News and Insights

British Columbia PST and Oil and Gas Producers and Processors 

Tax Development Dec 03, 2013

British Columbia has published the first of three bulletins pertaining to the oil and gas industry, specifically addressing those who are considered producers or processors of oil and gas.  Bulletin PST 113, “Oil and Gas Industry – Producers and Processors”, contains a multitude of definitions for terminology related to the application of Provincial Sales Tax (“PST”) in this industry.

Oil and gas producers and processors will be particularly interested in this bulletin, as it provides a good deal of information on how PST applies to their businesses.  However, those involved in the business of exploration, discovery and development of oil and gas, as well as service providers and contractors in the industry, will need to wait for the publication of separate bulletins addressing their particular operations.

Included in the bulletin are the following subsections: 

  • Extraction or Processing of Qualifying Petroleum or Natural Gas, which discusses the production machinery and equipment (“PM&E”) exemption and explains what constitutes a qualifying site and qualifying part of a processing plant or refinery;
  • Pollution Control and Waste Management, which provides further details on the exemption related to PM&E obtained for use substantially and directly in the pursuit of pollution control and waste management;
  • Transmission or Distribution of Goods or Software, in which information is provided on the PM&E exemption related to such activities; 
  • Electrical Machinery or Equipment, which outlines the conditions required for the PM&E exemption to apply to this type of machinery or equipment and reminds registrants that this exemption does not extend to electricity itself; and 
  • PM&E and Software Used to Operate, Control or Monitor Exempt PM&E, as well as Part, Materials and Services for PM&E, which are both recognized as components that will also qualify for exemption when linked to eligible PM&E.

In addition, details on claiming the PM&E exemption and other applicable exemptions have been outlined, including:

  • geophysical surveying;
  • goods incorporated into other goods for resale;
  • containers, labels and packaging materials;
  • chemical substances, catalysts and direct agents;
  • materials used to make prototypes; and
  • safety equipment and protective clothing.

Surprisingly, appendices to show examples of exempt and taxable items have been included in the bulletin, but remain blank at this point.