BC PST for Contractors and Trades: When You Must Charge and When You Pay

BC PST for Contractors and Trades: When You Must Charge and When You Pay

Provincial Sales Tax (PST) in British Columbia often creates confusion for contractors and trades professionals. Unlike GST, which applies broadly across Canada, PST has its own unique rules. Knowing when to charge PST to clients and when you are required to pay PST on materials can save you from costly penalties and ensure compliance. This guide breaks down the essentials for contractors and trades businesses in Vancouver and across B.C.

In B.C., contractors are generally considered the consumers of building materials they use in a project. This means you often pay PST on the materials you purchase, but you don’t necessarily charge PST separately to your customer. However, exceptions exist depending on the type of work and the materials supplied. For guidance on proper recording of these transactions, explore our Business Accounting Services.

Contractors may be required to charge PST in situations where they sell goods outright, or when specific contracts fall under supply-and-install rules. For example, if you fabricate and sell custom cabinets without installation, PST must be charged to the customer. Understanding the difference between PST and GST is critical—see our guide on Understanding GST and HST for comparison.

For most construction contracts, you are considered the consumer of the materials and must pay PST at the time of purchase. This applies even if the cost of those materials is built into the price charged to your customer. Ensuring that these costs are properly tracked is key—our Bookkeeping Services can help you set up systems to stay compliant.

Common Mistakes Contractors Make

• Failing to register for PST when required
• Not charging PST on the sale of goods without installation
• Confusing GST and PST obligations
• Inaccurate bookkeeping of PST paid on materials

These mistakes can result in assessments and penalties from the B.C. Ministry of Finance. Staying organized and informed is essential to protecting your business.

PST vs GST: Key Differences

Unlike GST, which is recoverable through input tax credits, PST is a cost to your business. You cannot claim it back. This makes it even more important for trades to budget accurately and price services appropriately. For support in ensuring compliance and efficiency, see our article on Navigating Business Taxes in Vancouver.

Why Work With a CPA?

A Chartered Professional Accountant can ensure that your business is not only compliant with PST regulations but also operating efficiently. With our experience supporting contractors and trades across Vancouver, we can help you avoid costly errors and focus on growing your business.