Taxpayers are reminded that two significant British Columbia provincial sales tax (PST) changes announced in last year’s budget are rapidly approaching. After deferring implementation for nine months because of the impacts of the COVID-19 pandemic, the province has confirmed that its expanded registration requirements for non-residents and the elimination of the food products exemption for soda beverages will both take effect on April 1, 2021.
Expanded Registration Requirements for Non-Residents
Effective April 1, 2021, Canadian sellers of taxable goods, as well as both Canadian and foreign sellers of taxable software or telecommunications services, located outside of British Columbia will be required to register for and collect PST.
Under the expanded rules, a business located outside of the province, but within Canada, is required to register for PST when all of the following occur during its normal course of business:
- Taxable goods are sold to customers in British Columbia;
- Purchase orders are accepted from customers in British Columbia; and
- Goods sold to customers in British Columbia are delivered to locations in the province (including deliveries made through third parties).
Similarly, businesses located outside of British Columbia, whether or not resident in Canada, are required to be registered for PST if they:
- Supply taxable software for use by an electronic device ordinarily situated in British Columbia or taxable telecommunications services to customers in the province; and
- Accept purchase orders for either of the above services from British Columbia customers.
In both situations, there is a minimum threshold before PST registration is required. Under the expanded registration requirements, non-resident businesses are generally only required to register once gross revenue from relevant supplies to customers in British Columbia in the previous 12 months exceeds $10,000, or if the same revenue is expected to exceed that threshold over the next 12 months.
Further details on British Columbia’s expanded PST registration requirements for non-residents can be found in Information Bulletin PST 001, Registering to Collect PST.
PST on Soda Beverages
While food products for human consumption are generally exempt from PST in British Columbia, the province has eliminated this exemption for soda beverages, effective April 1, 2021. For these purposes, a “soda beverage” is a carbonated or otherwise aerated (i.e., sparkling, fizzy, or bubbly) drink that contains sugar or any combination of natural and artificial sweeteners. PST will apply whether the soda beverage is carbonated naturally or through a manufacturing process, and regardless of how the beverage is sold.
All vendors of soda beverages are advised to adjust their point-of-sale systems in British Columbia to reflect the upcoming change in tax status. Note that all sales through a vending machine will be taxable if the machine dispenses soda beverages. Common examples of affected beverages include soft drinks, sparkling fruit juices, carbonated energy drinks, and sweetened sparkling water products.
Additional information on British Columbia’s “soda tax” can be found in Notice 2021-002, Notice to Sellers of Soda Beverages.
If you have any questions about how these PST changes might impact your organization, please do not hesitate to call the Ryan TaxDirect® line at 1.800.667.1600.