British Columbia Bulletin PST 303, “Warranties, Service Contracts and Maintenance Agreements” has been updated to clarify the application of PST to optional warranties with a specified number of services. Specifically, PST does not apply to an optional agreement where the scheduled or specified services are exempt from PST. However, if the included services are taxable, bundled sales rules apply, and PST applies to the fair market value of the taxable portion of the agreement. This principle applies to all optional warranties and agreements, including multijurisdictional vehicles and agreements including maintenance services.
Providers of optional agreements that include scheduled services or maintenance or a specified number of services are exempt from PST on parts and services purchased to carry out these agreements, even if the parts are provided at no additional cost to customers.