On April Fool's Day, the joke will be on British Columbia ("BC"). That is because the Provincial Sales Tax ("PST") will be reintroduced, replacing the Harmonized Sales Tax ("HST"). A majority of voters chose to scrap the HST in the provincial HST referendum held in the summer of 2011.

On April 1, 2013, BC will go back to having two sales taxes: the federal Goods and Services Tax ("GST") and the new PST. Despite its unpopularity, the HST was an improvement over the old PST. The HST streamlined the sales tax system used in BC by replacing two sales taxes with one, creating a simpler system that placed less administrative burden on business and generated less compliance costs.

Taxable Supplies

The new PST will apply to the same goods and services that were subject to the old PST. This means the PST will apply to the following:

  • purchases or leases of new or used goods;
  • purchases of telecommunication services, like cell phone use, internet access, non-basic cable, non-residential telephone service, and satellite service;
  • purchases of software;
  • purchases of accommodation;
  • purchases of legal services;
  • purchases of services provided in relation to goods, like computer repair and vehicle maintenance; and
  • goods that are brought or sent into BC for use in BC.


The new PST will also provide for many exemptions from the tax, including all of the same permanent exemptions that applied under the old PST. Importantly, there will be various business exemptions which will apply to such things as goods incorporated into other goods for resale and production machinery. There will also be an exemption for purchases or leases of goods that are intended to be leased.

The following is a list of some of the other items that will be exempt from the PST:

  • residential housing and commercial real estate;
  • most services, like dry cleaning, funeral services, and haircuts;
  • food for human consumption, other than water, ice, and any prescribed food products;
  • transportation fares, like airline fares, bus fares, ferry fares, and train fares;
  • fuel taxed or exempt under the Motor Fuel Tax Act;
  • in certain circumstances, a taxable component sold with a non-taxable component for a single price;
  • goods sold for less than 15 cents; and
  • books, newspaper and magazines; bicycles; children's clothing and footwear; and used cloths under $100.


The PST will have a general rate of tax of 7%. The 7% rate will apply to most items. However, there are also several special rates.

There will be a special varying rate for sales and leases of "luxury vehicles". An 8% rate will be applied to vehicles with a price that ranges from $55,000 to $55,999, a 9% rate for vehicles with a price that ranges from $56,000 to $56,999, and a 10% rate for vehicles with a price equal to or greater than $57,000.

Other special tax rates include a 12% rate on private sales of aircraft, boats and vehicles, and a 10% rate on liquor.

Administration of the PST

Letters will be sent to businesses with information on how to register in December 2012, and registration will begin in January 2013. When a business registers, it will receive a new 11 character PST number (e.g., PST-123-5678).

Generally, businesses that sell or lease taxable goods in BC or sell taxable services in BC are required to register. There is an exemption to the registration requirement for "small sellers". Generally, a small seller is considered to be a business that has $10,000 or less in taxable sales per year and no established business premises in BC.

Businesses will be required to remit money collected under the PST on the last day of the month: the same day as money collected under the GST is required to be remitted. Businesses that collect and remit the PST will receive a commission of up to $198 per month.

Other Issues Related to the Reinstatement of the PST

  1. Basic Personal Amount Income Tax Credit

The basic personal amount income tax credit was increased as part of the implementation of the HST. The increase will be reversed when the new PST is reinstated on April 1, 2013.

  1. Battery Levy

The battery levy will not be re-implemented. The provincial government is satisfied with the program it implemented on July 1, 2011, which governs the recycling and proper disposal of lead acid batteries.

  1. BC HST Credit

The $230 BC HST credit will be replaced with a $75 PST credit.

  1. Hotel Room Tax

The short term accommodation tax (formerly known as the Hotel Room Tax) will be reinstated on April 1, 2013. The tax will be 8% and will apply in the same manner as it did prior to being repealed.

The Municipal and Regional District Hotel Room Tax will continue to apply.

  1. Innovative Clean Energy Fund Levy

The Innovative Clean Energy Fund levy will be reinstated. The levy will be 0.4% of the purchase price of commercial and residential energy purchases of natural gas, fuel oil, and propane sold on a grid. The levy will not apply to commercial or residential purchases of electricity.

  1. Liquor Taxes and Mark-Ups

The special 10% rate for PST on liquor will be reinstated. Liquor mark-ups will be reduced to pre-HST levels in order to keep liquor prices constant.

  1. Multijurisdictional Vehicle Tax

The Multijurisdictional Vehicle Tax for inter-jurisdictional commercial carriers licensed under the International Registration Plan will be reinstated.

  1. Propane

The tax on propane will be reinstated at a rate of 2.7 cents per litre.

  1. Passenger Vehicle Rental Tax

The Passenger Vehicle Rental Tax will be reinstated. The tax will be $1.50 per day.

  1. Tobacco Taxes

The tax rate on tobacco products will be adjusted to ensure the repeal of the HST does not lower taxes on these products.


The transition back to the PST will create many challenges for businesses with connections to BC. The most basic challenges will be knowing when to collect and remit the tax and when to pay the tax, especially when self-assessment is required.