As we enter the second half of 2023, sellers in British Columbia and Saskatchewan will have to make slight changes in how they record and remit provincial sales tax.
These changes are provincial only and do not affect the general sales tax throughout Canada.
Online marketplace fees
Effective July 1 2023, online marketplace facilitators in British Columbia will be required to remit slightly more PST. Why more? Before July 1, they were only required to collect and remit PST on taxable items and services rendered to marketplace sellers. Now, they will be required to collect and remit PST on all online marketplace services rendered.
Please note that marketplace facilitators are different from marketplace sellers. For example, if you sell items on eBay, you are a seller on the eBay marketplace and do not have to consider GST/PST at all. However, under this change, the parent company eBay must change how it collects and remits PST in its British Columbia division.
This change applies both to sales tax on items sold through the marketplace and services provided by the marketplace facilitator. To continue our eBay example, eBay would not only have to charge sales tax on the item being sold but also on the other services eBay provides as well. These would include transaction facilitation services such as:
- Advertising
- Listing services
- Collecting and remitting payments
- Customer service
- Managing returns and refunds
Since these services all fall under Canada’s definition of taxable services, they must be included in PST calculations.
Place of Supply changes
Canadian GST follows the “place of supply” principle to determine what sales tax is applicable. This means that sales tax follows the place the good or service was originated, and not necessarily where it was sold to.
The new British Columbia PST rules also changed to align their online marketplace PST rules with the federal GST rules. Previously, goods purchased outside British Columbia via an online marketplace and shipped into the province for commercial use were subject to PST. Since this violates the “place of supply” principle, these goods are no longer subject to PST.
Medical equipment
There are some minor changes regarding medical equipment and PST.
- In British Columbia, automatic external defibrillators were added to the list of items exempt from PST. This includes their accessories, such as extra pads, wires, and repair or servicing for these machines.
- In Saskatchewan, labour and materials to repair or service exempt medical equipment is now also exempt from PST.
Other changes
Saskatchewan also made a few retroactive changes to its PST regulations to ensure consistent applications of the GST/PST laws.
- Commercially grown produce: storage containers and buildings for commercially grown produce are exempt from PST, retroactive to April 1 2019.
- Rice farming: Boats with attached harvesting equipment for rice farming are exempt from PST, retroactive to April 1 2019
- Geothermal drilling: Rigs and equipment used for commercial geothermal drilling are exempt from PST, retroactive to April 1 2017.
References:
PST changes for online marketplace facilitators in July – KPMG Canada
EY Tax Alert 2023 no 15 – Saskatchewan budget 2023-24 | EY Canada
EY Tax Alert 2023 no 07 – British Columbia 2023–24 budget | EY Canada
Tax Information Updates | Provincial Taxes, Policies and Bulletins | Government of Saskatchewan
Updates to sales taxes – Province of British Columbia (gov.bc.ca)