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Did You ‘Use’ That?: Interpreting B.C.’s PST Legislation


The way the B.C. Provincial Sales Tax (PST) legislation is worded, PST is required to be paid on property that is “used” within B.C. But what does “use” mean? Basically, if a person acquires something in B.C. and does anything other than ship it directly outside of the province, it will most likely be considered to be used in B.C. “Use” is defined so broadly, it is nearly impossible to escape.

Consider this scenario: You manufacture windows and doors in B.C., ship them to your customers in Saskatchewan and install the windows and doors for your customers (either with your own employees or with subcontractors).

Even though you manufactured these items with the sole purpose of sending them outside of B.C. to be installed for a customer, you are required to self-assess B.C. PST on all the material costs. Why? Because you are considered to have “used” the materials in your manufacturing process. Your cost of doing business just increased by 7%. To add insult to injury, you are also required to self-assess 5% Saskatchewan PST (on the labour and materials used to manufacture, plus transportation costs to Saskatchewan) because the windows and doors became real property upon installation in Saskatchewan. Unfortunately, B.C. and Saskatchewan don’t care that you had to pay tax to both provinces.

UPDATE: Please note that the 2015 B.C. Budget announced that if you manufacture tangible personal property for supply-and-install in another jurisdiction where sales tax is payable in that jurisdiction, you may be entitled to claim a B.C. PST refund for the tax you paid on the materials in B.C. This means if the windows you manufactured in B.C. are installed in Alberta, you still have to self-assess B.C. PST. But if the install is in Saskatchewan and you paid both B.C. PST and Saskatchewan PST, then you may be eligible for the B.C. PST refund.

Just because something is shipped out of B.C., it doesn’t mean B.C. PST is not applicable. Remember, whether your organization has “used” something in B.C. is not a determination you can necessarily make with common sense.