British Columbia Bulletin PST 207, “Medical Supplies and Equipment” has been updated to clarify how Provincial Sales Tax (“PST”) applies to promotional materials. This bulletin provides information about the application of PST to medical supplies and equipment as well as purchases by medical suppliers and service providers. It includes examples of exempt and taxable medical supplies and equipment, as well as information on purchases and the potential eligibility for a PST refund.
Generally, retailers are required to self-assess the PST on promotional items - goods used or sold below cost to help advertise or promote business. These items include samples, gifts and prizes. In addition, when goods are sold below cost (i.e., during a sale), the retailer is required to self-assess the PST on the value of the discount.
However, when goods are sold below cost for reasons other than promotional purposes, the retailer is not required to self-assess PST. The example outlined in the bulletin describes a situation where a retailer marks down inventory to a selling price below cost, not because of a sale, but because the items have decreased in value or are obsolete.