Claiming The British Columbia Sales Tax Credit

What is PST and how much is it in BC?

BC PST is the provincial sales tax in BC that applies to most goods, services, and software acquired in BC. The PST you’ll be charged is 7%. Businesses are required to charge and collect PST at the point of sale, so you’ll often notice a tax charge on your receipt for these types of purchases in BC.

What is GST?

The goods and services tax (GST) is a federal sales tax on most goods and services in Canada. All provinces charge GST, but in some provinces, the charge is hidden as part of the harmonized sales tax (HST). You’ll be charged 5% GST on most purchases in BC.

What is harmonized sales tax (HST)?

Harmonized tax, or harmonized sales and use tax (HST), is a hybrid of the PST and goods and services tax (GST). Five Canadian provinces, including New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, use HST in place of PST and GST. BC is not one of the provinces that uses harmonized sales tax currently.

So how much is BC sales tax?

Sales tax in BC is 12% on most goods and services. If you’re wondering what the sales taxes are in BC and how they’re broken down, we explain.

The tax rate is made up of two different taxes:

• 7%—the provincial sales tax (PST)
• 5%—the goods and services tax (GST)

Together, these taxes equal a 12% charge (7% + 5% = 12%). This charge applies to most goods and services in BC, and you’ll pay it at the point of sale of BC businesses.

There are some goods and services that are exempt from BC sales taxes, such as:

• Basic groceries
• Health and medical products
• School supplies
• Safety equipment and apparel

What is the BC sales tax credit?

While you’ll pay BC sales tax at the till and other points of sale, some Canadians will qualify for the BC sales tax credit. This sales tax credit helps some people living in BC and earning under a certain income threshold with the financial cost of paying an extra fee on their purchases.

You’ll claim the BC sales tax credit when you file your income tax return. You’ll receive the BC tax credit refund when you complete and file your tax return—even if you didn’t earn any income.

How much is the sales tax credit in BC?

The maximum credit is $75 for the taxpayer and $75 for his or her spouse or common-law partner. If you’re single, the credit is reduced by 2% of your net income over $15,000. If you have a cohabiting spouse or common-law partner, the credit is reduced by 2% of your family’s net income over $18,000. The credit is eliminated entirely when your income reaches $18,750 for individuals or $25,500 for spouses combined.

For example, John and Sharon make a combined income of $27,000. When completing the form to apply for the tax credit (form 5010-TC BC479), John and Sharon will deduct $18,000 as a couple, leaving $9,000 ($27,000 – $18,000 = $9,000). Their total claim is $150 (2 x $75 = $150).

But the calculation doesn’t stop there. John and Sharon’s claim is reduced by 2% of the amount by which their combined income exceeds $18,000 ($9,000 x 2% = $180). Note that a negative amount ($150 – $180 = – $30) results in a claim of zero.

Who can claim the BC tax credit?

You can only claim the BC tax credit if you qualify. Here are the criteria:

• Are 19 years of age or older
• Have a spouse or common-law partner
• Are a parent

BC tax credit eligibility also depends on whether you have been in prison. Applicants must not have been in prison or a similar institution for more than 6 months of the tax year, including December 31.

How to claim the BC sales tax credit

Claiming the tax credit is easy, but you need to file an income tax return. You can use form 5010-TC BC479 to calculate your eligibility for the credit and how much you are entitled to. Then, you’ll use that form to claim the BC sales tax credit when you file your income tax return. 

Tax software such as TurboTax completes this form automatically when you file your income tax return. Many people will notice that as soon as they start their tax return, it shows a refund of $75 for single persons and $150 for couples. This is because you have not made any income entries yet; the credit amount will change or be eliminated entirely once you enter your and your spouse’s income (if applicable).

To calculate your claim amount, you must first subtract the following amount from your income: $15,000 for an individual or $18,000 for a couple. Next, multiply your remaining income amount by 2%. Finally, subtract that amount from the maximum claim amount of $75 for individuals or $150 for couples to yield your claim amount. The credit received will be $75 or less for individuals and $150 or less for families.

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