News and Insights

BC Issues Bulletin PST 504, “Contractors Who are Also Retailers or Wholesalers”

Tax Development Jun 26, 2014

British Columbia (“BC”) has recently issued a new bulletin, PST 504, “Contractors Who are Also Retailers or Wholesalers” which discusses the options available to some contractors to account for Provincial Sales Tax (“PST”) on their inventory.

Generally speaking, a contractor would pay PST on goods purchased to fulfil a contract; however, a retailer or wholesaler would be exempt from PST on goods obtained for resale.  If a person is  both a contractor and a retailer/wholesaler, and at the time of purchase, a determination has not been made as to the use of the goods, the contractor can use one of three  alternatives to account for the PST.

  1. Maintain separate inventories and acquire goods exempt from PST on goods held in inventory for resale and pay PST on goods held in inventory for fulfilling contracts.  If there is a change in use at a later date, the contractor may either self-assess the tax (if resale inventory is used in a contract) or claim a refund (for PST paid on goods purchased for contract purposes that were resold); or
  2. Pay the PST on all goods and subsequently claim a refund if the goods are resold; or
  3. Obtain the goods without paying the tax (subject to meeting certain criteria) and self-assess on goods used to fulfil a contract.

A self-assessment may be made on the contractor’s next PST return, or on a Casual Remittance Return (FIN 405).

A refund of PST would involve submitting an Application for Refund – General (FIN 355), along with supporting documentation.

Where a contractor acquires goods exempt from PST,  the supplier must be provided with either the contractor’s PST number or a Certificate of Exemption – General (FIN 490).