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.
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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.