BC PST on Goods vs. Services

Definition

Under the Provincial Sales Tax Act (BC), the default rule is that tangible personal property (goods) is taxable unless specifically exempted, while services are exempt unless specifically listed as taxable. This inverse treatment (goods taxable by default, services exempt by default) is the single most important concept for determining whether to charge PST on an invoice.

Key rules

Goods (tangible personal property) are generally taxable at 7%:

• New and used consumer goods sold at retail.
• Business equipment, furniture, and supplies (unless acquired for resale or qualifying production machinery).
• Software delivered on physical media or downloaded for use in BC.
• Leases and rentals of tangible personal property situated in BC.
• Goods brought into BC from outside the province (self-assessment required).

Services are generally exempt, except for these enumerated taxable services:

• Short-term accommodation of less than 27 consecutive days (8% PST plus MRDT).
• Legal services (taxable since April 1, 2013).
• Telecommunication services used in BC, including cellular, internet, cable TV, and certain digital services.
• Related services to tangible personal property (repair, maintenance, installation, restoration of taxable goods).
• Services provided with or in relation to the purchase of a taxable good.
• Cloud software and software-as-a-service where the customer is in BC (per PST Bulletin 105).

Example

A BC incorporated consulting firm invoices a Vancouver client in May 2026 for three line items:

1. Custom software development (100 hours): $15,000 : exempt service, no PST.
2. One-year SaaS subscription to the firm's hosted platform: $3,000 : taxable software, $210 PST collected.
3. A bundled laptop shipped to the client with the software: $2,000 : taxable good, $140 PST collected.

GST at 5% applies to all three lines regardless of PST treatment. The invoice total is $20,000 + $1,000 GST + $350 PST = $21,350. The PST portion is remitted on the next eTaxBC return.

Common mistakes

• Charging PST on custom professional services that are exempt. Invoices with incorrect PST are often disputed and require credit notes and amended returns to fix.
• Treating a SaaS subscription as a service; under PST Bulletin 105, software use rights are taxable whether delivered as a download, on media, or through the cloud.
• Missing self-assessment on taxable goods bought from out-of-province vendors who did not collect BC PST.
• Assuming the October 2026 expansion captures IT consulting; it does not. Monitor Ministry notices for future changes.

Related concepts