BC PST on software and SaaS subscriptions
Published on Published
PST applies to software used on a device ordinarily in BC, including software accessed online, wherever the server is.
Short answer: BC PST applies to software, including software as a service (SaaS) such as a browser-based subscription, when it is bought for use on, through or with an electronic device ordinarily situated in BC, wherever the provider’s server is. The rate is 7% of the purchase price. Under Part 4 of the Provincial Sales Tax Act, the seller collects it if registered to do so, and otherwise the purchaser in BC pays it to the government directly. A business gets no PST credit for it.
What counts as software
The Act defines software as coded instructions, or a right to use coded instructions, whether exercised or not, designed to cause an electronic device to perform a task. Software as a service is software, or the right to use it, where the provider or someone else other than the purchaser keeps possession of the software.
Disc, download and subscription
| How you get it | How the province treats it |
|---|---|
| On a disc, or sold with computer hardware | Taxed under Part 3 of the Act, in a tangible format |
| Downloaded, or used through remote access | Taxed under Part 4 of the Act, in an intangible format |
| A subscription accessed online (SaaS or infrastructure as a service) | Taxed as software if bought for use on, through or with a device ordinarily in BC, wherever the server is |
Who pays and reports
A purchaser in BC who buys Part 4 software for use on a device ordinarily in BC owes 7% of the purchase price, paid to the seller if the seller collects it and to the government directly if not. The province’s page on software explains when the seller collects and when the purchaser pays directly. A business that sells software to BC customers has its own obligations, which the registration guide covers.
Exemptions exist
The PST Exemption and Refund Regulation has a Part 3 of exemptions in relation to software, with its own conditions. Read it before assuming a particular purchase is exempt.
What your books need to show
- Each software subscription as its own line, with the PST on the invoice or the PST you owe on it.
- The PST treated as part of the cost, because a business gets no PST input tax credit.
- Where a provider outside BC did not charge PST, a note of the purchase, so the PST owed can be worked out and reported.
Is a software subscription subject to PST in BC?
Yes, if it is bought for use on, through or with an electronic device ordinarily situated in BC, wherever the provider’s server is.
Does it matter that the provider is outside BC?
No for the tax itself. SaaS is taxable if used on a device ordinarily in BC, and the purchaser pays under Part 4 if the seller does not collect.
Is software on a disc treated the same way?
It is taxed under Part 3 as software in a tangible format. Software downloaded or used through remote access is taxed under Part 4.
Can my business claim the PST back?
No. A business gets no PST input tax credit for software or other purchases.
GST and PST in BC, side by side →
Registering for PST in British Columbia →
Want this handled for you
This is the work we do for clients every month. Tell us what you sell and where your books stand, and a written plan and a fixed monthly price follow within one business day.
info@orbisaccounting.ca