The province of British Columbia (“BC”) has issued two publications concerning the application of the new Provincial Sales Tax (“PST”) to items typically purchased and grocery and drug stores and to delivery charges.
This bulletin contains two specific (though not exhaustive) lists of items commonly sold in grocery and drug stores. The non-taxable list is sorted by categories which include:
- food for human consumption;
- health and medical products, and
- other goods (comprising of children’s clothing, publications, school supplies, feeds, fertilizer and plants, fuel, and safety equipment, etc.)
Special mention is made for pet food (taxable) and gift cards/certificates (non-taxable at time of purchase). PST is payable on the purchase or lease of new or used taxable goods, as well as software, when used in businesses. Goods purchased for resale or to lease are not subject to PST.
PST must be self-assessed and remitted:
- if suppliers do not charge PST on taxable goods;
- if taxable goods are purchased from out-of-province suppliers; or
- if goods are taken from resale inventory for business or personal use.
Containers, labels and packaging materials included with goods for resale are exempt from PST.
Special conditions apply to bonus items (not taxable for the supplier, taxable for the customer), bundled sales (PST only on the fair market value of the taxable portion) and promotional materials (taxable for the business, not taxable to the customer).
In certain circumstances, collectors of PST are now allowed to refund or credit customers for taxes charged/collected.
This bulletin covers useful information on when to apply PST to delivery and other transportation charges, as well as on goods damaged, destroyed or lost in transit. The following are some important points to note:
- The purchase price includes delivery charges including shipping and handling
- PST applies if the delivery occurs before title passes to the purchaser, if the goods are shipped to a location in BC, or if the seller is re-billing the delivery charges to the customer.
- PST does not apply if title to the goods passes to the purchaser at the seller’s premises, or if the goods are shipped to a location outside BC (provided sufficient documentation is retained).
- If the vendor charges for delivery to another location, the application of PST depends on whether or not the delivery charge is shown separately on the invoice – if it is indicated as a separate line item, PST will not apply; if it’s not shown, PST will apply to the total amount.
- If the delivery is a condition of the lease agreement, the delivery happens during the lease term, or the lease is from an out-of-province lessor (for goods shipped into BC), PST will apply.
- If the delivery occurs before or after the lease term, and the lease price does not include the charge, then PST will not apply.
No Sale or Lease
- For goods delivered within BC, or from a location in the province to a destination outside of BC, no PST will apply.
- Excluding special exemptions for new residents, the delivery charges on taxable goods brought into BC from an out-of-province location are subject to PST.
Other situations to consider are:
- For goods to which a related service has been provided, the delivery charges are generally not subject to PST, as long as these charges are indicated separately on the invoice.
- Taxable repairs and replacements will have PST applied to the delivery and other transportation charges. For example, where repairs are done at a customer’s location, PST will apply to the total amount charged, which includes the repair/replacement parts and the delivery charges to bring the parts to the customer’s location.
- Delivery charges for non-taxable or exempt goods will generally not be subject to PST.
Finally, the PST status on goods that are damaged, destroyed or lost in transit is dependent on who holds title to the goods and who is responsible for their replacement. If this is the seller, they will not pay PST; if it is the purchaser, they must pay the PST (with no refund available for the PST paid on the original purchase).