The Provincial Sales Tax Act (the "PST Act") is now in force in British Columbia, as of April 1, 2013. Many exemptions from provincial sales tax ("PST") are contained in the Regulations to the PST Act.
There are some customer specific exemptions from the PST in certain circumstances. When these customer specific exemptions are applicable, the business making the taxable sale or lease must generally receive an exemption certificate from the purchaser. The exemption certificate must be retained by the business. If a business does not charge PST on a taxable sale or lease and does not get an exemption certificate, the business may be liable for the PST not charged, penalties and interest.
The following is a list of the point of sale or lease exemption certificates:
- FIN 425: Certificate of Exemption Children's Clothing and Footwear;
- FIN 492: Certificate of Exemption Production Machinery and Equipment;
- FIN 458: Certificate of Exemption Farmer;
- FIN 455: Certificate of Exemption Commercial Fisher;
- FIN 462: Out-of-Province Delivery Exemption;
- FIN 456: Certificate of Exemption Aquaculturist;
- FIN 319: Gift of a Vehicle;
- FIN 443: Certificate of Exemption Self-Assessment on Software;
- FIN 440: Certificate of Exemption Purchase of Vehicle or Aircraft for Use Outside BC; and
- FIN 491: Certificate of Exemption Contractor.
A purchase or lease of tangible personal property, accommodation, software, telecommunication services or related services is exempt if the purchase or lease is made:
- solely for resale;
- to become part of tangible personal property or software for resale purposes;
- of a prototype or copy of a prototype or will become a prototype or copy of a prototype;
- to lease to other persons;
- to be used in the course of providing a related service to tangible personal property that remains part of the tangible personal property after the related service has been provided;
- to become part of a penstock system for a hydroelectric power plant;
- as specified work-related safety equipment and/or protective clothing to be worn by or attached to a worker; or
- by a purchaser who is purchasing telecommunication services for resale to other persons (90% or more to qualify), and whose primary business is selling or providing telecommunication services.
Where the purchaser has a PST number, the business must record the PST number to apply the PST exemption to the sale or lease. Otherwise, the FIN 490: Certificate of Exemption General must be used when the purchaser does not have a PST number and is making a purchase solely for resale.
When claiming an exemption, the purchaser is responsible to ensure that it qualifies for the PST exemption. While the forms provide a great deal of information on the tax exemptions, a purchaser must ensure the provisions of the PST Act and the Regulations are met in respect of the exemption. A purchaser who provides an exemption certificate for an exemption for which it does not qualify will be liable for any unpaid PST and penalties. For each of the certificates of exemption, the purchaser must certify that the information contained in the certificate is correct. The certificates also provide the following:
"I have knowledge that if I make a false statement to avoid paying tax, the Provincial Sales Tax Act charges a fine of up to $10,000 and/or imprisonment of up to two years, in addition to a penalty of 25% of the tax due and an assessment for the tax that should have been paid."