Until recently, those in British Columbia (“BC”) had one bulletin to consult regarding real property contracts and their provincial sales tax (“PST”) implications. In an effort to provide more detailed information regarding real property contracts, affixed machinery and the differences between the two, BC has issued several new bulletins. Such information is vital since PST applies to tangible personal property (“TPP”) and services to TPP, to affixed machinery, but not to services to affixed machinery, or to real property or services to real property.
Bulletin PST 500, “PST Overview for Real Property Contractors”, is a high-level look at PST and how it affects contractors in the business of supplying, affixing, or installing goods that may or may not become part of real property.
Bulletin PST 501, “Real Property Contractors”, repeats the information contained in Bulletin PST 500, but also provides a general overview on the determination of what becomes part of real property, the PST implications of installing goods that do not become part of real property, selling goods without installation and selling a combination of goods that become real property and goods that remain TPP. Exemptions relevant to contractors and the required documentation are also addressed.
Bulletin PST 502, “Examples – Goods that Generally Become Part of Real Property and Goods that Do Not”, lists examples as mentioned in the title. A key determining factor for goods to become part of real property is the degree of attachment to the real property. For example, speakers that are attached to the building with cabling inside walls and substantial attachments to walls or ceilings qualify as goods that become part of real property, however, the same equipment that is merely plugged into a wall or mounted for better sound remains TPP.
Bulletin PST 503, “Affixed Machinery”, looks at this category of goods that is unique to BC PST. The bulletin includes the definition of affixed machinery, information on PST on purchases, leases and services to such machinery, as well as the available exemptions and a few examples.
Bulletin PST 599, “Real Property Transitional Rules”, outlines the application of PST to real property contracts that straddled the implementation date for BC PST (i.e., April 1, 2013). In particular, PST applicable to the following scenarios occurring during the transitional period are discussed:
- goods used by contractors;
- goods incorporated into certain residential homes; and
- PST applicable to mobile homes affixed to real property.