B.C. PST Rebate for Incorporated Entities

Insights
| 5/17/2021

The following information was originally published by the B.C. government. Full details and any updates on the rebate program can be found here.


The B.C. Government announced the temporary provincial sales tax (PST) program “B.C. PST Rebate on Select Machinery and Equipment” to help corporations recover from the financial impacts of COVID-19.

The rebate acts like a refund but is separate from the existing PST Refund process. Under this temporary program, corporations can apply to receive an amount equal to the PST they paid between September 17, 2020 and September 30, 2021 on qualifying machinery and equipment.

Eligible entities have until March 31, 2022 to apply.

Who can apply

All incorporated businesses except the following are eligible to apply:

  • Crown corporations (federal or provincial)
  • Local government corporations
  • Charities, non-profit corporations, and not-for-profit corporations (except incorporated businesses wholly or partly owned by charities, non-profit corporations, and not-for-profit corporations)
  • Schools, school boards, and universities - including business, trade, and vocational schools
  • Hospitals
  • Regional health boards and community health councils designated under the Health Authorities Act
  • Agents of the government and of the other entities listed above, to the extent that the PST is paid in their capacity as an agent
  • Unincorporated entities, such as sole proprietors, cannot apply. However, they can choose to incorporate to take advantage of this program. Only machinery and equipment obtained after incorporation are eligible.

Corporate partners in partnerships can apply for the amount of PST they paid on their proportional ownership of machinery and equipment in the partnership. Non-corporate partners of partnerships cannot apply.

For more information, visit Who Can Claim a Refund

Qualifying machinery and equipment

The rebate applies to PST paid between September 17, 2020 and September 30, 2021 on qualifying machinery and equipment that are considered capital assets. Generally this means the asset is capitalized for accounting purposes (for example, is subject to depreciation).

For simplicity, Income Tax Act (Canada) capital cost allowance (CCA) class definitions already familiar to incorporated businesses are used to establish which types of capital assets qualify for the rebate.

PST paid on leases (both capital or operating leases) of qualifying machinery and equipment also qualifies.

General qualifications

Most non-consumable goods used in a business qualify for the rebate.

To qualify, the goods must be:

  • not listed as ineligible (see list below)

The goods must also be:

1. obtained substantially (more than 90%) for the purpose of gaining or producing income;

2. purchased or leased in B.C., brought into or received in B.C., brought into B.C. for temporary use, received from a related company, or received as a taxable gift; and

3. in the case of software taxed under Part 4 of the Provincial Sales Tax Act (PSTA), purchased for use on or with a device ordinarily situated in B.C.

Transition rules may exclude certain transactions from eligibility even where PST is paid during the qualifying period of September 17, 2020 to September 30, 2021. See list below.

What qualifies for the rebate
Examples of qualifying goods
Definitions
What qualifies for the rebate

The following goods qualify for the rebate:

  • All goods that fall under the CCA classes listed in the table below (including affixed machinery)
  • Zero-emission vehicles (as long as they fall under the CCA classes listed in "Examples of qualifying goods")
Examples of qualifying goods

Examples for each CCA class of goods that qualifies for the rebate.

Class Examples 
  • Furniture
  • Appliances
  • Tools costing $500 or more per tool
  • Some fixtures
  • Machinery
  • Outdoor advertising signs
  • Refrigeration equipment
  • Other equipment used in business
  • Photocopiers
  • Electronic communications equipment such as fax machines and electronic telephone equipment

10 

  • Harness or stable equipment
  • Sleighs or wagons
  • Telecommunication spacecrafts
  • Contractor’s movable equipment, including portable camp buildings, acquired for use in a construction business or for lease to another taxpayer for use in that other taxpayer’s construction business
  • Property acquired for a motion picture drive-in theatre
  • A motion picture film or video tape
12 
  • Books part of a lending library
  • Tools costing less than $500
  • Medical or dental instruments costing less than $500
  • Kitchen utensil costing less than $500
  • Chinaware, cutlery, tableware
  • Linen
  • Uniforms
  • Dies, jigs, patterns, moulds, lasts
  • Cutting or shaping parts of machines
  • Apparel or costume, including accessories used therewith, used for the purpose of earning rental income
  • A certified feature film or certified production
  • Computer software (other than systems software)
16  Coin-op video games or pinball machines
38 Most power-operated, movable equipment for use in excavating, moving, placing or compacting earth, rock, concrete or asphalt
43

Machinery and equipment used to manufacture and process goods for sale or lease

Note: machinery and equipment already exempt from PST does not qualify

43.1
  • Electrical generating equipment
  • Electrical vehicle charging stations between 10 kilowatts and 90 kilowatts
  • Geothermal heat recovery equipment used to extract heat for sale
43.2 Electrical vehicle charging stations 90 kilowatts or more 
46 Network infrastructure equipment and systems software for that equipment
50 General-purpose computer hardware and systems software for that hardware
53

Eligible machinery and equipment to be used in Canada primarily in the manufacturing or processing of goods for sale or lease

Note: machinery and equipment already exempt from PST does not qualify

54 Most zero emission vehicles
55

Zero-emission vehicles that:

  • are taxis, trucks or tractors designed for hauling freight
  • are primarily used by the taxpayer or a person with whom the taxpayer does not deal at arm’s length in a business that includes hauling freight, and

 


Definitions

Affixed machinery

Affixed machinery is machinery, equipment or apparatus that is:

  • used directly in the manufacture, production, processing, storage, handling, packaging, display, transportation, transmission or distribution of goods, or in the provision of software or a service, and
  • affixed to, or installed in, a building, a structure, or land so that it becomes part of real property.

Zero-emission vehicles

For the purposes of the rebate, a zero-emission vehicle is a motor vehicle that is:

  • fully electric
  • fully powered by hydrogen, or
  • a plug-in hybrid that has a battery capacity of at least 7 kWh.

The rebate defines vehicle and motor vehicle using the definitions from the PSTA.

Vehicle

A device in, on or by which a person or thing is or may be transported or drawn on a highway, but does not include a device designed to be moved by human power, a device used exclusively on stationary rails or tracks, mobile equipment or a motor assisted cycle.

Motor vehicle

A vehicle, not run on rails, that is designed to be self-propelled or propelled by electric power obtained from overhead trolley wires, but does not include mobile equipment or a motor assisted cycle.

What does not qualify for the rebate
Late payments of PST
Transition rules
What does not qualify for the rebate

The following goods do not qualify for the rebate:

  • Boats and vehicles, other than zero-emission vehicles
  • Consumables, disposable items, real property
  • Goods purchased to be installed as an improvement to real property (other than affixed machinery)
  • Goods purchased for resale by a small seller
  • Exclusive products purchased by independent sales contractors
Late payments of PST

To qualify for the rebate, the PST must be paid by its due date.

In most cases, PST is payable on the earlier of:

  • The day the consideration for a purchase or lease is paid
  • The day the consideration for a purchase or lease becomes due

Detailed rules governing when PST is payable can be found in Part 2 of the PSTA.

Late payments of PST do not qualify for the rebate, even if they are made during the qualifying period of September 17, 2020 to September 30, 2021.

Transition rules

Leased goods

For qualifying goods that are leased, the rebate only applies to PST paid on a rental period that includes a right to use the goods on or after September 17, 2020, but not beyond November 30, 2021.

A rental period is a portion of a lease for which a periodic price is payable. For example, a five-year lease that requires monthly payments has 60 monthly rental periods.

Delivery dates

The rebate does not apply to any goods delivered on October 1, 2021 or later unless a written contract specifies the eligible goods must be delivered no later than November 30, 2021.

Examples

Restaurants

A company that runs a restaurant is applying for the rebate. The company purchased kitchen equipment including a new stove, movable tables and chairs, dishes and metal cutlery, cleaning supplies, and paper used for printing daily specials. The purchases were made between September 17, 2020 and September 30, 2021 with PST paid at the time of purchase.

 The PST paid on the new stove, movable tables and chairs, and dishes and metal cutlery is eligible for the exemption because:

  • they are qualifying capital assets;
  • they are used substantially (more than 90% of the time) for producing or gaining income; and
  • the PST was paid during the qualifying period of September 17, 2020 to September 30, 2021.

The PST paid on the cleaning supplies and paper used for printing daily specials is not eligible because they are consumables and not capital assets.

Construction company

A construction company purchased power tools, scaffolding, and lumber between September 17, 2020 and September 30, 2021 with PST paid at the time of purchase.

The PST paid on the power tools and scaffolding is eligible for the rebate because:

  • they're capital assets found within the eligible CCA classes;
  • they're used substantially (more than 90% of the time) for producing or gaining income; and
  • the PST was paid during the qualifying period of September 17, 2020 to September 30, 2021.

The PST paid on the lumber is not eligible for the rebate because the lumber is excluded since it will be installed as an improvement to real property.

Vehicles

A delivery company purchased two vehicles on October 1, 2020 for use as delivery vehicles. PST was paid at the time of purchase. One of the vehicles is a zero-emission vehicle and the other is a conventional gasoline vehicle. A third vehicle, a zero-emission vehicle, was purchased on September 1, 2020 for use as a delivery vehicle with PST paid at the time of purchase.

The PST paid on the zero-emission vehicle purchased on October 1, 2020 is eligible for the rebate because:

  • it's a zero-emission electric vehicle;
  • it's used substantially (more than 90% of the time) for producing or gaining income;
  • it's a qualifying capital asset; and
  • the PST was paid during the qualifying period of September 17, 2020 to September 30, 2021.

The PST paid on the conventional gasoline vehicle purchased on October 1, 2020 is not eligible for the rebate because it's not a zero-emission vehicle.

The PST paid on the zero-emission vehicle purchased on September 1, 2020 is not eligible for the rebate because the PST was paid outside of the eligibility period of September 17, 2020 to September 30, 2021.

Machinery and equipment brought into B.C.

A construction company with locations in B.C. and Alberta brings power tools into B.C. for permanent use from its Alberta location on November 1, 2020. The company self-assesses the PST due on the power tools on December 31, 2020. The company also brings in a zero-emission vehicle on November 1, 2020 for use temporarily as a crew shuttle in B.C. until December 31, 2020. The company self-assesses PST under the Temporary Use formula and remits it on December 31, 2020.

The PST paid on the power tools brought into B.C. for permanent use on November 1, 2020 is eligible for the exemption because:

  • they're qualifying capital assets used substantially (more than 90% of the time) for producing or gaining income; and
  • the PST was paid (through self-assessment) within the qualifying period of September 17, 2020 and September 30, 2021.

The PST paid on the vehicle brought in for temporary use on November 30, 2020 is also eligible for the rebate because:

  • it's a zero-emission vehicle;
  • it's a qualifying capital asset; and
  • the PST (in this case the PST paid under the Temporary Use Formula) was paid during the qualifying period of September 17, 2020 to September 30, 2021.
Leases

A company leases a zero-emission vehicle on October 1, 2020 for use as a delivery vehicle. The lease agreement is for two years and ends on September 30, 2022. The rental periods are monthly with PST paid on the lease amount each month.

 The PST paid on the rental periods of October 2020 to September 2021 is eligible for the rebate because:

  • the rental periods fall within the qualifying period of September 17, 2020 to September 30, 2021;
  • the vehicle is a zero-emission vehicle;
  • the vehicle is used substantially (more than 90% of the time) for producing or gaining income; and
  • the PST paid on the monthly lease payments was paid during the qualifying period of September 17, 2020 and September 30, 2021.

The PST paid on the remainder of the rental periods, October 2021 to September 2022, is not eligible for the rebate because the rental periods fall outside of the qualifying period of September 17, 2020 to September 30, 2021.

Affixed machinery

A food distribution company purchases large commercial freezer units on January 1, 2021 and pays PST at the time of purchase. The freezer units will be used to store frozen food inventories and are installed in such a way that they become part of the real property (the buildings in which they are housed).

The PST paid on the freezer units is eligible for the rebate because:

  • the freezer units qualify as affixed machinery under an eligible CCA class;
  • they are to be used substantially (more than 90% of the time) for producing or gaining income; and
  • the PST was paid during the qualifying period of September 17, 2020 to September 30, 2021.
Goods and software delivered under a written contract

A company purchased desks and accounting software on August 1, 2021. The company purchased the desks and accounting software under a written contract where the desks and software are to be delivered to the company on October 1, 2021. PST is paid at the time of purchase on August 1, 2021.

 The PST paid on the desks and software is eligible for the rebate because:

  • the desks and software are being used substantially (more than 90% of the time) for producing or gaining income;
  • they're qualifying capital assets;
  • the PST was paid during the qualifying period of September 17, 2020 to September 30, 2021; and
  • delivery of the goods takes place on or before November 30, 2021 and the delivery was made under a written contract.
Partnerships

A partnership has two partners. One partner is a company and the other partner is an individual. Under the partnership agreement, each partner has an ownership interest of 50% in all assets of the partnership. On November 1, 2020, the partnership purchased painting equipment for use in the painting businesses it operates. The equipment cost $60,000 and the PST of $4,200 was paid at the time of purchase.

The PST paid by the company partner on their ownership interest in the painting equipment (50% of $4,200 which is $2,100) is eligible for the rebate because:

  • the PST was paid by a company during the qualifying period of September 17, 2020 to September 30, 2021;
  • the painting equipment is being used substantially (more than 90 percent of the time) for producing or gaining income; and
  • the painting equipment is a qualifying capital asset.

The PST paid by the other partner (50% of $4,200 which is $2,100) is not eligible for the rebate because the other partner is an individual and not a company.

What you need to apply

Be sure to keep all receipts and invoices between September 17, 2020 and September 30, 2021 with proof of the payment of PST on qualifying machinery and equipment. You may need to attach copies of your receipts and invoices as part of your application.

Have your incorporation information available. You may need to attach your incorporation documents as part of your application.

Have your banking information available. If you have a Canadian bank account, you’ll need to provide your banking information for direct deposit of your rebate payment. If you do not have a Canadian bank account, you’ll receive your rebate payment by cheque.

How to apply

You may only submit receipts for purchases made between September 17, 2020 and September 30, 2021. However, there are two application periods so that you don’t have to wait until after September 30, 2021 to submit them all.

You can submit a single application between April 1, 2021 and September 30, 2021

You can submit a second application between October 1, 2021 and March 31, 2022

If you didn’t submit an application during the first application period, you can submit up to 2 applications in the second application period.

You have until March 31, 2022 to apply.

If you have an eTaxBC login for reporting and paying PST, log on to access the rebate application.

If you don’t have an eTaxBC account you can apply for the rebate here.

 

This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual tax needs. This publication is not a substitute for obtaining personalized advice.