B.C. PST Rebate on Select Machinery and Equipment

TECHNICAL BACKGROUNDER: B.C. PST REBATE ON SELECT MACHINERY AND EQUIPMENT

Effective September 17, 2020, incorporated businesses are eligible for the BC PST Rebate on Select Machinery and Equipment. This program allows incorporated businesses to apply for a rebate of 100% of PST paid between September 17, 2020 and September 30, 2021 on select machinery and equipment.

Applying for and Receiving the Rebate

Incorporated businesses may make up to two PST rebate applications: the first application can be made between April 1, 2021 and September 30, 2021. The second application can be made starting October 1, 2021. The last day applications will be accepted is March 31, 2022, which is 6 months after the rebate period ends on September 30, 2021.

The Ministry of Finance will provide detailed information on the rebate process in advance of April 1, 2021.

What Qualifies for the Rebate

For simplicity, Income Tax Act (Canada) capital cost allowance (CCA) class definitions already familiar to incorporated businesses will be used to establish which types of capital assets qualify for the rebate program.

To be eligible for the rebate, eligible property must be:

  • described by the definitions found in Schedule II to the federal Income Tax Regulations, as they read on September 1, 2020, for CCA classes 8, 10, 12, 16, 43, 43.1, 43.2, 46, 50, 53, 54, and 55

  • obtained substantially (more than 90%) for the purpose of gaining or producing income,

  • and not excluded (as set out below)

Additionally, software and goods, other than goods obtained by lease, must be capital assets for the rebate to apply.

CCA classes covered by the BC PST Rebate on Select Machinery and Equipment include, but are not limited to:

  • machinery and equipment, tools, appliances and furniture

  • computer hardware and software

  • electric vehicle charging stations, and

  • zero-emission vehicles

For the purposes of the BC PST Rebate on Select Machinery and Equipment, a zero-emission vehicle means a

motor vehicle that is:

  • fully electric

  • fully powered by hydrogen, or

  • a plug-in hybrid that has a battery capacity of at least 7 kWh

For detailed information on what is included in these CCA classes, see:

  • Schedule II to the federal Income Tax Regulations, and

  • the Canada Revenue Agency's web page for capital cost allowances

What Does Not Qualify for the Rebate

Certain exclusions apply.

The following goods are not eligible for the BC PST Rebate on Select Machinery and Equipment program:

  • vehicles, other than zero-emission vehicles

  • goods purchased to be installed as an improvement to real property

    • see Bulletin PST 502, Examples – Goods that Generally Become Part of Real Property and Goods That Do Not (PDF, 240KB)

  • goods purchased for resale by a small seller

    • see Bulletin PST 003, Small Sellers (PDF, 313KB)

  • exclusive products purchased by independent sales contractors

    • see Bulletin PST 004, Direct Sellers and Independent Sales Contractors (PDF, 465KB)

Tax paid after the time permitted by statute is not eligible for the BC PST Rebate on Select Machinery and Equipment. In most cases, PST is payable on the earlier of the day the consideration for a purchase or lease is paid and the day the consideration for a purchase or lease becomes due. Detailed rules governing when PST is payable can be found in Part 2 of the Provincial Sales Tax Act.

Additionally, transition rules may exclude certain transactions from eligibility in some circumstances where PST is paid during the period spanning September 17, 2020 through September 30, 2021.

For eligible goods that are leased, the rebate will not apply to PST paid in relation to a rental period that:

  • does not include a right to use the goods on or after September 17, 2020, or

  • includes a right to use the goods after November 30, 2021

On this page, "rental period" refers to a portion of a lease for which a periodic price is payable (e.g. a 5-year lease that requires monthly payments would have 60 monthly rental periods).

For all other eligible goods and software, the rebate will not apply to PST paid if the goods or software are delivered on or after October 1, 2021 unless the goods or software are delivered under a written contract that specifies the goods or software must be delivered on or before November 30, 2021.

Who Qualifies for the Rebate

Incorporated businesses will be eligible to claim the BC PST Rebate on Select Machinery and Equipment.

Entities the rebate will not be available to include:

  • provincial and federal Crown corporations

  • local government corporations

  • charities and non-profit corporations, except incorporated businesses wholly or partly owned by charities

  • and non-profit corporations

  • schools, school boards and universities, including business, trade and vocational schools

  • hospitals

  • regional health boards and community health councils, and

  • agents of the government and of the other entities listed above, to the extent that the PST is paid in their

capacity as an agent

Repayment terms will apply in some circumstances

If an incorporated business receives a BC PST Rebate on Select Machinery and Equipment but receives a refund or credit in respect of the purchase or lease price of goods or software associated with the rebate (e.g. after returning goods to a seller), the rebate must be repaid in proportion to the amount of the refund or credit received by the incorporated business.

If an incorporated business receives a BC PST Rebate on Select Machinery and Equipment in respect of a leased good and subsequently uses that good other than substantially for the purpose of gaining or producing income during a rental period for which the rebate has been paid, the incorporated business must repay the amount of the rebate that is attributable to that rental period.

For all other eligible goods and software, if an incorporated business receives a BC PST Rebate on Select Machinery and Equipment and, at any point within 2 years of paying the PST uses the goods or software other than substantially for the purpose of gaining or producing income, the incorporated business must repay an amount equal to the amount of PST that would apply to the depreciated purchase price, as calculated using rules to be prescribed by regulation, as if PST were to apply on the date that the goods or software are no longer used substantially for the purpose of gaining or producing income.

Jane Zhao