British Columbia (“BC”) has issued two important certificates of exemption that may be used under qualifying circumstances to purchase taxable goods or services exempt of Provincial Sales Tax (“PST”). FIN 490 is for general use and FIN 425 is for children’s clothing and footwear. Persons who are not required to be registered for the Provincial Sales Tax (“PST”), or who have yet to obtain a PST registration number, may complete FIN 490 and provide it to their suppliers as evidence for the exemption of PST on their purchases.
The general exemption certificate may be used to purchase or lease tangible personal property or acquire accommodation, software, telecommunication services or related services for one of the following reasons:
- for resale only;
- to become part of tangible personal property or software for resale purposes;
- as a prototype, copy of a prototype or incorporated into a prototype or copy of a prototype;
- to lease to another person;
- to be used in the course of providing a related service to tangible personal property;
- to become part of a penstock system for a hydroelectric power plant;
- as specified work-related safety equipment and/or protective clothing; or
- telecommunication services acquired by a purchaser whose primary business is selling telecommunications services, 90% or more of which are sold to other persons.
Where a taxpayer makes a false statement on an exemption certificate to avoid paying tax, they may be subject to a fine up to $10,000 and/or imprisonment for up to two years.
FIN 425, “Certificate of Exemption - Children’s Clothing and Footwear”, should be completed by the purchaser of adult-sized clothing and/or footwear that is purchased for use by a child. The form must be retained by the retailer as evidence for the exemption from tax on otherwise taxable goods. Child-sized clothing and footwear are exempt from PST at the point-of-sale. The exemption form is required for PST exempt purchases made for children under the age of 15, who are acquiring adult-sized clothing and footwear.