News and Insights

Recent Changes in British Columbia’s Provincial Sales Tax Exemption and Refund Regulation 

Tax Development Nov 05, 2013

In October 2013, British Columbia (“BC”) amended certain sections of the Provincial Sales Tax Exemption and Refund Regulation(“PSTERR”) retroactive to April 1, 2013. 

These amendments include important changes to the production machinery and equipment (“PM&E”) exemption.

Before the modifications, PM&E used substantially at qualifying locations (manufacturers, software developers, transmission or distribution of goods or software, service providers, local government power generation, and the extraction or processing of minerals) were exempt.  The amendment substitutes “substantially” with “primarily” in Bulletins PST-110, “Production Machinery and Equipment Exemption,” PST-111, “Mining Industry”, and PST-112, “Logging Industry”.  BC has defined substantially to mean more than 90%, and primarily is considered used more than 50%.  This change will potentially make the PM&E exemption available to more taxpayers.

Specific to the mining industry is the inclusion of safety equipment, a pump, ventilating equipment or a compressor obtained for use substantially in the exploration for minerals or the development of mines as exempt machinery or equipment. In addition,  BC has taken this opportunity to clarify the following:

  • A welcome change regarding the use of the Certificate of Exemption – Production Machinery and Equipment (FIN 492).  A description of the parts and/or materials must be provided, but it is no longer necessary to indicate the specific PM&E that the parts and/or materials will be attached to.  Where related services to PM&E are acquired, the specific PM&E must also be described on the exemption form.  
  • While PM&E used in the construction of buildings and site preparation remain taxable (other than machinery or equipment (“M&E”) exempt for the logging and natural gas industries), the reference to the mining industry has been explained more clearly:
    • M&E obtained for use in the construction or maintenance of roads will be taxable.  However, an exemption from tax will apply to M&E obtained for use in the construction or maintenance of roads within the qualifying part of a mine site, or for use in the exploration for minerals or development of mines, or for extraction or processing of minerals.  

Please see the link below for the amendments to the PSTERR: 

PSTERR Amendments - October 2013