BC's Ministry of Finance has issued a revised interpretation of the Provincial Sales Tax ("PST") exemptions for First Nations individuals and bands and the contractors working with them.
Interpretive Bulletin 314 (regarding PST exemptions for First Nations) was revised in June 2023. One change relates to PST payable by contractors on goods used to construct improvements to real property on First Nations land.
Before June 2023, a contractor may be exempt from paying PST on goods used to improve real property on First Nations land if the contractor receives title to the goods on First Nations land.
Following the 2023 revision, contractors may be exempt from paying PST on goods used to improve real property on eligible First Nations land even if the contractor receives title to the goods off-reserve.
As such, the relevant location for determining whether a contractor is exempt from PST has shifted from where the contractor receives title to the goods to where the goods are used to improve real property. Generally, if the goods or affixed machinery are installed on qualifying First Nations lands, and the customer is a qualifying First Nations individual or Band, the exemption is applicable (provided that the other requirements for the "flow through" exemption for First Nations individuals and Bands for contractors are met—see Interpretive Bulletin 314 for more details).
This change may be relevant for any contractors working with First Nations to improve real property on-reserve, especially contractors that might use goods that are prefabricated and/or purchased or stored at off-reserve facilities. Contractors who work with First Nations are encouraged to seek professional advice as to the availability of this exemption and potential refund claims.
Originally published 23 February 2024
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