British Columbia Clarifies Application of PST to Related Services for Leased Goods

British Columbia has updated a few of its Provincial Sales Tax (PST) Bulletins to clarify the tax status of certain related services provided to leased goods, including:

• Bulletin PST 301: Related Services

• Bulletin PST 303: Warranties, Service Contracts and Maintenance Agreements

• Bulletin PST 315: Rentals and Leases of Goods

Related services are services provided to tangible personal property (i.e., goods), including labour provided to install, assemble, dismantle, repair, adjust, restore, recondition, refinish, or maintain goods. Generally, if a good is taxable, any related service provided to that good is also taxable, unless a specific exemption applies. A related service may be exempt because of the type of good (e.g., most exempt goods) to which it is provided or the nature of the service. However, in the latter case, the province has clarified that PST applies to otherwise exempt related services provided to leased goods or goods related to the leased goods if the lessor, or a third party under an agreement with the lessor, provides the service, subject to certain exceptions. Related services provided to prescribed types of leased goods, including most exempt goods, remain exempt.

The revised bulletins also include new examples to illustrate the application of PST to related services provided in relation to leased goods.

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals.