If you own a small business in British Columbia and you are unsure whether to charge GST, HST, or PST to your customers, you are not alone. Canadian sales tax is one of the most confusing areas for small business owners, and the rules in BC are different from most other provinces. This guide explains exactly what each tax is, when you are required to collect it, and what your obligations are as a BC business owner in 2026.
What are GST, HST, and PST?
GST: Goods and Services Tax
GST is a federal tax charged on most goods and services sold in Canada. The GST rate is 5% across the entire country and has remained at 5% since January 1, 2008. GST is administered by the Canada Revenue Agency (CRA), and all businesses registered for GST must file returns directly with CRA.
HST: Harmonized Sales Tax
HST is a combination of the federal GST and a provincial sales tax, merged into a single tax administered by CRA. HST applies in five provinces only:
- Ontario at 13%
- New Brunswick at 15%
- Nova Scotia at 14% (reduced from 15% on April 1, 2025)
- Newfoundland and Labrador at 15%
- Prince Edward Island at 15%
British Columbia does not use HST. BC withdrew from the HST system in April 2013 following a provincial referendum and returned to a separate GST and PST structure.
PST: Provincial Sales Tax (BC)
British Columbia's PST is a retail sales tax administered by the BC Ministry of Finance, separate from the federal GST collected by CRA. The BC PST rate is 7% and applies to most goods and some services sold in the province. Unlike GST, PST is not a value-added tax. This means businesses cannot claim PST paid on purchases as an input tax credit. PST is a cost to your business when you purchase goods, and a collection obligation when you sell them.
Do I need to register for GST in BC?
Under the Income Tax Act, you are required to register for GST when your total taxable revenues exceed $30,000 in any single calendar quarter or in four consecutive calendar quarters. This $30,000 threshold is called the small supplier threshold.
Key rules about GST registration in BC:
- If your annual revenue is below $30,000, you are a small supplier and GST registration is optional
- Once your revenue exceeds $30,000 in any 12-month rolling period, you must register within 29 days
- You can voluntarily register for GST even if you are below the threshold, which allows you to claim input tax credits (ITCs) on business purchases
- Once registered, you must collect GST on all taxable supplies and remit it to CRA
- Filing frequency is determined by CRA based on your annual revenue: monthly, quarterly, or annually
Do I need to register for PST in BC?
BC PST registration is required if you sell taxable goods or provide taxable services in British Columbia. Unlike GST, there is no revenue threshold for PST. You must register from your very first dollar of taxable sales.
You must register for BC PST if you:
- Sell taxable goods in BC, including most physical products
- Provide taxable services such as software, telecommunications, or accommodation
- Sell goods online to BC customers if you are located in BC
- Bring taxable goods into BC from another province for use in your business
You do not need to register for PST if you:
- Sell only exempt goods or services
- Are a reseller purchasing goods for resale and hold a valid PST exemption
- Are a manufacturer purchasing materials that become part of a product you manufacture for sale
What is exempt from PST in BC?
Not everything is subject to PST in British Columbia. Key PST exemptions include:
- Most professional services such as legal, accounting, medical, dental, and veterinary services (New regulation will take place in October 1, 2026)
- Food for human consumption, specifically groceries and not restaurant meals
- Prescription medications
- Residential rent
- Sales to registered resellers, requiring a completed exemption certificate
- Goods purchased for use in manufacturing products for sale
An important note for professional service firms: most accountants, lawyers, consultants, and other professionals are not required to collect PST on their fees. However, if your firm sells any physical products alongside services, the product portion may be subject to PST.
SaaS and software: special PST rules in BC
BC has specific PST rules for software and digital products that catch many tech-forward businesses off guard:
- Prewritten or off-the-shelf software sold or licensed to BC customers is subject to PST at 7%
- Software as a Service (SaaS) subscriptions are subject to PST in BC
- Custom software developed specifically for one customer is generally not subject to PST
- Cloud storage and hosting services may be subject to PST depending on the nature of the service
How to charge sales tax correctly to BC customers
For most BC small businesses, a properly formatted invoice shows two separate tax lines. Here is an example using a $1,000 sale to a BC customer:
- Subtotal: $1,000.00
- GST 5%: $50.00
- PST 7%: $70.00
- Total: $1,120.00
HST should never appear on a BC invoice for goods or services delivered in British Columbia. HST applies only when you determine that the place of supply is an HST province, for example when shipping goods to an Ontario customer.
Place of supply rules: selling to customers in other provinces
The place of supply rules determine which province's tax applies to your sale. For a BC business selling to customers across Canada:
- Goods physically shipped to Ontario: charge 13% HST, not BC taxes
- Goods shipped to Alberta: charge 5% GST only, as Alberta has no provincial sales tax
- Goods shipped to Quebec: charge 5% GST plus 9.975% QST
- Services delivered to an Ontario client: charge 13% HST based on the client's location
- Goods shipped to another BC customer: charge 5% GST plus 7% BC PST
Filing and remittance: who do you pay?
BC's separate tax structure creates two distinct filing obligations for most businesses:
- GST: filed and remitted to the Canada Revenue Agency (CRA), either monthly, quarterly, or annually depending on your revenue
- PST: filed and remitted to the BC Ministry of Finance, monthly or quarterly depending on your PST liability
You must maintain separate records for GST and PST collections. Failing to remit collected taxes on time results in interest charges and penalties from both CRA and the Province of BC.
Key deadlines for BC businesses in 2026
- GST annual filing with December 31 year-end: due June 15, 2026
- GST quarterly for Q1 2026: due April 30, 2026
- GST quarterly for Q2 2026: due July 31, 2026
- PST monthly returns: due the last day of the following month
- T2 corporate tax return: due six months after fiscal year end
Common GST and PST mistakes BC small business owners make
In our experience working with Metro Vancouver small businesses, these are the most common sales tax errors we see:
- Not registering for PST when required, which is especially common among SaaS companies and online retailers
- Charging HST instead of separate GST plus PST on BC sales
- Missing the $30,000 GST threshold and failing to register on time
- Not collecting PST from BC customers under the incorrect assumption that business-to-business sales are exempt
- Failing to keep adequate records of PST exemption certificates received from resellers
- Missing input tax credits on legitimate business expenses
When should you talk to a CPA about sales tax?
You should consult a CPA when:
- You are approaching or have crossed the $30,000 GST threshold
- You sell goods or services to customers in multiple provinces
- You sell software, SaaS, or digital products to BC customers
- You have been selected for a GST or PST audit by CRA or the BC Ministry of Finance
- You are registering a new corporation in BC
- You are unsure whether your sales are taxable, zero-rated, or exempt
Disclaimer: This article provides general information only and does not constitute tax advice. Tax rules change frequently. Consult a CPA for advice specific to your business situation.
