The province of Saskatchewan (“SK”) has recently updated Information Bulletin PST-13, “Petroleum Drilling & Well Servicing Contractors”. The bulletin has been improved, by adding more details, to help contractors providing drilling and well services in the petroleum industry understand their obligations with respect to the PST. Given the fact that the province consulted with the Canadian Association of Oilwell Drilling Contractors, the Petroleum Services Association of Canada and the Canadian Association of Petroleum Producers in preparing the update, this version of the bulletin is expected to provide those in the industry with valuable insight and clarification of the PST legislation as it relates to their operations.
The registration and reporting requirements section contains information relating to the following:
- contractors providing services;
- contractors renting equipment;
- resident contractors; and
- non-resident contractors.
The next four sections in the bulletin provide details on the PST Remission (i.e., rebate) available for certain categories of equipment. PST Remission is available on several types of equipment used directly in oil and gas exploration and down-hole development, servicing and testing of oil wells. Specific pieces of equipment in the following categories may qualify for remission, with examples of exempt and taxable pieces provided in each related section of the bulletin:
- mobile capital equipment;
- geophysical survey and exploration equipment;
- drilling and service rigs; and
- well servicing equipment.
Furthermore, the bulletin looks at the difference between tools and equipment provided with an operator versus tools and equipment rentals and a remission of PST that may apply to rentals. A discussion on taxable equipment used in indirect activities, out-of-province repair services and taxable services rounds out the information on PST applicable to purchases.
The bulletin then proceeds to explain the PST from the revenue or billing side of the equation for sales of used business assets, fracturing and cementing services and lost or damaged charges. Interestingly, the discussion on fracturing and cementing services has not been updated as a note indicates that the issue of how contractors are invoicing customers for these services is currently being heard in the courts. It has been indicated that this section will be reviewed by the province once the case is concluded.
Under the section that addresses Fuel Tax, a discussion on dual purpose storage tanks is included. This discussion indicates that where fuel is not exclusively used for exempt purposes (i.e., heating) and it is stored in one tank, an approved meter must be used to measure the quantity of clear tax paid fuel being dispensed for heating purposes in order to obtain the applicable fuel tax refund.