Certain businesses in British Columbia must now charge PST on delivery charges.
British Columbia has announced that, as of April 1, 2018, where a vendor in British Columbia sells taxable goods to be delivered to a buyer located in British Columbia and delivery charges are incurred at the time the sale of the goods is contracted, PST will apply to those delivery charges. Previously, British Columbia's policy was that PST did not apply to delivery charges where title to the goods passed to the purchaser at the vendor's premises in British Columbia. As a result of this change, which was announced in a recent administrative bulletin, B.C. PST will generally apply to charges to deliver taxable goods.
British Columbia's updated PST Bulletin 302 states that PST generally applies to delivery charges incurred at or before the time the title of the goods is passed to the buyer. British Columbia considers delivery charges to be incurred at the time the contract for delivery is entered into, which would normally be at the time the contract to purchase the goods is entered into. The bulletin clarifies that delivery charges are "incurred" at the time the buyer agrees to pay for the services and do not need to be invoiced or paid to be considered "incurred". For example, if a vendor in British Columbia enter into a contract that identifies both the price of taxable goods and a charge for the delivery of the goods in British Columbia, PST will apply to both the price of the goods and the delivery charge.
Penalties will not apply to PST not collected under incorrect guidance
In the revised bulletin, British Columbia indicates that previous versions of the bulletin erroneously stated that PST did not apply to delivery charges if the title of the taxable goods passed at the seller's premises in British Columbia (i.e., the shipping point). However, British Columbia's new bulletin states that vendors that did not collect PST in this specific scenario before April 2018 will not be subject to the penalty for not collecting PST on those charges. British Columbia has enacted a remission order to that effect that has application to any sales made after March 2013 and before April 2018.
For more information, contact your KPMG adviser.
Information is current to April 17, 2018. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500