GST and PST on Supply-and-Install Work in BC

Almost every contractor in British Columbia has had the same argument at some point: the general contractor says there should be no PST on the invoice, the bookkeeper says there should, and nobody can find a clear answer. The rule is actually straightforward once you see what it turns on — but it is counterintuitive, and getting it wrong costs real money in both directions.

This is general information for contractors, not tax advice. Confirm your own situation with your accountant or with the Province before you change how you bill.

The rule turns on one question: does it become part of the building?

British Columbia treats a contractor who installs goods that become part of real property as the end user of those materials. You are not reselling them to the customer; you are consuming them to create an improvement to their building.

That single idea produces the whole rule:

• You pay PST when you buy the materials. Your supplier charges it, and it is yours to absorb.
• You do not charge PST to your customer on the supply-and-install contract. Services to real property are not subject to PST.
• GST still applies at 5% on the whole contract, as it always does.

So on a parkade deck coating job — membrane, primer, aggregate, topcoat, labour — you paid 7% PST on every pail when you bought it, and your invoice to the general contractor shows GST only. That is correct, and it is why the GC's accounting department pushes back when they see PST on a coating invoice.

When you do charge PST

The exemption is about improvements to real property. It stops applying when what you are doing is really a sale of goods:

• Supply only. You sell the material and someone else installs it. That is a retail sale — register for PST, charge it, and claim back the PST you paid on those goods.
• Goods that do not become part of the building. Items that stay movable are goods, not an improvement, even if you place them on site.
• Off-site work. If something is removed from the site and worked on elsewhere, PST applies to that service.

A lot of coating and waterproofing businesses do both — installed systems on some jobs, material supplied to another applicator on others. Those two invoice types are taxed differently, and the difference is not cosmetic.

What it means for your pricing

Because PST on materials is a cost rather than something you pass through, it has to be inside your number before you send the quote. On a job with $40,000 of material, that is $2,800 of PST sitting in your cost base. Price at your usual markup without accounting for it and you have quietly given away a chunk of your margin.

Two practical habits:

• Build your material cost PST-included when you estimate, or carry it as an explicit line in your cost budget. Do not treat supplier list price as your cost.
• When you quote supply-only, quote plus applicable taxes and be explicit that PST is charged. It is a different conversation from your install work and the customer should not be surprised.

What it means for your books

This is where it most often goes wrong, and it is worth being precise because the two taxes behave in opposite ways.

• GST is recoverable. The GST you pay a supplier is an input tax credit — an asset you claim back on your return. It never belongs in job cost.
• PST is not recoverable on materials you install. It is part of what the job cost you, and it belongs in the job's material cost, not in a tax account waiting to be reclaimed.

If your bookkeeping treats supplier PST the same way it treats GST, two things happen: your job costing understates what the work actually cost you, and your tax accounts carry a balance you can never recover. On a year of installed work that error can run into five figures.

The mistakes worth checking for

1. PST charged on an installed-system invoice. The GC will catch it eventually, and it makes the whole invoice look uncertain.
2. PST not charged on a supply-only sale. Harder to spot, and the liability is yours, not the customer's.
3. Supplier PST posted as recoverable. Quietly inflates profit on every job you have ever costed.
4. Estimates built on pre-tax material pricing. The 7% comes out of margin every time.
5. Work outside BC costed at BC rates. Tax follows where the work is. A job in Alberta carries GST only; one in Ontario carries 13% HST on the whole thing, installed or not, because HST does not make the real property distinction at all.

Where these numbers should actually live

None of this is hard once it is set up — the difficulty is that it has to happen on every invoice and every supplier bill, consistently, for years. Spreadsheets do not enforce it, and general-purpose accounting software does not know that a coating system becomes real property.

We built JobSnap for this — estimating, invoicing, purchase orders, supplier bills and job costing for subcontractors, with the supply-versus-install rule handled properly and PST landing in job cost where it belongs. It is a separate business from Canopus Supply, owned by the same person, and there is a working demo you can click through without signing up.

The short version

If it becomes part of the building, you pay the PST and do not charge it. If you are selling goods for someone else to install, you charge it. GST applies either way, and tax follows the province the work is in — not the province your office is in. Put the PST you pay into job cost, keep the GST you pay in a recoverable account, and check with your accountant before changing how you invoice.