BC PST Exemptions

Definition

A PST exemption removes an otherwise taxable purchase from the 7% Provincial Sales Tax base. Exemptions fall into two broad categories: item-based exemptions, where the good or service itself is non-taxable regardless of purchaser, and purchaser-based exemptions, where the purchaser's status or use of the good (for example, a reseller or qualifying farmer) removes the PST at the point of sale. Most purchaser-based exemptions require the buyer to provide a valid exemption certificate or registration number to the seller.

Key rules

Major item-based exemptions:

• Food products for human consumption (basic groceries, restaurant meals are separately taxed in some cases under liquor provisions only).
• Prescription drugs, medical devices, and many health-related products.
• Children's clothing and footwear.
• Bicycles (with limited exceptions).
• Books, newspapers, and magazines.
• Residential electricity, heating fuel, and natural gas (subject to separate ICE Fund tax rules).
• Admissions, memberships, and most personal services.

Major purchaser-based or use-based exemptions:

• Goods purchased for resale by a PST-registered vendor (exemption claimed by providing the PST number to the supplier).
• Production Machinery and Equipment (PM&E) exemption for qualifying manufacturing, logging, mining, oil and gas, and certain software development uses. Strict eligibility tests and documentation apply under PST Bulletin 110.
• Farm machinery, equipment, and feed acquired for qualifying agricultural use.
• Goods acquired by a status First Nations individual for use on reserve (with valid Certificate of Indian Status).
• Diplomatic and certain government-to-government purchases.

Example

A BC incorporated consulting firm purchases three items for its Vancouver office in 2026:

1. A laptop for employee use: $2,000. Taxable good, no exemption applies (consulting is not PM&E), 7% PST = $140 payable.
2. Office printer paper: $200. Taxable good, no exemption, 7% PST = $14 payable.
3. Prescription medication for an employee (paid by the corporation as part of a health benefit): $150. Item-based exemption (prescription drug), 0% PST.

Contrast with a BC manufacturing corporation buying a $50,000 CNC milling machine that qualifies under the PM&E exemption: the buyer provides a completed Certificate of Exemption (Production Machinery and Equipment, FIN 492) to the supplier at purchase. The supplier does not charge PST, saving $3,500, and retains the certificate for four years as audit support.

For resale purchases, the reseller provides its BC PST number on a purchase order or signed declaration. For example, a Victoria gift shop orders $10,000 of inventory and provides the supplier with PST-1234-5678; the supplier does not charge PST. When the gift shop later sells the items at retail, it charges PST to the final consumer and remits it.

Common mistakes

• Claiming the PM&E exemption without meeting the narrow eligibility tests. PST Bulletin 110 lists specific qualifying activities; general office automation and business software do not qualify.
• Failing to retain the completed exemption certificate. Without documentation, the seller becomes liable for the uncollected PST on audit.
• Assuming that because GST was exempt, PST is also exempt. The two taxes have different exemption lists (for example, residential rent is exempt from both, but consulting services are currently exempt from PST only).
• Missing the four-year window to claim a refund of PST paid in error.

Related concepts