GST and PST in British Columbia: a plain guide for small businesses

British Columbia is one of the few provinces where a business deals with two separate sales taxes: the federal GST at 5%, filed with the Canada Revenue Agency, and the provincial PST at 7%, filed with the BC government. They have different rules, different returns and different deadlines. Here is what a small business needs to know.

Do you need to register for GST?

You must register for GST once your taxable sales pass $30,000 in a single calendar quarter or over four consecutive calendar quarters. Below that you are a small supplier and registration is optional. Many businesses register early anyway, because registration is what lets you claim back the GST you pay on business expenses.

Do you need to register for PST?

If you sell or lease taxable goods, software or certain services in BC, you generally need to register for PST, regardless of size. There is a small seller exception for businesses with less than $10,000 in taxable sales over the past 12 months, but it has conditions, so check before you rely on it.

How often do you file?

• GST: annually if your revenue is $1.5 million or less, quarterly up to $6 million, monthly above that. You can choose to file more often.
• PST: monthly, quarterly or annually, based on how much PST you collect. The BC government tells you your period when you register.

What you can claim back

GST paid on business expenses comes back to you as input tax credits, as long as you keep the bills and the supplier is registered. PST works differently: there is no credit for PST you pay. That makes coding expenses correctly important, because GST and PST on the same bill go to different places.

Five mistakes we fix most often

• Charging HST to BC customers. BC uses GST plus PST, not HST.
• Charging BC PST to customers in other provinces, or GST only to customers in HST provinces. The place of supply decides the tax.
• Missing input tax credits because bills are not in the books.
• PST and GST collected into the same account, so the returns cannot be reconciled.
• Filing late because the annual deadline crept up. Penalties and interest start the day after.

How AxLedger handles it

AxLedger applies place-of-supply rules to every sale, keeps GST, HST, PST and QST in separate accounts, and fills in your GST/HST return with the CRA line numbers. When you file, you record the confirmation number and the period locks so the numbers cannot drift.

Sources: CRA, which GST/HST rate to charge; Government of BC, provincial sales tax.