Provincial Sales Tax Act, Part 7 - Refunds

Division 1 — Refunds from Collectors

Section 146 – Refund If No Obligation To Pay

PST - SEC.146/Int.

References:

Act: Section 1 "collector", "lease", "software", "taxable service"; Section 148; Section 152

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2014/09)

Effective February 19, 2014, Bill 8, Budget Measures Implementation Act, 2014 amended section 146 to broaden its application to tax paid in error generally (as opposed to being limited to tax paid in error in respect of TPP, software, or a taxable service). As a result, circumstances such as PST paid in respect of the purchase of real property qualify for a refund under section 146.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 146 authorization for a collector to provide a refund or credit within 180 days of the date their customer paid an amount as tax in circumstances in which there was no legal obligation to pay the tax.

The refund or credit provided under section 146 is permissive, meaning that the collector may, but is not required to, provide a refund or credit.

Section 147 – Refund If Person Fails To Provide Evidence At Time Of Sale Or Lease

PST - SEC.147/Int.

References:

Act: Section 1 "collector", "lease", "software", "taxable service"; Section 37; Section 39; Section 44; Section 49; Section 92; Section 93; Section 95; Section 105; Section 119; Section 123.1; Section 130; Section 145; Section 148; Section 153

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2016/01)

Effective April 1, 2013, Bill 13, Finance Statutes Amendment Act, 2015 repeals and replaces section 147. The amendment clarifies the scope of the section by authorizing collectors to credit a person an amount of tax that has been levied but not yet paid in situations where a customer provides evidence of an exemption after the tax has been levied.

Effective February 19, 2014, Bill 8, Budget Measures Implementation Act, 2014 amended section 147 to add a reference to subsection 39(4).

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 147 authorization for a collector to provide a refund or credit within 180 days of the date their customer paid an amount as tax in circumstances in which a customer provides evidence of eligibility to claim an exemption from tax.

The refund or credit provided under section 147 is permissive, meaning that the collector may, but is not required to, provide a refund or credit.

Section 148 – Prohibition – Refund Already Received

PST - SEC.148/Int.

References:

Act: Section 1 "director"; Section 146; Section 147; Section 152; Section 153

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 amended section 148 to add references to credits.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 148 general limits and prohibitions on persons requesting refunds from the director.

This provision ensures that a person cannot claim or receive a refund (or credit) twice (i.e., from a collector and from the director) on the same payment of tax.

Section 149 – Refund If Motor Vehicle Returned To Collector

PST - SEC.149/Int.

References:

Act: Section 1 "collector", "motor vehicle", "purchase price"; Section 150; Section 157

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2016/01)

Effective April 1, 2013, Bill 13, Finance Statutes Amendment Act, 2015 amends section 149 by providing authority for a collector to provide a credit or a refund of the amount of tax paid or the amount of tax that is payable, but has not been paid.

A refund cannot be paid by the collector when the amount has not been paid by the purchaser. Under the amendment, the collector is able to credit an amount where the purchaser has not yet paid the amount to the collector.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 149 the requirement for a collector to provide a refund to a purchaser of a motor vehicle if:

(a) a purchaser returns a motor vehicle to the collector who sold it to the purchaser within one year of the date tax is payable under the Act in respect of the purchase, and

(b) in return for the motor vehicle the collector refunds or credits to the purchaser all or a portion of the purchase price,

the collector must, at the time the refund or credit of the purchase price is paid or allowed, refund to the purchaser the amount of tax paid by the purchaser that is attributable to the amount of the refund or credit of the purchase price.

Section 149 is different than section 150 [refund or credit of purchase price] because a collector must provide a refund or credit of tax paid under section 149, but may provide a refund under section 150.

Section 150 – Refund Or Credit Of Purchase Price

PST - SEC.150/Int.-R.3

References:

Act: Section 1 "collector", "purchase price", "software", "taxable service"; Section 149; Section 157

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2016/01)

Effective April 1, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 150 by adding a reference to an amount "payable" in addition to an amount paid. The amendment clarifies that collectors may credit an amount of tax that has been levied but not yet paid (i.e., an amount payable).

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 150 that, subject to section 149 [refund if motor vehicle returned to collector], if a collector, within four years of the date tax is payable under the Act in respect of the purchase, pays a refund or allows a credit to a purchaser of tangible personal property, software or a taxable service of all or a portion of the purchase price, the collector may, at the time the refund or credit of the purchase price is paid or allowed, refund or credit to the purchaser the amount of tax paid by the purchaser that is attributable to the amount of the refund or credit of the purchase price.

Under section 150, the collector may, but is not required to, provide a refund or credit of tax paid.

R.1 Volume Rebates (Issued: 2014/04)

A rebate of a portion of total purchases over a certain timeframe (e.g., annually) is a reduction in the purchase price of the TPP purchased over that timeframe. Therefore, as provided under section 150, the collector may refund the tax attributable to the reduction in the purchase price. Alternatively, the purchaser may apply for a refund from the director under section 157 [refund by director if collector does not provide refund].

R.2 Restocking Charges (Issued: 2014/04)

Where a restocking charge is made by the collector when goods are returned for a refund or credit of the purchase price within 4 years of purchase, the re-stocking charge reduces the amount of the purchase price that is refunded or credited to the purchaser. The amount of tax to be refunded or credited is calculated on the actual amount of the purchase price refunded. Where a restocking charge is made, only the PST attributable to the net amount of the refund or credit given to the purchaser by the collector is refundable; that is, on the refund or credit minus the restocking charge.

For example, if there was a $20 restocking charge for returned merchandise on which a $100 credit was given, the net credit to the customer would equal $80, as follows:

Example

Purchase price originally paid:

 

$100.00

Credit provided:

$100.00

 

Less restocking charge:

 $20.00

 

Net Credit:

 

$80.00

Amount of PST refund or credit
(7% of net credit):

 

$5.60

R.3 Commodities Returned For Fair Market Value (Issued: 2014/04)

Commodities such as minerals are sometimes returned to the supplier for their current market value at the time of return rather than for the price originally paid by the customer. As such, the customer may receive an amount that is greater than or less than the amount originally paid.

Where the materials are returned within 4 years, the customer is only entitled to a refund or credit of the amount of tax paid that is attributable to the amount of the refund or credit of the purchase price.

If the amount of the credit or refund of the purchase price is:

  • higher than the price originally paid by the customer, the PST refund or credit cannot exceed the amount of PST actually paid

  • lower than the price originally paid by the customer, the PST refund or credit is based on the amount of the refund or credit of the purchase price.

Section 151 – Refund Or Credit Of Lease Price

PST - SEC.151/Int.

References:

Act: Section 1 "collector", "lease", "lease price", "lessee"; Section 157

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2016/01)

Effective April 1, 2015, Bill 13, Finance Statutes Amendment Act, 2015 amends section 151 by adding a reference to an amount "payable" in addition to an amount paid. The amendment clarifies that collectors may credit an amount of tax that has been levied but not yet paid (i.e., an amount payable).

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 151 that if a collector, within four years of the date tax is payable under the Act in respect of a lease, pays a refund or allows a credit to a lessee of tangible personal property of all or a portion of the lease price, the collector may, at the time the refund or credit of the lease price is paid or allowed, refund or credit to the lessee the amount of tax paid by the lessee that is attributable to the amount of the refund or credit of the lease price.

Under section 151, the collector may, but is not required to, provide a refund or credit of tax paid.

Division 2 — Refunds from Director

Section 152 – Refund If No Obligation To Pay Or Collect

PST - SEC.152/Int.-R.3

References:

Act: Section 1 "collector", "director"; Section 146; Section 148; Section 208

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2014/09)

Effective April 1, 2013, Bill 8, Budget Measures Implementation Act, 2014 amended section 152 to authorize the director to pay a refund to a collector if the collector has remitted tax to the government and the person liable to pay the tax has also paid the tax directly to government (i.e., self-assessed).

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 152 the requirement for the director to provide a refund in which a person has paid tax and there was no legal obligation to pay the amount or in which a collector has remitted an amount and there was no requirement for the collector to levy and collect the amount.

R.1 Recovery Of Stolen Vehicles (Issued: 2014/04)

A purchaser may unknowingly pay PST on the acquisition of a stolen vehicle. In some cases, the police may subsequently identify the vehicle as stolen and return the vehicle to the proper owner.

In this situation, no sale of the vehicle has occurred because the seller was not the legal owner of the vehicle and could not transfer title to the purchaser. Because there was no sale, the purchaser had no legal obligation to pay the tax and is eligible for a refund of the PST paid in accordance with subsection 152(1).

R.2 Refunds And Tax-Included Pricing (Issued: 2016/07)

Some collectors may take a tax-included approach to pricing. See PSTR/Sec. 85/R.1. In such cases, and particularly in cases where no PST is shown on a receipt, bill or invoice (see PSTR/Sec. 85/R.2), the evaluation of refund claims is nuanced.

Subsection 152(1) provides authority for a refund to a person who has paid an amount as tax in circumstances in which there was no legal obligation to pay the amount as tax. This authority may be used to provide a refund to a purchaser or lessee.

If a collector has taken a tax-included approach to pricing and has not issued a receipt, bill or invoice showing the PST as a separate item, a refund may still be provided to a purchaser or lessee if the director is satisfied that the purchaser or lessee paid an amount as tax. The director may be satisfied if a review of the collector's books and records indicates that the collector treated a portion of the money it received as PST (e.g., by accumulating amounts as PST in a tax liability account).

For example, if a collector sells computers for $500, issues receipts, does not show tax on the receipts, but, in its books and records, apportions each $500 it received into PST of $31.25, GST of $22.32, and revenue of $446.43, this indicates that the collector did levy and collect an amount as PST. If an audit confirms that the collector accumulated PST in respect of computers it delivered to locations outside BC, the customers outside BC could apply for PST refunds under subsection 152(1). As a result of the collector's business practices, these customers would not have receipts demonstrating that they paid $31.25 as PST. However, the director may consider other evidence (e.g., a letter from the collector to affected customers, along with a receipt proving that a customer belongs to this class) for the purposes of evaluating a purchaser's refund claim.

Although customers are less likely to know that they are eligible to claim a refund of PST in cases where a collector did not show the PST as a separate item on a receipt, bill or invoice (because they may not know that they paid an amount as PST), this does not provide grounds upon which a refund may instead be issued to the collector.

Subsection 152(2) provides authority for a refund to a collector if the collector has remitted an amount in circumstances in which the collector (a) was not required to levy and collect the amount under the Act, and (b) did not collect the amount under the Act. If a collector has taken a tax-included approach to pricing and "backs out" an amount as PST (as in the previous example), that collector has collected an amount under the Act. Therefore, subsection 152(2) does not provide authority for a refund to such a collector, but subsection 152(1) remains available to the collector's customers.

R.3 Refund If Collector Makes Out-Of-Pocket Remittance In Error (Issued: 2016/07)

If a collector makes an out-of-pocket remittance in respect of an amount they (a) believe they were required to levy and collect under the Act, and (b) did not collect under the Act, but later discovers that they were not required to levy and collect the amount under the Act, the collector may apply for a refund under subsection 152(2).

For example, a collector sells clothing and footwear for adults and children. It does not levy and collect PST on sales of children's clothing and footwear. However, after hearing that a competitor levies and collects PST on children's footwear, the collector reviews its records, calculates an amount equal to 7% of all of its sales of children's footwear for the past four years (i.e., the amount of tax its customers would have paid, if the collector had levied tax), reports this amount as collected taxes on its next collector's return, and remits the amount to the government.

In essence, in making this remittance, the collector has paid an amount equal to the penalty that it would face under subsection 203(1) for failing to levy tax. The collector later confirms that children's footwear is exempt under PSTERR subsection 9(2). Because the amount remitted by the collector was an amount that the collector (a) was not required to levy and collect under the Act, and (b) did not collect under the Act (i.e., because the collector calculated the remittance on top of the money it received from its customers), the collector may apply for a refund under subsection 152(2).

Section 153 – Refund If Person Fails To Provide Evidence At Time Of Sale Or Lease

PST - SEC.153/Int.

References:

Act: Section 1 "collector", "director"; Section 37; Section 44; Section 49; Part 3 – Division 6; Part 3 – Division 7; Section 92; Section 93; Section 95; Section 105; Section 119; Section 123.1; Section 130; Section 145; Section 147; Section 148

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2014/09)

Effective February 19, 2014, Bill 8 - Budget Measures Implementation Act, 2014 amended paragraph 153(1)(a) by adding a reference to subsection 39(4). Section 39(4) was added at the same time and is a similar documentation provision to other sections referenced in section 153(1)(a).

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 153 the requirement for the director to provide a refund in the circumstance in which a person provides evidence of eligibility to claim an exemption from tax paid to a collector.

Section 153.1 – Refund If Person Fails To Provide Evidence At Time Of Vehicle Registration

PST - SEC.153.1/Int.

References:

Act: Section 1 "director"; Section 30; Section 37; Section 49; Section 50; Section 52; Section 100

Bulletin PST 400

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 added section 153.1.

Section 153.1 requires that, if the director is satisfied that

(a) a person was required to pay to the Insurance Corporation of British Columbia (ICBC) an amount of tax under section 37 [tax on purchase], section 49 [tax if tangible personal property brought into British Columbia for use], section 50 [tax on registration of vehicle brought into British Columbia], section 52 [tax if tangible personal property brought into British Columbia by non-residents] or section 100 [tax on gift of vehicle, boat or aircraft given in British Columbia] in circumstances in which the person would not have been required to pay the amount if ICBC had obtained from the person, at or before the time the tax was payable, the declaration, information and document required under subsection 30(7) [when tax is payable in respect of vehicles], and

(b) the person would not have been required to pay the amount of tax to ICBC but for subsection 30(7),

the director must refund to the person the amount of tax paid.

Section 154 – Motor Vehicle Returned To Manufacturer

PST - SEC.154/Int.-R.2

References:

Act: Section 1 "director", "motor vehicle", "purchase price"

Bulletin PST 400

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 154 the requirement that, if the director is satisfied that

(a) a purchaser returned a motor vehicle to the manufacturer more than one year after the date of purchase,

(b) the return of the motor vehicle to the manufacturer results from an independent, impartial third party dispute resolution process, and

(c) on the return of the motor vehicle the manufacturer paid a refund or allowed a credit to the purchaser of all or a portion of the purchase price,

the director must refund to the purchaser the amount of tax paid by the purchaser that is attributable to the amount of the refund or credit of the purchase price.

R.1 Motor Vehicle Returned To Manufacturer Within One Year After The Date Of Purchase (Issued: 2017/05)

Order in Council 120, dated March 8, 2017 authorizes a remission of tax in relation to the amount of tax attributable to the amount of the purchase price of the motor vehicle refunded or credited to the purchaser

Conditions for Remission

The remission only applies providing all of the following conditions have been met:

  • the purchaser returned the motor vehicle to the manufacturer within one year after the date of purchase,

  • the return of the motor vehicle to the manufacturer resulted from an independent and impartial third party dispute resolution process, and

  • upon the return of the motor vehicle, the manufacturer paid a refund or allowed a credit to the purchaser of all or a portion of the purchase price.

Limitations on Remission

  • A remission of less than $10 is not authorized.

  • A remission on an application that was received by the director more than four years after the tax was paid is not authorized.

An application for a remission must be in a form satisfactory to the director (using an Application for Refund - General (FIN 355)) and must be signed by the purchaser.

R.2 Motor Vehicle Returned To Manufacturer More Than Four Years After The Date Of Purchase (Issued: 2018/11)

Order in Council 445, dated November 28, 2017 authorizes a remission of Social Service Tax, Tax on Designated Property or Provincial Sales Tax (tax) in relation to the amount of tax attributable to the amount of the purchase price of the motor vehicle refunded or credited to the purchaser by the manufacturer through the buy-backs under the Volkswagen and Audi emissions settlement awards.

Conditions for Remission

The remission only applies providing all of the following conditions have been met:

  • the purchaser returned the motor vehicle to the manufacturer more than four years after the date on which tax was paid

  • the return of the motor vehicle to the manufacturer resulted through the buy-back options of the Volkswagen and Audi emissions settlement agreements, and

  • upon the return of the motor vehicle, the manufacturer paid a refund or allowed a credit to the purchaser of all or a portion of the purchase price.

Limitations on Remission

  • A remission of less than $10 is not authorized.

  • A remission on an application that was received by the director within four years after the tax was paid is not authorized.

An application for a remission must be in a form satisfactory to the director (using an Application for Provincial Sales Tax Paid on a Vehicle (FIN 355MV)) and must be signed by the purchaser.

Section 155 – Refund In Accordance With Nisga’a Nation Taxation Agreement

PST - SEC.155/Int.

References:

Act: Section 1 "director"; Section 86; Section 111; Section 165

Bulletin PST 314

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 155 the requirement for the director to pay a refund of tax paid to an eligible person so entitled under the Nisga'a Nation Taxation Agreement.

Subsection 155(1) provides that in section 155, "Taxation Agreement" has the same meaning as in section 6.1 of the Nisga’a Final Agreement Act.

Subsection 155(2) provides that if the Taxation Agreement provides that a person is entitled to a refund of tax paid by the person under the Act (i.e., the Provincial Sales Tax Act), on application and on receipt of evidence establishing that the person is so entitled, the director must pay that refund to that person.

Section 156 – Refund In Accordance With Treaty First Nation Tax Treatment Agreement

PST - SEC.156/Int.

References:

Act: Section 1 "director"; Section 86; Section 111; Section 165

Bulletin PST 314

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 156 that if a tax treatment agreement of a treaty first nation provides that a person is entitled to a refund of tax paid by the person under the Act, on application and on receipt of evidence establishing that the person is so entitled, the director must pay that refund to that person.

Section 157 – Refund By Director If Collector Does Not Provide Refund

PST - SEC.157/Int.

References:

Act: Section 1 "collector", "director", "lease price", "purchase price"; Section 149; Section 150; Section 151

Bulletin PST 400

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 157 the requirement for the director to provide a refund to a person in circumstances in which a collector did not refund or credit to the person the correct amount as attributed to the purchase price or lease price.

Subsection 157(1) provides that if the director is satisfied that

(a) a collector paid a refund or allowed a credit to a person of all or a portion of a purchase price in the circumstances referred to in section 149 [refund if motor vehicle returned to collector] or section 150 [refund or credit of purchase price], and

(b) the collector did not refund or credit to the person the amount of tax paid by the person under the Act that is attributable to the amount of the refund or credit of the purchase price,

the director must refund to that person the amount of tax paid by the person that is attributable to the amount of the refund or credit of the purchase price.

Subsection 157(2) provides that if the director is satisfied that

(a) a collector paid a refund or allowed a credit to a person of all or a portion of a lease price in the circumstances referred to in section 151 [refund or credit of lease price], and

(b) the collector did not refund or credit to the person the amount of tax paid by the person that is attributable to the amount of the refund or credit of the lease price,

the director must refund to that person the amount of tax paid by the person that is attributable to the amount of the refund or credit of the lease price.

Section 158 – Property Shipped Out Of British Columbia

PST - SEC.158/Int.-R.1

References:

Act: Section 1 "director", "promotional distribution", "use"

PSTR: Section 12

Bulletin PST 400

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 158 that if the director is satisfied that

(a) a purchaser purchased tangible personal property at a sale in British Columbia for a business use and paid tax under Part 3 [Taxes in Relation to Tangible Personal Property] on the purchase,

(b) the tangible personal property,

(i) in the case of tangible personal property provided by way of promotional distribution, was shipped out of British Columbia in bulk to a recipient for the recipient’s own use or consumption outside British Columbia, or

(ii) in any other case, was shipped out of British Columbia for use outside British Columbia, and

(c) no use whatsoever was made of the tangible personal property while it was in British Columbia other than to store it in and to ship it out of British Columbia,

the director must refund to the purchaser the tax paid under Part 3 on the purchase.

R.1 Property Shipped Out Of British Columbia For Non-Business Use (Issued: 2014/04)

Section 158 refers only to property purchased for a business use. Property purchased in British Columbia for personal use outside the province is not eligible for a refund, even if no use has been made of it prior to its removal from the province.

Note: If goods are delivered (i.e., shipped, mailed, etc.) by the seller to an out-of-province location, they may be exempt under PSTERR section 26 [tangible personal property shipped outside British Columbia]. This exemption applies regardless of the residency of the purchaser or the nature of the use of the goods.

Section 158.1 - Property Used to Improve Real Property Outside British Columbia

PST - SEC.158.1/Int.

References:

Act: Section 1 "affixed machinery", "use"

Bulletin PST 506

Interpretation (Issued: 2016/01)

Effective February 18, 2015, Bill 10, Budget Measures Implementation Act, 2015 added section 158.1 to provide a refund to a contractor who is required to pay PST on TPP if they:

  • process, fabricate or manufacture the TPP into, or attach to or incorporate the TPP into other TPP,

  • ship the other TPP outside of BC to fulfill a contract for the supply and installation of an improvement to real property, and

  • pay sales tax in the other jurisdiction on the other TPP and are not eligible for a refund of or credit or rebate for that sales tax.

Section 158.1 is added because of the changes to the definition of "use" that impose 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. Changes to the definition of "use" ensure the PST 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 provides a refund of PST if sales tax is paid by the contractor on the resulting TPP in another jurisdiction.

Section 159 – Refund Or Deduction For Bad Debts

PST - SEC.159/Int.-R.3

References:

Act: Section 1 "director", "lease", "lessee", "purchaser", "registrant", "reporting period", "software", "taxable service"; Section 166; Section 168; Section 199

PSTERR: Section 134

Bulletin CTB 001

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 159 authority for a registrant to

  • deduct from taxes required to be remitted, or

  • claim a refund from the director

the specified amount in relation to a bad debt.

Subsection 159(1) provides the following definitions for the purposes of section 159:

"specified amount", in relation to a transaction, means a portion, determined in the prescribed manner (as provided by PSTERR subsection 134(1) [refund or deduction for bad debts]), of the amount remitted by the person to the government in respect of taxes payable under the Act on that transaction;

"transaction" means a transaction referred to in paragraph 159(2)(a).

Subsection 159(2) provides that section 159 applies to a person in respect of a transaction if

(a) the person sells or leases tangible personal property or provides software or a taxable service,

(b) the person, in accordance with the Act, remits the tax required under the Act to be levied and collected for the transaction,

(c) the person is a registrant at the time the transaction occurs,

(d) the purchaser or lessee does not pay to the person the full amount of the consideration in respect of the transaction, and

(e) within four years of the date on which the tax referred to in paragraph 159(2)(b) was remitted, the person writes off as unrealizable or uncollectable the amount owing by the purchaser or lessee.

Subsection 159(3) provides that a registrant to whom section 159 applies in respect of a transaction may deduct the specified amount from the amount of taxes that the registrant is required to remit under the Act in respect of the reporting period in which the registrant writes off the amount owing referred to in paragraph 159(2)(e).

Subsection 159(4) provides that a deduction referred to in subsection 159(3) must be made in a form specified by the director (in Box H on a Provincial Sales Tax Return (form FIN 400)).

Subsection 159(5) provides that if the director is satisfied that

(a) section 159 applies to a person in respect of a transaction, and

(b) if the person is a registrant, the person has not made a deduction under subsection 159(3) in respect of the transaction,

the director must refund the specified amount to the person.

Subsection 159(6) provides that if a registrant who has made a deduction under subsection 159(3) or obtained a refund under subsection 159(5) recovers some or all of the amount referred to in paragraph 159(2)(e) with respect to which the refund was paid or the deduction was made, the registrant must add an amount, determined in the prescribed manner (as provided by PSTERR subsection 134(2)), to the tax remitted by the registrant under the Act in respect of the reporting period in which the recovery was made.

Subsection 159(7) provides that if a person, other than a registrant referred to in subsection 159(6), who obtained a refund under subsection 159(5) recovers some or all of the amount referred to in paragraph 159(2)(e) with respect to which the refund was paid, the person must pay to the government an amount, determined in the prescribed manner (as provided by PSTERR subsection 134(3)), on or before the last day of the month following the month in which the recovery was made.

R.1 Sales Of Bad Debt Accounts Receivables (Issued: 2014/04)

Section 159 provides a proportional refund of tax remitted on sales that are subsequently written off as bad debts. Under the legislation, the right to claim a refund is vested in the person who remitted the tax at the time of the transaction. If the accounts receivables are sold to a third party, the person who remitted the tax would not be in a position to write off the debt and therefore does not meet the criteria for claiming a bad debt refund.

Note: The third party who purchased the bad debt accounts receivables is also not eligible to claim a bad debt refund as they do not met the criteria under subsection 159(2).

R.2 Legal Services And Bad Debt Refunds (Issued: 2014/04)

Bulletin CTB 001 specifies that, when claiming a bad debt refund, the claimant must indicate the name and address of the purchaser whose account has been written off. However, because of the unique nature of solicitor-client privilege, the ministry will accept a tax refund claim that identifies legal services bad debt accounts by the client's file number rather than by the client's name and address. The claim must still include the other supporting information specified in the bulletin.

PSTERR subsection 134(1) [refund or deduction for bad debts] specifies the amount of the refund to which a collector is entitled in respect of a particular transaction. For a legal transaction, this means the total amount that is payable by a client for the services provided by a lawyer. This includes all fees and disbursements charged by the lawyer, whether they are exempt or subject to tax under the Act.

For example, if a lawyer bills $2,000 in taxable fees and $100 in non-taxable disbursements, the tax payable would be $140. The lawyer is required to remit the tax payable whether or not the client has paid. Where the lawyer writes off the account after receiving only a $500 payment from the client, the refund would be calculated as follows:

PST Remitted
 ($140)

X

uncollected balance of account ($1,840)
total amount of original account including GST ($2,340)

=

Refund
($110.09)

R.3 Supply And Install Contracts - Defaults (Issued: 2014/04)

Where the contractor's customer defaults under a contract to improve real property where the contractor is required to pay tax on the purchase price of the TPP, the contractor is not entitled to a refund of the tax paid on TPP that has been installed. This is because the contractor, not its customer, is the purchaser of the TPP and the tax liability is incurred by the contractor. In this situation, the contractor has correctly paid its own tax liability.

Section 160 – Refund To Collector

PST - SEC.160/Int.

References:

Act: Section 1 "collector", "director", "registrant", "reporting period"; Part 7 – Division 1; Section 166; Section 199; Section 243

Act: Part 8

Bulletin PST 400

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 160 authority for a collector to

  • deduct from taxes required to be remitted, or

  • claim a refund from the director

the amount of any refunds paid or credits allowed by the collector to their customers.

the refund and deduction provisions that apply in relation to refunds paid or credits allowed by a collector in the specified circumstances.

Subsection 160(1) provides that section 160 applies to a collector if the collector has

(a) levied and remitted an amount in accordance with the Act, and

(b) paid a refund or allowed a credit under Division 1 [Refunds from Collectors] of Part 7 [Refunds] or under a regulation made under section 243 [regulations in relation to refunds and credits in relation to exclusive products] in respect of the amount referred to in paragraph 160(1)(a).

Subsection 160(2) provides that if a collector to whom section 160 applies is a registrant, the collector may deduct, in respect of the reporting period in which the refund or credit referred to in paragraph 160(1)(b) is paid or allowed, the amount of the refund or credit from the amount of taxes that the collector is required to remit under the Act.

Subsection 160(3) provides that a deduction referred to in subsection 160(2) must be made in a form specified by the director (in Box I on a Provincial Sales Tax Return (form FIN 400)).

Subsection 160(4) provides that if the director is satisfied that

(a) section 160 applies to a collector, and

(b) if the collector is a registrant, the collector has not made a deduction under subsection 160(2) in respect of the refund or credit referred to in paragraph 160(1)(b),

the director must refund to the collector the amount of the refund or credit referred to in paragraph 160(1)(b).

Section 161 – Refund To Small Seller

PST - SEC.161/Int.

References:

Act: Section 1 "collector", "eligible tangible personal property", "small seller", "software", "taxable service"; Section 37; Section 49; Section 55; Section 89; Section 90; Section 112; Part 5 – Division 1; Part 5 – Division 2; Part 5 – Division 4; Part 5 – Division 5

Bulletin PST 003; Bulletin PST 400

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 161 that if the director is satisfied that

(a) a person as a small seller paid tax

(i) under section 37 [tax on purchase] in accordance with section 89 [tax on acquisition of eligible tangible personal property] in respect of eligible tangible personal property,

(ii) under section 49 [tax if tangible personal property brought into British Columbia for use] in accordance with section 90 [tax on eligible tangible personal property brought into British Columbia] in respect of eligible tangible personal property,

(iii) under section 55 [tax if tangible personal property brought into British Columbia from outside Canada] in respect of eligible tangible personal property,

(iv) under section 112 [tax on purchase of software by small seller] in respect of software, or

(v) under Division 1 [Services Related to Purchase], Division 2 [Related Services in Relation to Tangible Personal Property], Division 4 [Legal Services] or Division 5 [Telecommunication Services] of Part 5 [Taxes in Relation to Services] in respect of a taxable service purchased for resale, and

(b) when the person sold the eligible tangible personal property, software, or taxable service, the person was a collector who levied and collected tax as required by the Act on that sale,

the director must pay a refund to the person of the amount of tax referred to in paragraph 161(a) that was paid by that person.

Section 162 – Refunds Authorized Or Required Under Regulations

PST - SEC.162/Int.

References:

Act: Section 1 "director", "eligible charity", "parent's advisory council"; Section 242

Interpretation (Issued: 2013/12; 2014/09)

Effective April 1, 2013, Bill 8 - Budget Measures Implementation Act, 2014 amended subsection 162(c) and (d) by adding "or parent's advisory council" after "an eligible charity." The amendment is part of a series of amendments (see also section 165) that expand the authority of the director to pay a refund to a parent's advisory council (PAC) where the PST was paid by a school or school board on purchases using PAC raised funds.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides a series of refunds where authorized by the regulations or required by the regulations.

Section 163 – Prohibition – Refund Or Credit Already Received

PST - SEC.163/Int.

References:

Act: Section 1 "director"; Part 7 – Division 1; Part 7 – Division 2

Bulletin PST 400

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 163 general limits and prohibitions on persons requesting refunds from the director.

This provision ensures that a person cannot claim or receive a refund twice (i.e., from a collector and from the director) on the same payment of tax.

Subsection 163(1) provides that a person who has been paid a refund or allowed a credit under Division 1 [Refunds from Collectors] of Part 7 [Refunds] is not entitled to and must not apply for a refund under Division 2 [Refunds from Director] of Part 7 in respect of any portion of the amount of the refund or credit paid or allowed under Division 1.

Subsection 163(2) provides that if a person is paid a refund under Division 2 of Part 7 and the person subsequently is paid a refund or allowed a credit under Division 1 of Part 7 in respect of the same payment of tax, that person must pay to the government the amount refunded under Division 2 on or before the last day of the month after the month in which the refund under Division 1 was received by that person.

Division 3 — General

Section 164 – Definition

PST - SEC.164/Int.

References:

Act: Section 1 "director"; Part 7 – Division 3

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 164 that in Division 3 [General] of Part 7 [Refunds], "refund" means a refund payable under the Act by the director.

Section 165 – Claim For Refund

PST - SEC.165/Int.-R.1

References:

Act: Section 1 "director", "eligible charity", "parent's advisory council"; Section 155; Section 156

PSTERR: Section 121; Section 122

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised 2014/09)

Effective April 1, 2013, Bill 8 - Budget Measures Implementation Act, 2014, amends section 165 by a reference to "parent's advisory council" in subsections (1) and (3) and by adding a new subparagraph to subsection (1)(a). The amendment is part of a series of amendments (see also section 162) that expand the authority of the director to pay a refund to a parent's advisory council (PAC) where the PST was paid by a school or school board on purchases using PAC raised funds.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 as amended by Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013 provides under section 165 general requirements on a person or an eligible charity in relation to claiming a refund from the director.

R.1 Payment Of Interest On Refunds And Overpayments Of Tax (Issued: 2014/08, Revised 2014/10)

The "Interest on Overdue Accounts Payable Regulation" (Financial Administration Act) authorizes payment of interest on delayed payments for goods and services purchased by the BC Government and on overpayments of taxes.

When the branch processes refunds, interest payable is charged to the Ministry of Finance. Therefore, tax refunds must be processed as soon as possible to avoid incurring interest charges through delayed processing.

As a result of the "Interest on Overdue Accounts Payable Regulation" (Financial Administration Act), refunds generally fall into the following two categories. The distinction between the two categories is important because it affects the starting date for calculating interest.Which category applies in each situation depends upon the circumstances and type of refund being processed.

CATEGORY 1: Refunds where a person should not have been required to pay tax. Examples of such situations are as follows:

  • Overpayments of tax as a result of an error in calculating the tax due.

  • Tax paid on TPP that is unconditionally exempt (e.g., food for human consumption).

  • Tax paid on TPP that is conditionally exempt (i.e., where the seller must collect tax unless they obtain certain information and/or documentation) where the purchaser provided suitable information or documentation at or before the time of making the purchase, but where the seller refused or otherwise failed to provide an exemption. Examples include:

    • PM&E, where the purchaser provided a Certificate of Exemption - Production Machinery and Equipment (FIN 492).

    • Prescribed TPP for farmers, where the purchaser provided a farm ID card or a Certificate of Exemption - Farmer (FIN 458).

    • Prescribed TPP for commercial fishers, where the purchaser provided a Certificate of Exemption - Commercial Fisher (FIN 455).

    • Prescribed TPP for aquaculturists, where the purchaser provided a Certificate of Exemption - Aquaculturist (FIN 456).

    • Qualifying parts for multijurisdictional vehicles (MJVs) or MJV trailers, where the purchaser provided a Prorate account number.

    • A vehicle exempt under PSTERR section 24 [vehicle purchased for use outside British Columbia], where the purchaser provided a Certificate of Exemption - Purchase of Vehicle or Aircraft for Use Outside of BC (FIN 440).

    • TPP purchased by an eligible First Nation purchaser on First Nation land or off First Nation land and then delivered to First Nation land by the seller, where the purchaser provided the all of the information and documentation outlined in Bulletin PST 314, Exemptions for First Nations.

    • TPP purchased by diplomats/consular corps personnel, where the purchaser provided a valid diplomatic or consular corps ID card.

  • Tax paid on TPP purchased for resale, where the person who purchased the TPP provided either:

    • their registration number (see paragraph 37(3)(a) [Tax on purchase]; or

    • a certificate of exemption (see paragraph 37(3)(b)).

  • Tax paid on an exempt residential energy product delivered by the seller to a storage tank or meter that services only the part of a multi-use building that is used for residential use.

  • Tax paid on children's clothing where the seller refused to or otherwise failed to provide the exemption at the point of sale.

  • Tax paid in protest. (Tax paid in protest refers to situations where the Ministry insists tax is payable, while a taxpayer disagrees but chooses to pay tax instead of pursuing the matter further. Tax is refundable in these situations if, at a later date (and subject to the limitation period), it is confirmed that the taxpayer's interpretation was correct.)*

  • Tax otherwise paid in situations where there is no legal obligation to pay tax (e.g., on the purchase of real property).

In such cases, interest is calculated from the date of the overpayment (the date tax was paid), or from an "average date" if the overpayment was made over a period of time, up to the date the claim is paid, less the first 60 days which is the period allowed as processing time under the "Interest on Overdue Accounts Payable Regulation" (Financial Administration Act).

CATEGORY 2: Refunds where the taxpayer is required to pay taxes initially, but then must complete some action, or supply some information, to qualify for a refund, or to perfect his or her claim. Examples of such situations are as follows:

  • Tax paid on TPP that is conditionally exempt (refer to examples under Category 1) where the purchaser failed to provide suitable information or documentation at or before the time of making the purchase.

  • Tax paid on TPP purchased for resale, where the person who purchased the TPP failed to provide suitable information or documentation at the time of making the purchase.

  • Tax paid on children's clothing because the purchaser was required to, but refused to complete the Certificate of Exemption - Children's Clothing and Footwear (FIN 425).

  • Refunds paid under the authority of any of the provisions in Part 6 [refunds] of the PSTERR.

  • Tax paid on merchandise returned within 4 years of purchase.

  • Tax paid on the mark-up portion of unsold liquor purchased under a Special Occasion Licence.

On all refunds under Category 2, the taxpayer was required to pay the tax initially, but either became exempt by virtue of some action (i.e., removing a vehicle from the province) or was required to file a claim for the rebate/refund, whereas, in Category 1 the taxpayer was not initially required to pay the tax.

On overpayments or refunds in Category 2, the interest will be calculated from the date the Ministry receives the claim or from the date when the Ministry received sufficient and complete details to enable the Ministry to pay the claim, less the first 60 days as processing time allowed. All refunds must, therefore, be date-stamped upon receipt. Where further information is required from the claimant, the date when this information is received must be noted.

Checking the claimant's records or documents to verify the accuracy of the information submitted, however, is not to be construed as a situation where the claimant is required to provide further details. The date the claim is received, or the date when the required additional information is received, is the starting point for interest calculation.

Section 166 – Refund Limits

PST - SEC.166/Int.-R.2

References:

Act: Section 1 "collector", "director", "lessee", "purchaser"; Section 159; Section 160

Bulletin PST 400

Interpretation (Issued: 2013/12; Revised: 2017/05)

Effective May 19, 2016, Bill 14, Finance Statutes Amendment Act, 2016 repealed subsection 166(2) and replaced it with the new provision which eliminates the reference under paragraph 166(2)(b) to limitation periods for actions for refunds claimed by collectors for tax paid on amounts written off as bad debts and the reference under section 166(2)(c) to amounts refunded to purchasers.

This amendment does not eliminate the ability for PST collectors to obtain refunds for amounts written off as bad debts or credited back to customers, but clarifies that such refunds are only available through the mechanism in the Act itself.

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 166 the general limitations with respect to refunds.

R.1 Determining The Tax Paid Date (Issued: 2014/04)

The limitation period for claiming refunds is calculated from the date the tax was actually paid, not from the date of the invoice.

The following guidelines should be used to determine the tax paid dates:

  • Where purchase and payment occur concurrently, the date of purchase is the date the tax was paid.

  • Where a collector extends credit (e.g., sends the purchaser an invoice) the date the tax is paid is the date the purchaser pays the collector, not the date of the invoice.

  • Where a person self-assesses, the date the tax is paid is the date they self-assess, not the date the tax obligation arose (e.g., the date the property was brought into the province).

  • Where the contract calls for performance (e.g., payment of the purchase price) at a later date (e.g., next 30 days), the tax is paid on the actual date the purchaser pays the invoice, even if the purchaser pays it before or after the due date, and even if the retailer has had to remit an amount equivalent to the tax in the interim.

  • Where a purchase is made via a third party credit card (i.e., a credit card not issued by the collector), the tax is paid on the date when the purchaser makes a payment for the TPP with that credit card. On that date, through various contractual arrangements, the purchaser becomes obligated to repay the person providing the credit according to the terms of their agreement, and the person extending the credit is liable to satisfy the amount owed, including taxes.

R.2 Determining The Claim Date (Issued: 2014/04)

For the purpose of determining whether a refund claim was made within the limitation period, the claim is considered to have been made on the date it was received by the ministry. All refund applications received by the ministry are date-stamped.

Note: Refund applications must be submitted in the form and manner satisfactory to the director. Applications will be returned if the documentation accompanying the initial application is insufficient and/or the application form is not complete. The claim date is established when an applicant resubmits a completed application form with the required documentation.

Section 167 – Appropriation For Refunds

PST - SEC.167/Int.

References:

Act: Section 1 "director"

Interpretation (Issued: 2013/12)

Effective April 1, 2013, Bill 54, Provincial Sales Tax Act, 2012 provides under section 167 that if the director pays a refund, the director must pay the refund from the consolidated revenue fund.

*Tax paid in protest refers to situations where the Ministry insists tax is payable, while a taxpayer disagrees but chooses to pay tax instead of pursing the matter further. Tax is refundable in these situations if, at a later date, it is confirmed that the taxpayer's interpretation was correct (subject to the limitation period).