British Columbia has revised Bulletin PST 504, “Contractors Who are Also Retailers or Wholesalers”, which explains the options available to real property contractors who may also be engaged in retailing and wholesaling activities. The challenge faced by these contractors is how to account for the goods held in inventory as goods for resale (exempt) or for use to fulfil a real property contract (taxable).
The first alternative proposes the contractor maintain separate inventories for goods related to each category, one for resale inventory, and another for goods to be used in real property contracts. Any movement of goods between these inventories under this option will require either a self-assessment of PST or the filing of a PST refund claim.
Under the second alternative, the contractor opts to pay PST on all goods purchased for either the resale inventory or used to fulfill a real property contract. If the goods are later resold, a refund PST may be claimed.
Subject to meeting certain conditions, a third alternative allows the contractor to purchase all goods exempt of PST, and a self-assessment of PST is required on any goods subsequently used to fulfill a real property contract.
The bulletin also clarifies that goods incorporated into other goods held for resale qualify for an exemption from PST.