PST Remittance Guide for Small Businesses in BC
Nearly all businesses in BC are required to collect, report, and remit provincial sales tax (PST). However, figuring out when collection is required, how to track it properly, and when to file can feel overwhelming for small business owners. This guide will walk you through the basics of PST reporting obligations, using a home renovation contractor as an example, and provide practical steps on how to track and remit PST efficiently.
Who Needs to Remit PST in BC?
In British Columbia, businesses that sell or lease taxable goods, software, or services must register, collect, and remit PST to the provincial government. Even small businesses and independent contractors are often required to do so.
Taxable Goods
“Goods” refers to tangible personal property — physical items that can be seen, touched, or moved. In BC, the general rule is that most goods are taxable unless there is a specific exemption.
- Examples of taxable goods: Furniture, appliances, electronics, building materials (flooring, lumber, tile), office supplies
- Examples of exempt goods: Basic groceries, prescription drugs, children’s clothing
Taxable Services
Not all services in BC are taxable, but certain categories are specifically subject to PST. Businesses providing these services must collect and remit PST just like sellers of goods.
- Examples of taxable services: Legal and accounting services, telecommunications, software services, accommodation
- Examples of exempt services: Labour to install goods into real property, educational services, medical services
Taxable vs. Exempt Examples
Taxable vs. Exempt Examples
| Category | Taxable (PST applies) | Exempt (No PST charged) |
|---|---|---|
| Goods | Furniture, flooring, office supplies | Basic groceries, prescription drugs, kids’ clothes |
| Services | Accounting fees, legal advice, telecom bills | Labour to install goods into real property |
| Software | Purchased software, customizations, upgrades | Custom software developed solely for one client |
| Accommodation | Hotel or short-term rentals | Rental of residential housing (long-term leases) |
The Intent of PST
PST is designed so that the final consumer pays tax — not every business along the supply chain. This prevents double taxation and keeps PST fair.
- Businesses buying goods for resale don’t pay PST if they provide an exemption.
- Businesses buying goods for their own use must pay PST (e.g., office supplies, tools).
Manufacturing Inputs
For manufacturers, raw materials incorporated into finished products are PST exempt. Tools, machinery, and supplies used in production remain taxable.
- Exempt: Lumber and hardware that go into cabinets for resale
- Taxable: Workshop tools, safety gear, computers used in the business
PST Exemption Letters – A Key Requirement
To avoid PST at the time of purchase for resale items, businesses must:
- Register for PST with the Ministry of Finance.
- Obtain a PST exemption number/letter.
- Provide this exemption to the vendor at or before the time of sale.
Important: Using your exemption letter on purchase does not remove your obligation to charge PST when you resell the item. It simply shifts the responsibility to charge PST to the final customer.
Example – Flooring Contractor in BC
- Resale of flooring materials: PST applies to goods sold directly to the customer.
- Supply-and-install contract: Invoice may read “Supply and Install Flooring – $10,000” with no separate PST line, since the contractor already paid PST on materials at purchase.
- Using exemption at purchase: Contractor doesn’t pay PST upfront but must charge PST on the materials portion of the customer’s invoice (e.g., Materials $8,000 + PST $560, Labour $2,000 exempt).
- Contracts matter: The approach must be agreed upon in writing before work begins, specifying whether PST is included or itemized and which parts of the contract are taxable.
Self-Reporting for Purchases
If PST wasn’t charged on a taxable purchase, the business must self-assess. Common scenarios:
- Goods bought from an out-of-province supplier
- Imported equipment and supplies
- Online software or digital products without PST applied
Businesses must calculate the PST owing and report it on their next PST return in eTaxBC.
Rewards for On-Time Filing
BC offers a small commission to businesses that file and remit their PST on time. The credit is a fraction of one percent of PST collected, helping offset admin costs. This is essentially a reward for staying compliant.
How Often Do You File PST?
Filing frequency depends on your PST collected:
- Monthly: Default for most businesses
- Quarterly: If annual PST is under $12,000
- Annually: If annual PST is under $1,200
Tracking PST in QuickBooks Online (QBO)
- Set up PST under “Taxes.”
- Apply PST to taxable line items on invoices.
- Code purchases for resale properly.
- Use QBO’s sales tax reports to see PST owing.
How to Remit PST in BC
- Log in to eTaxBC.
- Select the reporting period.
- Enter PST collected (using QBO reports).
- Submit payment via eTaxBC or online banking.
- Save your confirmation receipt for records.
Conclusion & Call to Action
While we’ve outlined the key concepts of tracking, reporting, and remitting PST, many small business owners still struggle to keep on top of it. At Agate Bay Bookkeeping, we help business owners across BC stay compliant, save time, and reduce stress.
👉 Contact Agate Bay Bookkeeping today for peace of mind that your PST and corporate tax obligations are being handled properly.
