the FYI on PST

• A Real Property Contractor (RPC) does not charge PST to its customers on materials and services.
• A RPC pays PST on the materials it purchases to fulfill its contracts with customers – unless a specific exemption applies.  The PST becomes part of the material expense.
• When a RPC (who is GST registered) wants to get a full reimbursement from its customers on materials purchased, the RPC would charge GST on the materials and PST.

Here is an example:

ABC Contracting buys $1,000 of lumber from Home Depot to build new front steps for its client, Miss Brown.  ABC Contracting is charged GST and PST on the lumber.

The total Home Depot invoice is $1,120 ($1,000 plus $70 PST plus $50 GST).

ABC Contracting incurs $500 in labour to build the stairs.

ABC Contracting would bill Miss Brown as follows:

Material ($1,000 plus PST of $70)  $1,070.00

Labour                                                      $500.00

Subtotal                                                 $1,570.00

GST                                                           $ 78.50

Total                                                     $ 1,648.50

For more information please refer to the Small Business Guide to PST.