The British Columbia Provincial Sales Tax (PST) Rebate on Select Machinery and Equipment is a temporary PST program to help corporations recover from the financial impacts of COVID-19.
Starting April 1, 2021, 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”.
Businesses operated by sole proprietors will not qualify for the new PST rebate. Certain other entities such as crown corporations, charities and non-profit corporations will also not qualify.
Qualifying Machinery and Equipment
Most capital assets used in a business to earn income will generally qualify. The following criteria need to be met by the asset:
- Substantially (90% or more) used for the purpose of gaining or producing income in the business;
- Purchased or leased in B.C., brought into or received in B.C., received from a related company, or received as a taxable gift; and
- In the case of software, purchased for use or with a device ordinarily situated in B.C.
For simplicity, eligibility is categorized by capital assets that corporations depreciate for tax purposes under the “Capital Cost Allowance” (CCA) regime. Assets in CCA classes 8, 10, 12, 16, 38, 43, 43.1, 43.2, 46, 50, 53, 54, and 55 generally qualify. For more details, see the CRA website on commonly used CCA classes, their descriptions, and rates.
The following assets 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) – Bulletin PST 502
- Goods purchased by resale by a small seller – Bulletin PST 003
- Exclusive products purchased by independent sales contractors – Bulletin PST 004
Leased goods
The rebate only applies to PST paid on a rental period 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 5-year lease that requires monthly payments has 60 monthly rental periods.
Applying for the rebate
What you need:
- Keep all receipts and invoices with proof of PST payment on Qualifying Machinery and Equipment;
- Incorporation information may be required to be attached to the application;
- Banking information such as direct deposit information; and
- Further information may be requested as required.
Qualifying corporations will be able to apply online for the new temporary PST rebate as of April 1, 2021. Incorporated businesses can make two rebate applications: the first application can be made between April 1, 2021 and September 30, 2021. The second application can be made between October 1, 2021 and March 31, 2022. The second application cannot cover expenditures for which the rebate has previously been claimed.
You can apply online with detailed instructions on the BC government website:
https://www2.gov.bc.ca/gov/content/taxes/sales-taxes/pst/rebate-machinery-equipment
Repayment obligations
In certain circumstances, corporations may need to repay all or part of the rebate if they receive a refund or credit in respect of the price of the eligible property or if they subsequently use the eligible property other than for the purpose of gaining or producing income.
If you have any questions about the application process, feel free to contact us.
