Do Contractors Charge PST in BC?

Short answer: In most cases, no. If you supply and install materials that become part of a building or land (framing, drywall, roofing, plumbing, wiring, built-in cabinets), you pay the 7% PST yourself when you buy those materials, and you don't charge PST to your customer. You usually need to register and charge PST only if you also sell goods without installing them, supply and install goods that stay goods (like a freestanding fridge), or repair items off site.

Why it works this way

BC treats a renovation or construction job as an improvement to real property. The province collects PST at the start of the chain: on the lumber, tile, fixtures and wire you buy. Your labour on real property (painting a house, roofing, plumbing, electrical work) is not subject to PST. So on a normal job, the PST you paid at the supplier is simply one of your costs, and it should be built into your price.

When you DO have to charge PST

You need a PST number and must charge PST when you:

  • Sell taxable goods without installing them (selling a customer a box of fixtures to take home)

  • Supply and install goods that do not become part of the property. On those jobs PST goes on the goods and the related service. The province's examples (from its "Defining real property" guide): freestanding fridges, ranges, freezers, washers and dryers, window air conditioners, curtains and drapes, furniture, plug-in lamps, and plants in movable containers

  • Repair something off site. For example, if you take a furnace motor back to a shop to fix it, you charge PST on that repair. On-site repairs to the building itself are not taxed

On a mixed job, you pay PST on the materials that become part of the property and charge PST on the items that stay goods.

What counts as "part of the property"?

The general rule: if it's attached to the building or land, even a little, it usually becomes real property. Simply plugging something in doesn't count. A few examples from the province:

  • Real property (you pay PST, don't charge it): built-in dishwashers, ovens and cooktops, range hoods, hardwired ceiling fans, hot water heaters, venetian blinds, curtain rods, a hot tub attached to the deck or ground

  • Stays goods (you charge PST): freestanding ranges and fridges, freestanding dishwashers, curtains and drapes, a plug-in hot tub that just sits on its own weight

What you pay PST on as a contractor

You pay PST on the materials that go into the job, the parts and supplies you use to install them, and your own tools and equipment: tools, computers, vehicles and cleaning supplies. It doesn't matter whether the job is a lump sum or time and materials; you pay PST on the materials either way.

Don't forget GST is a different tax

PST is BC's tax. GST is federal. If you're registered for GST, you add 5% GST to your invoice for the whole job, labour and materials. You can usually claim back the GST you paid on your materials as an input tax credit. There's no input tax credit for the PST you paid, which is why it has to be in your price. Not sure if you need to be registered for GST? You have to register once your sales pass $30,000 in one calendar quarter or over four quarters in a row.

Example: a bathroom renovation

This is an example only, with round numbers.

  • You buy $4,000 of tile, a vanity, a toilet and fixtures for the job. You pay 7% PST at the supplier: $280. (You also pay $200 GST, which you can claim back if you're registered.)

  • Your materials cost is $4,280. Your labour on the job is $6,000.

  • You invoice the customer $10,280, with no PST line. Add 5% GST of $514, for a total of $10,794.

  • Now say the customer also asks you to supply a freestanding fridge for $2,000. That fridge stays a good, so you need a PST number and you charge 7% PST on it: $140, plus $100 GST.

If you had left the $280 PST out of your price, it would come straight out of your profit. If that PST is missed on every job, it adds up quickly.

Frequently asked questions

Do I charge PST on labour in BC?

Not on work done to a building or land, like framing, painting, roofing, plumbing or electrical. PST does apply to labour on goods that stay goods, such as installing a freestanding appliance, and to off-site repairs.

Do I need a PST number as a contractor?

Most contractors who only do construction and renovation work don't. You need one if you sell goods, or install goods that don't become part of the property. Check with the province if your work is a mix.

Should my quote show PST?

On a normal supply-and-install job, no. The PST you paid on materials is part of your cost, so build it into your price instead of listing it. If part of the job is taxable goods, show PST on those items only.

Can I buy materials PST-free for a customer who is exempt?

In some cases. There are exemptions for written contracts with certain customers who would be exempt if they bought the goods themselves, for example qualifying First Nations individuals or bands, and the Government of Canada. The written contract has to be in place before you buy the goods, and you use the province's Certificate of Exemption (Contractor), form FIN 491. You can't use a PST number to claim it.

Is PST 7% on everything?

The general rate is 7%, with some exceptions. Building materials, fixtures and tools are generally taxed at 7%.

Can I claim back PST like GST?

No. Unlike GST, there's no input tax credit for the PST you pay on materials, so it's a cost of the job and needs to be in your price.

Free tools that help with this

PST rules for contractors have edge cases. If you're not sure how a job should be taxed, the province's Consumer Taxpayer Services line (1-877-388-4440) can confirm, or we can look at it with you.

Working with subs? Related question: Do subcontractors charge GST in BC?

How Murtagh & Co. Can Help.

We work with trades and construction businesses across the Okanagan on bookkeeping, GST, tax and the numbers behind your pricing. We can check that the PST you pay on materials is actually built into your quotes, and that your GST is set up right.

Murtagh & Co. was founded by Devon Murtagh, CFA, FRM, a former trades business owner who has priced jobs and paid for materials himself.

Prefer to talk it through? Book a free 30-minute call at a time that works for you, or reach out at info@murtaghco.ca.

More free tools for contractors: murtaghco.ca/contractor-toolkit