BC uses a split GST + PST system at 12% combined. The 5% GST is recoverable, but the 7% PST is a permanent cost — knowing the difference saves you from overclaiming.
How your business purchases are taxed at the register.
British Columbia operates a dual-tax system with 5% federal GST and 7% provincial PST, totaling 12%. The critical distinction for self-employed workers: only the GST portion is recoverable through Input Tax Credits. The 7% PST is a permanent, non-recoverable cost on most purchases.
BC famously adopted HST in 2010 and then reversed it in 2013 after a public referendum — the only province to ever repeal an HST. The return to split GST/PST means BC businesses must track two separate tax components on every receipt, and cannot recover the provincial portion. This affects everyone from photographers and creatives to construction contractors.
However, BC's PST has important exemptions that benefit self-employed workers. Production machinery, certain software, and some professional services are PST-exempt. Understanding which purchases are exempt can save you 7% on significant expenses. ScanForTax flags PST-exempt categories and separates the recoverable GST from the non-recoverable PST on every receipt.
See exactly how taxes break down on common business purchases in British Columbia.
British Columbia
You pay $560 total. Only the $25 GST is recoverable via ITC. The $35 PST is a permanent cost, making your true expense $535 ($500 + $35 PST).
British Columbia
Custom or prewritten software purchased electronically is PST-exempt in BC. You only pay 5% GST ($100), which is fully recoverable. Your true cost is $2,000.
British Columbia
Restaurant meals in BC are subject to 5% GST + 10% PST (liquor attracts higher PST). The $7.50 GST is recoverable. The meal is 50% deductible on T2125, and the PST is a sunk cost.
Your Input Tax Credit (ITC) filing roadmap.
Keep receipts with GST/HST registration numbers
Match each expense to a T2125 line item
Claim ITCs on your GST/HST return
In BC, only the 5% GST is recoverable through Input Tax Credits on your GST/HST return filed with the CRA. The 7% PST is never recoverable — it is a cost of doing business. When calculating business expenses, include the PST as part of your deductible expense amount on categories like office expenses and capital cost allowance, but do not claim it as a separate ITC. ScanForTax separates GST from PST on every receipt so you never accidentally overclaim.
2 advantages, 2 things to watch
Unlike HST provinces such as Ontario where the full tax is recoverable, BC's 7% PST is a permanent cost. On a $10,000 equipment purchase, that's $700 you cannot claim back. Factor PST into your true cost calculations.
Custom software and prewritten software delivered electronically (downloads, SaaS) are exempt from BC PST. This saves 7% on subscriptions like Adobe Creative Cloud, QuickBooks, and other business software.
BC PST Bulletin PST 105Machinery and equipment used directly in manufacturing, logging, mining, or oil and gas extraction is exempt from PST. Contractors in these industries can save significantly on major equipment purchases.
BC PST Bulletin PST 110BC charges 10% PST on liquor, 8% on accommodation, and additional municipal and regional taxes. Business meals with alcohol and travel accommodation cost more than expected — budget accordingly.
See profession-specific tax guides for self-employed workers in British Columbia.
Official government and support links for British Columbia self-employed workers.
Provincial guide to PST registration, exemptions, and filing.
Federal guide to GST registration and Input Tax Credits.
Free resources and advisory services for BC small businesses.
Common T2125 deductions for British Columbia self-employed workers.
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