News and Insights

British Columbia Bulletin PST 110, “Production Machinery and Equipment Exemption”

Tax Development May 16, 2013

British Columbia issued this publication to assist manufacturers, including logging companies, mining companies, oil and gas producers, software developers, manufacturing service providers and local governments involved in power generation activities, in understanding how the production machinery and equipment exemption applies to their operations.   To qualify as a manufacturer, a person must produce goods for sale to others and have a reasonable expectation that the total value of the sale of these goods exceeds $30,000 per year, or manufacture goods for sale, lease or own use, where there is a reasonable expectation that the total manufacturing cost of the goods will be in excess of $30,000 per year.  In addition, exempt production machinery and equipment must be used primarily (more than 50%) and directly (part of, or an integral component of) in the manufacturing process and substantially (more than 90%) at the manufacturing site.  The bulletin includes a handy diagram of what qualifies (and what doesn’t) as part of a manufacturing site.

The production machinery and equipment exemption may also apply to purchases of the following equipment or supplies:

  • pollution control equipment;
  • waste management equipment;
  • equipment used to transmit or distribute goods;
  • electrical equipment;
  • equipment used to operate, control or monitor production equipment;
  • parts for production equipment;
  • goods incorporated into goods for resale;
  • container, labels and packaging materials;
  • materials consumed in the production process;
  • chemical substances, catalysts and direct agents;
  • materials to make prototypes; and
  • safety equipment and protective clothing.

Persons who are eligible for the production machinery and equipment exemption must provide the seller with a completed Certificate of Exemption – Production Machinery and Equipment (form FIN 492) in order to acquire eligible goods, supplies and services exempt from PST.

Further information on businesses qualifying as manufacturers and the equipment eligible for the production machinery and equipment exemption is available in Bulletin PST 110.