British Columbia Sales Tax for Contractors: GST and PST

Short answer: British Columbia stacks two separate taxes: 5% federal GST administered by the CRA and 7% provincial PST administered by the BC Ministry of Finance — there is no HST here. As a real property contractor you do not charge your customer PST on the work, and if that is all you do, you never register for PST. Instead you pay PST on the materials as the end user. GST is different: you register once your taxable revenue passes the $30,000 small supplier threshold.

Most Canadian tax advice online was written for an HST province, where one tax, one registration, and one return cover everything. BC left HST in 2013 and runs GST and PST as separate systems with different administrators, registrations, and — critically — recoverability. Getting it wrong rarely means undercharging a customer; it means quietly eating a tax you should have priced in. The authorities are the Canada Revenue Agency for GST and the BC Ministry of Finance for PST. For licensing, see British Columbia contractor license requirements.

Which taxes apply to a contractor in British Columbia?

Tax	Rate	Administered by	Registration	Recoverable?
GST	5%	CRA (federal)	Above the $30,000 small supplier threshold	Yes — input tax credits
PST	7%	BC Ministry of Finance	Often not required for real property contractors	No

Combined, a BC consumer buying taxable goods sees 12%. But a contractor’s experience of the two is nearly opposite. GST flows through you — you collect it, claim back the GST on your inputs, and remit the net. PST does not flow through you at all on real property work. You absorb it.

That asymmetry is the most expensive thing on this page. There are no input tax credits under PST. Every dollar of PST on lumber, fixtures, and materials is a real cost that must sit inside your price. Contractors moving from Ontario, where 13% HST is fully recoverable, routinely underbid their first BC jobs for this reason — see Ontario sales tax for contractors.

Do you charge PST on your work in BC?

No. If you are a real property contractor, it does not matter whether your contract is to supply and affix or to install an improvement to real property, or to install affixed machinery — in either case you do not charge your customer PST. There is no invoice line for provincial tax on the labor, and none on the materials you incorporated. What you do charge is GST, if you are registered.

The statutory home for this is Part 3, Division 8 of the Provincial Sales Tax Act, headed “Affixed Machinery and Improvements to Real Property” — worth knowing the name, because it tells you the two categories the Act cares about. Whether what you attached is an improvement to real property or affixed machinery is a distinction that is not always obvious on site, and the Ministry publishes a bulletin on exactly that question. The Ministry’s real property contractor guidance has moved from a numbered bulletin to web content, so search the Ministry site rather than a bulletin number you found on a forum.

Who pays the PST on materials, and can you shift it?

You do. As a real property contractor you are treated as the user of the goods you obtain to fulfil the contract, so you pay PST on those taxable goods at purchase unless a specific exemption applies. You are the end consumer in the province’s eyes, and the chain stops with you.

There is one escape hatch. A contractor does not have to pay PST on goods obtained to fulfil a contract where the contractor and the customer have entered a written agreement that specifically states the customer agrees to the contractor transferring the liability for PST on the goods to them, and the agreement meets the province’s conditions.

Three cautions, because this is the part of BC’s regime most often relied on wrongly. It must be agreed before the fact — you cannot retrofit it when the supplier invoice lands. It is not a discount; it moves who is legally liable, and the customer has to understand that they are taking on a tax bill. And the wording requirements are specific enough that you should confirm the current conditions with the BC Ministry of Finance and have the clause checked, rather than copying one from another contractor’s contract. Getting the drafting wrong leaves you liable anyway, having priced the job as though you were not.

When does a BC contractor have to register for PST?

You are not required to register to collect and remit PST if you only enter into contracts to supply and affix or install goods that become part of real property. That is the design: you already paid PST on the way in, so there is nothing to collect on the way out.

Registration bites when you step outside that lane, and there are two common ways contractors do:

• You sell goods without installing them. A supply-only sale is a retail sale, and retail sales of taxable goods require you to register and collect PST.
• What you install does not become part of real property. Freestanding appliances, furniture, and some items classed as affixed machinery are not improvements to real property. Sell and install those and you are back in retailer territory.

A contractor who sells a spare fixture off the truck, or drops an appliance without hard-wiring it in, has crossed that line without noticing. If any part of your work hands over goods that stay goods, check your position before assuming the no-registration rule covers you.

Does the $10,000 small seller exemption cover contractors?

No — and this one is settled in the statute rather than a matter of interpretation, so it is worth being blunt about. BC does have a small seller rule: broadly, gross revenue not exceeding $10,000 in the previous 12 months from retail sales of eligible goods, software or services, by someone who does not regularly make retail sales from established commercial premises and is not otherwise required to register.

But the Provincial Sales Tax Act defines “small seller” by explicitly excluding several categories, and contractors are named among them — the definition carves out a contractor who, to fulfil a contract, purchases tangible personal property to supply and install affixed machinery or improvements to real property. That is a description of your business, written into the exclusion.

So the $10,000 figure is real and irrelevant to you at the same time. It is common wrong advice, and wrong in the expensive direction: a contractor who thinks the small seller rule is doing the work will not understand why they were paying PST on materials all along.

When do you have to register for GST?

The federal side works on a genuine threshold, and it is set in the Excise Tax Act rather than by BC. You are a small supplier — not required to register for GST — while taxable revenue stays at or below $30,000, measured either over the four calendar quarters immediately preceding the current one, or within a single calendar quarter. The two tests run in parallel: one good quarter can take you over on its own, without four quarters of history. GST itself is charged at 5%, and BC is not a participating province, which is why no provincial component rides along with it.

Two points contractors get wrong. The $30,000 is measured on revenue, not profit — billing $90,000 and netting $28,000 puts you well over. And you can register voluntarily below the threshold, which is often worth doing: once registered you claim input tax credits on the GST in tools, fuel, materials, and subcontractors. Under PST you never get that option, which is why the two decisions should not be made together.

How does this show up on your invoice?

For a straightforward BC renovation the invoice shows your charge, GST at 5% if you are registered, your GST/HST number, and no PST line at all. That absence is correct and worth a one-line note, because commercial customers dealing with suppliers in other provinces will ask. A customer-liability agreement for PST on materials belongs in the contract and the job file, not a verbal understanding. Any supply-only sale of goods gets separated out with PST charged on it. General mechanics are in what to include on an invoice.

One habit to build: BC announces PST changes through the provincial budget, and the scope of what PST applies to has been widening rather than narrowing. Because PST is not recoverable, any extension that touches services you buy — professional advice, engineering, design — lands directly on your cost base rather than washing through like GST would. Check the Ministry’s current notices each budget cycle instead of assuming last year’s treatment holds, and confirm the effective date and exact scope there rather than from secondary coverage.

Two non-tax registrations sit alongside this. WorkSafeBC: there is no requirement to register if you are self-employed and hire no workers or unregistered subcontractors — note that unregistered subcontractors count, which catches people who think “no employees” settles it — and optional Personal Coverage is available to cover your own lost earnings and medical costs. SkilledTradesBC runs compulsory certification for seven trades: construction electrician, industrial electrician, powerline technician, steamfitter/pipefitter, refrigeration and air conditioning mechanic, gasfitter (Class A and B), and sheet metal worker. In those trades you must be a registered apprentice, a trade qualifier, or a certified journeyperson.

What records hold this position together?

BC’s regime is defensible on paper and fragile in practice, because proof of correct treatment lives in your purchase records, not your sales records. To show you handled PST properly you must show what you bought, that you paid PST on it, and which job it went into — the opposite of a collection model where the invoice tells the story. That makes supplier receipts the primary document of your BC tax position, which is uncomfortable for anyone who keeps them in a truck console. A disciplined contractor receipt organizer routine is most of the work.

Keel is built for that half. It is an iOS app running entirely on the device — no account, no bank connection, no cloud, App Store privacy label “Data Not Collected.” It captures receipts read on-device with Apple Intelligence, produces invoice PDFs with your own numbering, logo, and payment-link QR code, logs mileage, and writes everything into an append-only, hash-chained ledger you can export as one file for the year or hand over as an Accountant Pack. Free is $0 with unlimited invoices, receipts, and mileage; Keel Pro is a one-time $249.99 Lifetime purchase.

Keel is a record keeper, not a compliance tool. It does not register you for PST or GST, file returns, or decide whether what you installed became an improvement to real property.

Frequently asked questions

Do I charge my customer PST on a renovation in BC?

No. As a real property contractor, whether your contract is to supply and affix or install an improvement to real property or affixed machinery, you do not charge your customer PST. You charge GST if you are registered. The PST was already paid — by you, on the materials, when you bought them.

Do I need to register for PST as a contractor in British Columbia?

Generally not, if you only enter into contracts to supply and affix or install goods that become part of real property. You must register if you sell goods without installing them, or if what you install does not become part of real property. Confirm with the BC Ministry of Finance.

Can I claim back the PST I paid on materials?

No. PST has no input tax credit mechanism, unlike GST. Every dollar of PST you pay on materials is a permanent cost that must be built into your price. This is the single biggest difference between working in BC and in an HST province like Ontario — a pricing problem, not a filing problem.

Can my customer agree to pay the PST instead of me?

Yes, under a specific mechanism. A contractor need not pay PST on goods obtained for a contract if the contractor and customer enter a written agreement specifically stating the customer agrees to the contractor transferring the PST liability to them, meeting the Ministry’s conditions. It must be agreed up front.

Does the $10,000 small seller threshold apply to me?

No. The Provincial Sales Tax Act defines small seller by excluding several categories, and one of them is a contractor who purchases tangible personal property to fulfil a contract to supply and install affixed machinery or improvements to real property. That is written into the definition itself, so it is not a judgment call. The $10,000 figure is real but does not reach you — this is widely repeated bad advice.

When do I have to register for GST in BC?

When your taxable revenue exceeds $30,000, measured either over the four calendar quarters immediately preceding the current quarter or within a single calendar quarter. Either test can trip on its own. That is revenue, not profit. You may also register voluntarily below the threshold, which lets you claim input tax credits on the GST in materials, fuel, and tools — an option PST never gives you.

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This article is general information, not legal or tax advice. Rules change — confirm with the authority named above.