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This Act is current to June 20, 2018
See the Tables of Legislative Changes for this Act’s legislative history, including any changes not in force.

Provincial Sales Tax Act

[SBC 2012] CHAPTER 35

Part 4 — Taxes in Relation to Software

Application of this Part

104   This Part does not apply in relation to software that is subject to tax or is exempt from tax under Part 3 [Taxes in Relation to Tangible Personal Property].

Tax on software

105   (1) A purchaser in British Columbia who purchases software for use on or with an electronic device ordinarily situated in British Columbia must pay to the government tax at the rate of 7% of the purchase price of the software.

(2) Subsection (1) does not apply to a purchaser who must pay tax imposed under section 107 or 112 in respect of the software.

(3) If a collector sells software at a sale in British Columbia to a person who alleges that the person must pay tax under section 107 in relation to the software in accordance with section 107 (1) (b) (i), the collector must nevertheless levy and collect the tax under subsection (1) of this section unless the collector obtains from that person, at or before the time the tax is payable, a declaration in a form acceptable to the director.

Tax on use of software on device in British Columbia

106   (1) Subject to subsection (2), this section applies to a purchaser of software if

(a) the purchaser is a BC resident and the software is used, on or with an electronic device ordinarily situated in British Columbia,

(i) by the BC resident,

(ii) by another person at the BC resident's expense,

(iii) by a principal for whom the BC resident acts as agent, or

(iv) by another person at the expense of a principal for whom the BC resident acts as agent, or

(b) the purchaser is a non-resident and the software is used, on or with an electronic device ordinarily situated in British Columbia,

(i) by the non-resident,

(ii) by another person at the non-resident's expense,

(iii) by a principal for whom the non-resident acts as agent, or

(iv) by another person at the expense of a principal for whom the non-resident acts as agent.

(2) This section does not apply to a purchaser in relation to software if the purchaser must pay tax imposed under section 105, 107 or 112 in relation to the software.

(3) A purchaser to whom this section applies must pay to the government tax at the rate of 7% of the purchase price of the software.

(4) Tax payable under subsection (3) must be paid on or before the last day of the month after the month in which the software is first used as referred to in subsection (1) (a) or (b).

(5) Despite subsection (4), tax payable under subsection (3) by a registrant must be paid on or before the prescribed date and in the prescribed manner.

Tax on business use of software on devices in and outside British Columbia

107   (1) Subject to subsection (1.1), this section applies to a purchaser of software if

(a) the purchaser

(i) carries on business in British Columbia, or

(ii) enters British Columbia with the intention of carrying on business in British Columbia, and

(b) the purchaser

(i) is in British Columbia when the purchaser purchases the software and purchases the software for use, in the course of the purchaser's business, on or with an electronic device ordinarily situated in British Columbia and on or with an electronic device ordinarily situated outside British Columbia, or

(ii) in the course of the purchaser's business, uses the software or allows the software to be used on or with an electronic device ordinarily situated in British Columbia and on or with an electronic device ordinarily situated outside British Columbia.

(c) [Repealed 2013-1-225.]

(1.1) This section does not apply to a purchaser who must pay tax imposed under section 112 in respect of the software.

(2) A purchaser to whom this section applies must pay to the government tax on the software in the amount determined by the following formula:

amount = 7% × purchase price ×BC usage

total usage
where
purchase price = the purchase price of the software;
BC usage = the estimated use of the software in British Columbia during the prescribed period;
total usage = the estimated total use of the software during the prescribed period.

(2.1) For the purposes of subsection (2), the estimated use of the software in British Columbia must be determined by a method the director considers reasonable.

(3) Tax payable under subsection (2) must be paid,

(a) if subsection (1) (b) (i) applies to the purchaser in relation to the software, on or before the last day of the month after the month in which the software is purchased, and

(b) if subsection (1) (b) (ii) applies to the purchaser in relation to the software, on or before the last day of the month after the month in which the purchaser first uses that software or allows that software to be used as referred to in that subsection.

(4) Despite subsection (3), tax payable under subsection (2) by a registrant must be paid on or before the prescribed date and in the prescribed manner.

Adjustment of tax under section 107

108   (1) In this section:

"BC usage period" means the period prescribed for the purposes of the description of "BC usage" in section 107 (2);

"total usage period" means the period prescribed for the purposes of the description of "total usage" in section 107 (2).

(2) At the end of the BC usage period, a purchaser to whom section 107 applies must determine the following:

(a) the estimated use of the software in British Columbia during the BC usage period;

(b) the total use of the software during the total usage period;

(c) the amount determined by the formula in section 107 (2) using the use and total use determined under paragraphs (a) and (b) of this subsection instead of the estimated use under section 107.

(2.1) For the purposes of subsection (2), the estimated use of the software in British Columbia must be determined by a method the director considers reasonable.

(3) If the amount determined under subsection (2) (c) exceeds the amount determined under section 107 (2), the purchaser who is required to pay tax imposed under section 107 in respect of the software for the BC usage period must pay to the government tax equal to the amount of the excess.

(4) Tax payable under subsection (3) must be paid on or before the last day of the month after the month in which the BC usage ends.

(4.1) Despite subsection (4), tax payable under subsection (3) by a registrant must be paid on or before the prescribed date and in the prescribed manner.

(5) If the director is satisfied that the amount determined under section 107 (2) based on an estimate exceeds the amount determined under subsection (2) (c) of this section, the director must refund to the purchaser who paid tax under section 107 the amount of the excess.

Tax if use of software changes

109   (1) If a person

(a) purchased software that is exempt from tax under this Act because the software was to be used for a particular purpose, and

(b) subsequently uses that software, or allows that software to be used, for a purpose other than

(i) the particular purpose, or

(ii) another purpose for which that software would be exempt from tax under this Act if that software were to be used for that purpose,

the person must pay to the government tax in accordance with whichever of section 105, 106 or 107 under which the person would have had to pay tax but for the exemption.

(2) Tax payable under subsection (1) must be paid on or before the last day of the month after the month in which the person first uses the software, or allows the software to be used, as referred to in subsection (1) (b).

(3) Despite subsection (2), tax payable under subsection (1) by a registrant must be paid on or before the prescribed date and in the prescribed manner.

Tax if conditions of exemption for software not maintained for specified period

109.1   (1) This section applies to a person in relation to software if

(a) the person used software that was exempt under a prescribed provision of the regulations from tax under this Act,

(b) the prescribed provision of the regulations requires specified conditions to be maintained for a specified period, and

(c) those conditions are not maintained for that period.

(2) A person to whom this section applies must pay to the government tax at the rate of 7% of the purchase price of the software.

(3) Tax payable under subsection (2) must be paid on or before the last day of the month after the month in which the conditions referred to in subsection (1) are not maintained.

(4) Despite subsection (3), tax payable under subsection (2) by a registrant must be paid on or before the prescribed date and in the prescribed manner.

Tax if change in use of resulting software, telecommunication service or tangible personal property

110   (1) If a person

(a) purchased software exempt from tax under section 113 (1) (a), and

(b) becomes, for any period, a user of the software, telecommunication service or tangible personal property to which the software referred to in paragraph (a) of this subsection is processed, fabricated or manufactured into, attached to or incorporated into, other than a user of that software who uses that software only for a purpose referred to in section 113 (2),

the person must pay to the government tax at the rate of 7% of the purchase price of the software.

(2) Tax payable under subsection (1) must be paid on or before the last day of the month after the month in which the person first becomes

(a) a user of the software first referred to in subsection (1) (b), or

(b) a user of the telecommunication service or tangible personal property referred to in subsection (1) (b).

(3) Despite subsection (2), tax payable under subsection (1) by a registrant must be paid on or before the prescribed date and in the prescribed manner.

Tax if change in use of software for which refund received under taxation agreement

111   (1) If a person

(a) received a refund of tax under section 155 [refund in accordance with Nisga'a Nation Taxation Agreement] or 156 [refund in accordance with treaty first nation tax treatment agreement] in relation to software, and

(b) subsequently uses that software, or allows that software to be used, for a purpose other than

(i) a purpose that would entitle the person to receive a refund of tax under section 155 or 156, or

(ii) another purpose for which that software would be exempt from tax under this Act if that software were to be used for that purpose,

the person must pay to the government tax on the purchase price of that software in accordance with whichever of section 105, 106 or 107 under which the person would have had to pay tax but for the exemption.

(2) Tax payable under subsection (1) must be paid on or before the last day of the month after the month in which the person first uses the software, or allows the software to be used, as referred to in subsection (1) (b).

Tax on purchase of software by small seller

112   (1) A small seller who purchases software for resale must pay to the government tax at the rate of 7% of the purchase price of the software.

(2) Software referred to in section 113 (1) (a) and (c) and in prescribed provisions of the regulations is not exempt from tax imposed under this Part when purchased by a small seller who must pay tax in accordance with subsection (1) of this section.

(3) The exemption set out in section 113 (2) does not apply to a small seller who must pay tax in accordance with subsection (1) of this section.

Exemptions in relation to software

113   (1) Subject to section 112 (2), the following are exempt from tax imposed under this Part:

(a) subject to subsection (3) of this section, software that is purchased for the purpose of being processed, fabricated or manufactured into, attached to or incorporated into

(i) other software for the purpose of retail sale,

(i.1) a telecommunication service for the purpose of retail sale, or

(ii) tangible personal property for the purpose of retail sale or lease;

(b) [Repealed 2013-1-232.]

(c) software purchased substantially for one or more of the following purposes:

(i) incorporating copies of the software into other software, a telecommunication service or tangible personal property for retail sale;

(ii) re-licensing copies of the software for retail sale;

(iii) a prescribed purpose,

if

(iv) under the terms of the licence governing the use of the software, the software must be used substantially for one or more of the purposes referred to in subparagraphs (i) to (iii), or

(v) the purchaser of the software, telecommunication service or tangible personal property has acquired all rights to the software, and the software is used substantially for one or more of the purposes referred to in subparagraphs (i) to (iii);

(d) software, other than prescribed software, that is purchased for the purpose of being incorporated into a prototype, or copies of the prototype made for a prescribed purpose, if the prototype is a result of research and development activities aimed at developing a new or improved product or a new or improved process.

(2) Subject to section 112 (3), a purchaser who purchases software is exempt from tax imposed under this Part on the purchase if that purchase is made for the sole purpose of selling to other persons that software.

(3) The exemption under subsection (1) (a) does not apply if the purchaser of the software that is purchased for the purpose of being processed, fabricated or manufactured into, attached to or incorporated into

(a) other software for the purpose of retail sale is to retain an interest in the other software after the retail sale,

(a.1) a telecommunication service for the purpose of retail sale is to retain an interest in the telecommunication service after the retail sale, or

(b) tangible personal property for the purpose of retail sale or lease is to retain an interest in the tangible personal property after the retail sale or lease.

Exemption in relation to software purchased from small seller

114   If a purchaser purchases software from a small seller, the purchaser is exempt from tax imposed under this Part on that purchase.

Contents | Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15