British Columbia has revised Provincial Sales Tax (PST) Bulletin PST 110, “Production Machinery and Equipment Exemption,” to clarify the existing rules and update some of the examples provided. In particular, the province clarified that the production machinery and equipment (PM&E) exemption is available to manufacturers that generate hydrogen and energy from clean sources, such as sunlight, wind, air, water, ocean tides, currents or waves, and hydrogen. In addition, machinery and equipment used in the transmission or distribution of goods, clean energy resources, or software may qualify for exemption, subject to certain conditions.
Furthermore, the province has significantly enhanced its guidance on what constitutes the qualifying part of a manufacturing site for the purpose of the PM&E exemption, as well as how an otherwise ineligible activity may qualify as part of the production process where it is combined with a qualifying manufacturing activity and takes place at a qualifying part of the manufacturing site. This concept is illustrated through the addition of two new examples. In the first example, the activities of a manufacturer packaging its own goods after producing them can qualify as part of the production process. In the second example, the generation of steam by a paper manufacturer to power its qualifying manufacturing activities (i.e., producing paper) can qualify as part of the production process.
If you have any questions about British Columbia’s PM&E exemption from PST, please do not hesitate to contact Ryan TaxDirect® at taxdirect@ryan.com or 1.800.667.1600.
