BC PST for Contractors: What Surrey Trades Businesses Need to Know
PST is the tax that trips up more BC contractors than any other. The rules feel backwards: you pay PST on materials but generally don't charge it to your customer. Get it wrong and you're either eating tax you didn't need to pay or owing CRA-scale penalties to the province. Here's the plain-English version for Surrey trades businesses.
The One Rule That Explains Almost Everything
In BC, PST is 7% on most goods. But when a contractor improves real property (renovations, new builds, repairs to buildings), the contractor is treated as the end user of the materials.
That means:
✅ You PAY PST when you buy lumber, fixtures, wiring, paint — anything incorporated into the job.
✅ You do NOT charge PST to your customer on the contract price (materials + labour billed together as one lump sum).
✅ You do NOT need to be "PST exempt" on those purchases — you pay it like any consumer.
This surprises contractors who move here from provinces with HST, where the contractor claims input tax credits instead. BC works differently. Don't apply HST logic to PST.
Click here to schedule a free consultation to review your current PST setup directly with a CPA experienced in BC PST compliance for contractors and trades businesses.
When DO You Charge PST?
The lump-sum rule covers most construction contracts, but there are important exceptions:
Time-and-materials billing
If you separately itemize materials on the invoice (rather than one lump-sum contract price), you generally must collect PST on the materials portion. This is the single most common PST mistake we see from Langley renovators and handymen. How you structure your contracts and invoices changes your PST obligations — get advice before you pick a billing style.
Selling goods at retail
If you also sell products over the counter — say, a plumbing shop that sells fixtures to walk-in customers — those retail sales need PST collected, and you need a PST number.
Jobs outside BC
Work performed on real property located outside BC follows different rules; materials for those jobs may be purchased exempt in specific circumstances.
Buying Materials: The Traps
Out-of-province and online purchases
Buy materials from an Alberta supplier (or Amazon) that didn't charge you PST? You still owe it — you're required to self-assess and remit the 7% to BC. Auditors love this one.
"Contractor pricing" isn't PST-exempt
A trade discount has nothing to do with PST. Unless a specific exemption applies, you pay PST on the discounted price.
Tools and equipment
PST applies to your tools, vehicles used in the business, and office equipment too — you're the end user.
Registration and Filing
Register for a PST number through eTaxBC if you need to collect PST (retail sales, separately-stated materials). Pure lump-sum contractors who never collect PST generally don't need to register — but confirm this for your situation.
File returns through eTaxBC. Filing frequency (monthly, quarterly, annually) depends on how much PST you collect.
Deadlines and penalties are strict: late filing draws penalties plus interest, and directors can be personally liable for unremitted PST. This is not a tax to be casual about.
The 5 Costliest PST Mistakes Contractors Make
Charging PST on labour for real-property contracts — confusing customers and over-collecting.
Not charging PST on separately-itemized materials in time-and-materials invoices — then owing it out of pocket in an audit.
Forgetting to self-assess on out-of-province purchases.
Claiming contractor "exemptions" that don't exist for standard job materials.
Mixing up PST and GST — remember, GST (5%) works on input tax credits; PST (7%) doesn't. They're separate systems with separate filings.
PST vs. GST: Keep Them Straight
GST (federal)
Rate in BC: 5%
On contractor labour for real property: Generally yes, if you're a GST registrant
Input credits on materials: Yes — claim ITCs
Registration threshold: $30,000 in taxable supplies (small supplier threshold)
Filed with: CRA
PST (provincial)
Rate in BC: 7%
On contractor labour for real property: Generally no
Input credits on materials: No — you're the end user
Registration threshold: $10,000 in taxable revenue
Filed with: eTaxBC (province)
Final Thoughts
If you're a contractor in BC billing time-and-materials, buying materials out of province, or unsure whether you should be registered for PST, there is a high probability your current setup would not survive a provincial audit. We regularly uncover these issues during onboarding reviews before they turn into years of back tax, penalties, and interest. We strongly recommend reviewing your PST processes with a CPA before the Ministry of Finance reviews them for you.
Click here to schedule a free consultation with a CPA experienced in BC PST compliance for contractors and trades businesses.
Tristan Bagri, CPA
Founder & Director
Tristan@tsbcpa.ca | 778-707-4699
Frequently Asked Questions (FAQ)
Do I charge PST on a renovation quote in Surrey?
If it's a lump-sum contract to improve real property: no PST on the quote — but you pay PST on the materials you buy for the job.
I'm a subcontractor billing a general contractor. Do I charge PST?
On lump-sum subcontract work for real property: generally no. The same end-user logic flows through.
What if my customer is PST-exempt (e.g., certain government or First Nations purchasers)?
Exemptions are narrow and documentation-heavy. Don't assume — verify the exemption certificate applies to your specific situation before skipping the tax.
Should my bookkeeper handle PST filings?
They can prepare them, but make sure someone who understands contractor PST rules reviews the setup first. Misconfigured filings compound quietly for years.
Not sure your PST setup is right?
TSB Chartered Professional Accountant Inc. works with BC and Surrey contractors and trades every day. We'll review your invoicing, registration, and filings — and fix what's wrong before an audit finds it. Call 778-707-4699 or book a consultation at www.tsbcpa.ca/consult.
Disclaimer: This article is provided for general informational purposes only and is not intended as legal or tax advice. The interpretation of CRA rules may vary based on specific facts and circumstances. Readers should consult a qualified CPA or tax professional before making decisions.
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