication services] does not apply because all of the charges relate to the acquisition of long distance telecommunication services.

Where the telecommunication service provider also provides local telephone services together with long distance services, the sign-up fee and monthly service fees are generally considered to form part of the purchase price for the local telephone services.

For exempt residential telephone services, the sign-up fee and monthly service fees are also exempt from PST. However, PST applies to any per-call charges or flat fee for long distance telecommunications. For business or commercial telephone services, the sign-up fee and monthly service fees are part of the total amount payable for taxable telecommunication services and are subject to PST.

Section 22 – Reduced Purchase Price Or Lease Price

PST - SEC.22/Int.

References:

Act: Section 1 "original lease price", "original purchase price", "software", "taxable service"; Section 9; Section 12; Section 14; Section 17

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 22 the rules for determining the purchase price or lease price if a reduction in the purchase price or lease price is provided.

Subsection 22(1) provides that the purchase price of tangible personal property is equal to the purchase price of the tangible personal property under paragraph 9(a) [purchase price of tangible personal property] less the amount of the reduction provided by a seller if, at or before the time of sale,

(a) a seller offers to a purchaser a reduction in the purchase price of tangible personal property under paragraph 9(a), and

(b) the conditions of the reduction, if any, have been met by the purchaser.

Subsection 22(2) provides that the lease price of tangible personal property is equal to the original lease price less the amount of the reduction provided by a person if, at or before the time a lease is entered into,

(a) a person offers to a lessee a reduction in the original lease price of tangible personal property, and

(b) the conditions of the reduction, if any, have been met by the lessee.

Subsection 22(3) provides that the purchase price of software is equal to the original purchase price less the amount of the reduction provided by the seller if, at or before the time of sale,

(a) a seller offers to a purchaser a reduction in the original purchase price of software, and

(b) the conditions of the reduction, if any, have been met by the purchaser.

Subsection 22(4) provides that the purchase price of a taxable service (i.e., a related service, accommodation, legal service or telecommunication service) is equal to the original purchase price less the amount of the reduction provided by the seller if, at or before the time of sale,

(a) a seller offers to a purchaser a reduction in the original purchase price of the taxable service, and

(b) the conditions of the reduction, if any, have been met by the purchaser.

Section 23 – Purchase Price Or Lease Price If Coupon Accepted

PST - SEC.23/Int.-R.1

References:

Act: Section 1 "software", "taxable service"; Section 9; Section 12; Section 14; Section 17

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 23 the rules for determining the purchase price or lease price if a coupon is accepted.

Subsection 23(1) provides the following definitions:

"coupon" does not include a gift certificate;

"initial price" means the following:

(a) in relation to a purchase of tangible personal property, the purchase price of the tangible personal property under paragraph (9)(a) or 9(b) [purchase price of tangible personal property];

(b) in relation to a lease of tangible personal property, the lease price of the tangible personal property under paragraph 12(a) or 12(b) [lease price of tangible personal property];

(c) in relation to software, the purchase price of the software under paragraph 14(a) or 14(b) [purchase price of software];

(d) in relation to a taxable service (i.e., a related service, accommodation, legal service or telecommunication service), the purchase price of the taxable service under paragraph 17(a) or 17(b) [purchase price of taxable service].

Subsection 23(2) provides that if a seller or a person leasing tangible personal property to a lessee accepts, as consideration for a purchase or lease of the tangible personal property or software or a taxable service, a rebate offer or coupon that entitles the purchaser or lessee to a reduction in the price of the purchase or lease of the tangible personal property or the price of the software or taxable service equal to an amount specified in or provided for by the rebate offer or coupon, and the seller or the person leasing can reasonably expect to be paid an amount for the redemption of the coupon by another person, for the purposes of the Act:

(a) the purchase price of the tangible personal property, software or taxable service is equal to the initial price of the tangible personal property, software, or taxable service as if the rebate offer or coupon were not accepted, and

(b) the lease price of the tangible personal property is equal to the initial price for the lease of the tangible personal property as if the rebate offer or coupon were not accepted.

Subsection 23(3) provides that despite subsection 23(2), if a seller accepts, as consideration for the purchase of a motor vehicle, a rebate offer or coupon from the manufacturer of the vehicle that entitles the purchaser to a reduction in the price of the vehicle equal to the amount specified in or provided for by the rebate offer or coupon, for the purposes of the Act, the purchase price of the motor vehicle is equal to the initial price of the motor vehicle less the amount specified in or provided for by the rebate offer or coupon.

Subsection 23(4) provides that if a seller or person leasing tangible personal property to a lessee accepts, as consideration for a purchase or lease of tangible personal property or a purchase of software or a taxable service, a rebate offer or coupon that entitles the purchaser or lessee to a reduction in the price of the purchase or lease of the tangible personal property or the price of the software or taxable service equal to an amount specified in or provided for by the rebate offer or coupon, and the seller or the person leasing the tangible personal property to the lessee can reasonably expect not to be paid an amount for the redemption of the coupon by another person, for the purposes of the Act:

(a) the purchase price of the tangible personal property, software or taxable service is equal to the initial price of the tangible personal property, software, or taxable service less the amount specified in or provided for by the rebate offer or coupon, and

(b) the lease price of the tangible personal property is equal to the initial price of the tangible personal property less the amount specified in or provided for by the rebate offer or coupon.

Manufacturers of products often provide rebate offers or coupons to increase sales. Rebate offers and coupons do not reduce the purchase price or lease price under the Act, and tax applies to the purchase price or lease price as if the rebate offer or coupon were not accepted. The only exception is where the rebate offer or coupon is from a motor vehicle manufacturer; in that case, the purchase price of the motor vehicle is reduced by that amount.

Where the coupon or rebate offer is provided by the actual seller or lessor, the purchase price or lease price is reduced and the tax applies to the reduced amount.

For example, consider the following 3 examples:

Example 1: J Edgar Vacuums offers a $100 off coupon where consumers purchase one of its top end vacuums at any retail store during May 2013. J Edgar Vacuums does not have retail stores. The normal retail selling price for the vacuums is $500. When a consumer goes to a retail store with the coupon from J Edgar Vacuums, the coupon is being provided by a party other than the seller, and therefore does not reduce the purchase price under the Act. Tax applies on the $500 amount despite the fact that the customer is only paying $400.

Example 2: Paris Drugs offers a $1 off coupon for hand cream at its retail stores. The original purchase price for the hand cream is $5. The coupon is provided by the actual seller, and reduces the purchase price to $4. Tax applies on the reduced amount.

Example 3: Fonda, a motor vehicle manufacturer, offers a $1,000 manufacturer’s rebate to consumers purchasing one of their vehicles during May 2013. Fonda sells its vehicles through independent dealerships. The normal retail selling price for one of its vehicles is $50,000. When a consumer goes to a dealership, the reduction is being provided by a party other than the seller, but because of the exception provided by subsection 23(3), the rebate reduces the purchase price under the Act. Tax applies on the reduced amount (i.e., $49,000).

R.1 Purchase Credits Provided By Credit Card Companies (Issued: 2014/08)

Some credit card companies provide their customers with a credit in dollars (e.g. $1,000) that they can apply towards the purchase of a motor vehicle or other TPP after the customers have charged a specified amount of money to their credit card. The credit is applied by the vendor at the time the motor vehicle is purchased. The credit card company then reimburses the seller for the amount of the credit.

Paragraph 23(2)(a) provides that, for the purpose of determining the purchase price, if the seller is reimbursed by a third party for the reduction in the purchase price, PST applies to the purchase price as if the credit was not applied. As a result, PST applies to the purchase price before the credit, less any trade-in allowance captured by section 24 [Purchase price if trade-in allowed on purchase of tangible personal property].

Example:

Purchase Price for New Vehicle: $25,000
Less Trade-in Allowance: $5,000 
Equals: $20,000 
Less Credit Card Credit: $1,000
Amount Paid by Customer: $19,000 
Amount Subject to PST: $20,000

PST - SEC.24/Int.-R.2 Section 24 – Purchase Price If Trade-In Allowed On Purchase Of Tangible Personal Property

References:

Act: Section 1 "Excise Tax Act"; Section 9; Section 49

Bulletin PST 116

Interpretation (Issued: 2013/11)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 24 the purchase price or lease price where a trade-in is accepted.

Subsection 24(1) provides the following definitions:

"applicable tax" means a tax imposed in relation to tangible personal property under any of the following:

(a) the Act;

(b) the Consumption Tax Rebate and Transition Act;

(c) the Social Service Tax Act;

(d) section 165(2), 212.1 or 218.1 or Division IV.1 of Part IX of the Excise Tax Act in respect of British Columbia as a participating province under Part IX of that Act;

"initial price," in relation to tangible personal property, means the purchase price of the tangible personal property under paragraphs 9(a)-(c) [purchase price of tangible personal property].

Subsection 24(2) provides that if either the tangible personal property that is sold or traded-in is a multijurisdictional vehicle, the trade-in reduction under subsection 24(3) does not apply.

Subsection 24(3) provides that if, in relation to a sale in British Columbia of tangible personal property, other tangible personal property on which the purchaser has previously paid the applicable tax or that was exempt from an applicable tax is accepted at the time of sale by the seller as consideration on account of the price of the tangible personal property sold (i.e., there is a trade-in), for the purposes of the Act, the purchase price of the tangible personal property sold is the amount equal to the initial price of the tangible personal property sold less the amount of the credit allowed for the tangible personal property accepted.

Subsection 24(4) provides that if a motor vehicle on which a person referred to in subsection 49(5) [tax if tangible personal property brought into British Columbia for use] has previously paid an applicable tax or that was exempt from an applicable tax is accepted at the time of sale of a motor vehicle to which section 49 applies by the seller as consideration on account of the price of the motor vehicle sold (i.e., there is a trade-in), for the purposes of subsection 49(7.1) or subsection 49(8), the purchase price of the motor vehicle sold is the amount equal to the initial price of the motor vehicle sold less the amount of the credit allowed for the motor vehicle accepted.

In order for a trade-in to reduce the purchase price on which tax is charged under the Act, all of the following criteria must be met:

  • The tangible personal property traded-in by the purchaser must have "tax paid status" (i.e., either the applicable tax as defined in subsection 24(1) was paid, or the purchaser was exempt from one of these taxes).

  • The trade-in must be accepted at the time of the sale.

Because of these criteria, the following situations would not qualify for a trade-in credit:

  • The tangible personal property traded-in was not subject to any of the applicable taxes.

  • The trade-in was not accepted at the time of the sale (e.g., the trade-in was accepted two days after the sale).

R.1 Dealer Use And Manufacturer Use Vehicles (Issued: 2014/07)

A trade-in allowance is available where a seller accepts a "tax paid" vehicle as a partial reduction in the purchase price of a new vehicle at the time the new vehicle is acquired from the seller.

In instances where a dealer returns a dealer-use vehicle (or a manufacturer returns a manufacturer-use vehicle) to inventory and replaces it with another vehicle, there has not been a sale of the vehicle (i.e. the dealer cannot buy a vehicle from itself and later trade that vehicle in on another vehicle that it already owns). Therefore, the trade-in provisions under section 24 do not apply to dealer use or manufacturer use vehicles.

R.2 Out Of Country Motor Vehicle Trades (Issued: 2014/09)

The trade-in credit does not apply to motor vehicle trade-ins on out-of-country trades regardless of whether the trade-in has had an applicable tax paid on it.

Section 24(4) deems a purchase price for the purposes of subsection 49(7.1) or subsection 49(8). However, section 49(7.1) and (8) only apply (in accordance with subsection 49(7)) to a motor vehicle if the person purchased the motor vehicle outside British Columbia, but in Canada. Accordingly, the trade-in credit does not apply to vehicles imported from outside Canada.

Section 25 – Depreciated Purchase Price Of Tangible Personal Property

PST - SEC.25/Int.

References:

Act: Section 1 "conveyance", "entry date", "prototype"; Section 49; Section 51; Section 51.1; Section 52; Section 63; Section 72; Section 72.1; Section 80.4; Section 82; Section 82.1; Section 83; Section 84; Section 85; Section 86

PSTR: Section 10

Bulletin PST 307

Interpretation (Issued: 2013/11; Revised: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 amended subsection 25(2)(a)(iii) of the Act. The amendment is consequential to concurrent amendments to section 72 [tax if vehicle ceases to be multijurisdictional] and section 72.1 [tax if transferred vehicle ceases to be multijurisdictional] of the Act.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 25 the rules regarding purchase price with respect to depreciation:

Subsection 25(1) provides that, subject to subsection 25(3), section 25 applies (i.e., depreciation applies) in respect of tangible personal property that becomes subject to tax under specified sections:

Subsection 25(2) provides the formula to determine the purchase price of prescribed TPP (see PSTR Section 10) to which depreciation applies.

Subsection 25(3) provides that section 25 does not apply if the TPP becomes subject to tax under the specified sections than 15 days after the date of purchase.

The general rule is that for the above provisions, the purchase price is the greater of the depreciated value or 50% of the purchase price of the TPP. The depreciation rules do not apply if the TPP becomes subject to tax under the sections specified in subsection 25(3) less than 15 days after the date of purchase.

For information on depreciation rates, and how depreciation must be calculated, see PSTR/Sec. 10/Int.

Section 26 – Purchase Price If Bundled Purchase

PST - SEC.26/Int.-R.1

References:

Act: Section 1 "fair market value", "non-taxable component", "software", "taxable component", "taxable service"; Section 9; Section 14; Section 17; Section 137; Section 240

PSTR: Section 10.1; Section 11

Bulletin PST 316

Interpretation (Issued: 2013/11; Revised: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 added a new subsection (4.1) to section 26 of the Act, to provide for the exclusion of a rule (i.e. section 26(4)(b)) for the determination of the purchase price of a taxable component that is sold or provided with a non-taxable component for a single price in certain circumstances.

Also, for reference purposes, subsection 26(4) was amended by striking out "subsection (6)" and substituting the phrase "subsections (4.1) and (6)".

Subsection 26(4)(b) is an exception to the general rule that PST applies to the fair market value of the taxable component in a bundled purchase. If subsection 26(4)(b) applies (i.e. the non-taxable component is not ordinarily available/provided separate from the taxable component for a price), 100% of the bundled price is subject to PST. This rule resulted in certain cases where taxable software, not ordinarily available on its own, was provided to participants in educational, training, or instructional programs. In such cases, 100% of the bundled price (i.e. including tuition) was subject to PST.

The amendment results in such cases being subject to the general rule for bundled purchases. This exclusion is limited to cases where software is the only taxable component and where it is provided to participants in programs that mirror those described in PSTERR subsections 85(a) and (b) [education programs]. Also see PSTR Section 10.1.

Effective April 1, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 repealed and replaced section 26.

Section 26 sets out the rules to determine the purchase price of a taxable component in circumstances where the taxable component is sold or provided with a non-taxable component for a single price (i.e. a bundled purchase).

Subsection 26(2) provides that, subject to subsection 19(3), section 26 applies if a taxable component is sold with a non-taxable component for a single price.

Subsection 26(3) provides that, subject to subsections 26(4) and 26(6), the purchase price of a taxable component is equal to the fair market value of the taxable component.

Subsection 26(4) provides that, subject to subsection 26(6), the purchase price of a taxable component is equal to the initial price accepted by the seller or the person from whom the taxable component passes or is acquired for all the taxable and non-taxable components sold for the single price if:

(a) the fair market value of the taxable component is greater than 90% of the single price and the single price is less than $500, or

(b) the non-taxable component is not ordinarily available for sale separate from the taxable component or is not ordinarily provided separate from the taxable component for a price.

Paragraph (b) above does not apply to software bundled with a prescribed program or activity (see PSTR section 10.1) and that is provided only to participants of the program or activity.

Subsection 26(5) provides that subsection 26(6) applies in relation to accommodation if

(a) the accommodation is the only taxable component sold or provided with a meal for a single price, and

(b) the meal is the only non-taxable component sold or provided with that accommodation.

Subsection 26(6) provides that the purchase price of accommodation to which this subsection applies is equal to the amount attributed to the purchase of the accommodation in accordance with the regulations (see PSTR/Sec.11/Int.).

The following is a summary of the bundled sales rules (does not include the rules for accommodation under subsections 26(5) and 26(6)):

Summary of bundled sales rules (does not include the rules for accommodation under subsections 26(5) and 26(6))

General Rule

Tax applies on the fair market value of the taxable component of the bundled sale - subsection 26(3)

General Exceptions

Value of taxable portion

PST

• Taxable portion is more than 90% of the single price and the single price is less than $500 (paragraph 26(4)(a)), or

• The non-taxable component is not ordinarily available for sale separate from the taxable component or is not ordinarily provided separate from the taxable component for a price (paragraph 26(4)(b))

Tax applies on the total single price - subsection 26(4)

Taxable portion is $50 or less and is 10% or less of the single price

The total single price is exempt under section 137 [taxable component sold with non-taxable component for single price], provided all of the criteria of section 137 are met

Examples:

General rule

A wicker gift basket (taxable) contains a teddy bear (taxable) and chocolates (non-taxable) for a single price of $20. The wicker basket and teddy bear have a fair market value of $15 and the chocolates have a fair market value of $10. Tax applies to the fair market value of the basket and teddy bear (i.e., $15).

First exception – taxable component more than 90% of the single price and the single price is less than $500

A wicker gift basket (taxable) contains roses (taxable) and chocolates (non-taxable) for a single price of $100. The basket and roses have a fair market value of $92 (92% of the total price). Because the total selling price is less than $500 and the fair market value of the taxable component is more than 90% of the total single price, tax applies on the total single price of $100.

Second exception – taxable component is $50 or less and is 10% or less of the single price

A wicker gift basket (taxable) contains a variety of food (non-taxable) and a candle (taxable) for a single price of $100. The fair market value of the candle is $2 and the fair market value of the basket is $3. Because the taxable component (the basket and the candle: $5) is less than $50 and less than 10% of the single price ($100), the total single price is exempt under section 137 provided all the criteria of section 137 are met.

R.1 Application Of Tax To Bundled Purchases Containing Liquor (Issued: 2013/11)

If liquor is sold as part of a bundled sale, the liquor is treated like any other taxable component in a bundled sale and the general rule applies. Tax applies at a rate of 10% on the fair market value of the liquor and, generally, at a rate of 7% on the other taxable goods or services that are part of the bundle.

If the taxable component (liquor) of the sale is more than 90% of the total selling price and the total selling price is less than $500, then the entire price is subject to tax.

Note: the exemption under section 137 does not apply when liquor is sold as part of a bundled sale due to paragraph 137(e). Therefore, tax applies at the rate of 10% on the fair market value of the liquor and, generally, 7% on the fair market value of the other taxable goods or services in the bundle, even if the fair market value of the taxable portion, including liquor, is $50 or less and 10% or less of the total selling price.

Section 27 – Valuation By Director

PST - SEC.27/Int.

References:

Act: Section 1 "fair market value", "sale", "software", "taxable service", "use"; Section 16; Section 109; Part 3 – Division 9

Interpretation (Issued: 2013/11; Revised: 2016/01)

Effective June 9, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 27(2) to provide an exception rule for section 211 [appeal to minister] and section 212 [appeal to court]. The amendment ensures, as temporarily provided for in section 1.11 of the Provincial Sales Tax Transitional Regulation, that the deemed fair market value under section 27 (2) does not apply to appeals under sections 211 and 212. Section 1.11 of the Provincial Sales Tax Transitional Regulation will be repealed under section 47 of the Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 on April 1, 2016. The amendment will allow the minister and courts, on appeal, to continue to consider the determination of fair market value and vary the determination when considering an appeal beyond April 1, 2016.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 and Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provide under section 27 that the director may determine the fair market value in certain circumstances. Once the determination is made, that amount becomes the purchase price or lease price (as applicable) on which tax is payable.

Subsection 27(3) provides that for the purposes of paragraph (m) of the definition of "sale" and subparagraph (a)(ix) of the definition of "use" (relating to the provision by a registered charity of tangible personal property of nominal value as a gift in return for a donation), the director may determine whether tangible personal property or a type of tangible personal property has a nominal value.