In this document you can find information on how the PST applies to goods acquired, brought, sent or received by realty contracting agents with the purpose to improve realty.

What Is Improvement of Realty?

The notion of realty includes land and any type of buildings and structures permanently fixed to it. Term improvements of realty stands for any kind of goods that become permanently fixed to the land, buildings and structures on installation (such as windows doors, electrical system, driveways and sidewalks, large machinery etc.). Although, this list does not include affixed machinery.

What Is Affixed Machinery?

Equipment or machinery used in the process of manufacturing, transporting , packaging or distributing of goods or provision of services is called affixed machinery, under the condition that it is affixed to land or a building.

Who Is Realty Contracting Agent?

A person is a realty contracting agent if he constructs buildings under the contract. Also, a person can be regarded as a realty contracting agent if he supplies or installs goods that are improvements of realty.

The PST Rules for Realty Contracting Agents

General Rule

All realty contracting agents are obliged to pay the PST on the goods they acquire, send or receive with the purpose of improvement of realty on the territory of BC, if it is done under an actual contract. Supplying or installing goods can not be considered as the sale of those goods. This is why realty contracting agents are not eligible for the exemption for the goods they purchased with the purpose of resale.

Realty Contracting Agents Who Resell Goods

If a realty contracting agents purchases goods solely with the purpose of resale, he doesn't have to pay the PST. If goods are acquired not only for resale, but also for their further use for fulfilling a contract as a realty contracting agent (or any other use), then the person who uses the goods has to pay the PST. In this case the PST must be self-assessed by the end of the month following the month when goods were used for the first time.

Exclusions

If a realty contracting agent makes an agreement with a customer that the letter is responsible for paying the PST and the purchase price is stated in that agreement, then the agent is exempt from the PST. There must be a written proof of such agreement. Realty contracting agents must be registered with the ministry for collecting the PST before entering into this kind of agreement.

Also a realty contracting agent doesn't have to pay the PST if he acquires, sends or brings the goods on the territory of BC under a written contract made with Government of Canada or a person who is exempt from the PST.

Transitional Rules

A realty contracting agent must pay the tax on the goods if they were purchased before April 1, 2013 but used with the purpose to supply or install affixed machinery or improve realty under the contract after April 1, 2013.

If goods are acquired, sent or received on the territory of BC are joined with the realty that may be the subject matter of a taxable sale, they r subject to the PST. In this case the PST is paid on the purchase cost of the goods.

If a person purchased or manufactured a mobile home on the territory of BC before April 1, 2013 and it is used as a place of residence, he must pay the PST on the purchase cost of that mobile home.