GST is a 5% federal sales tax administered by the CRA on most goods and services sold in Canada. BC PST is a 7% provincial sales tax administered by the BC Ministry of Finance on a narrower list of goods and specific taxable services sold in the province. A BC business selling taxable goods typically charges both, registers with both governments, files both returns, and treats the input-tax-credit recovery completely differently — because only GST allows it.
The one-sentence difference
GST is a value-added tax where you can recover the GST you pay on business inputs. PST is a retail sales tax where you cannot. That single rule reshapes the ledger: 5% of every GST-paid invoice is recoverable through input tax credits, and 7% of every PST-paid invoice is a real cost that hits the P&L permanently.
GST in one paragraph
GST (Goods and Services Tax) is 5% federally, administered by the Canada Revenue Agency. Nearly every commercial good or service sold in Canada is taxable, with a specific exemption list: basic groceries, most residential rent, most financial services, most health and dental services, prescription drugs. Businesses register for GST once their worldwide taxable revenue exceeds $30,000 in four consecutive calendar quarters (or any single quarter). Below that threshold, registration is voluntary. GST registrants charge 5% on taxable sales, claim input tax credits (ITCs) on the GST they pay on business purchases, and remit the difference quarterly or annually.
BC PST in one paragraph
BC PST (Provincial Sales Tax) is 7% provincially, administered by the BC Ministry of Finance. The taxable base is narrower: most tangible goods sold in BC, software, telecommunication services, legal services, accommodation, short-term vehicle rentals, and a specific list of other taxable services. There is no revenue threshold — any business selling taxable goods in BC must register. Registrants charge 7% on taxable sales and remit on a schedule set at registration (monthly, quarterly, or semi-annually). There is no equivalent to GST's input tax credits; PST paid on business inputs is a cost to the business.
The comparison at a glance
| Dimension | GST | BC PST |
|---|---|---|
| Rate | 5% | 7% |
| Administered by | CRA (federal) | BC Ministry of Finance |
| Filing portal | CRA My Business Account | eTaxBC |
| Registration threshold | $30,000 worldwide taxable revenue | None — register when you sell taxable goods in BC |
| Input tax credits | Yes (recoverable) | No (cost to business) |
| Filing frequency | Annual, quarterly, or monthly | Monthly, quarterly, or semi-annual |
| Typical return due | One month after period-end (or 3 months annual) | Last day of month after period-end |
| Penalties for late filing | 1% + 25% of that 1% per month, max 12 months | Interest + potential penalties |
The critical difference: ITCs versus no recovery
This is the one rule that must be internalised to keep a BC ledger clean. Every time the business pays a supplier, two separate things happen on the invoice: the GST is recoverable, the PST is not. A $1,000 invoice with $50 GST and $70 PST posts as $1,000 to the expense account, $50 to the GST-recoverable account (an asset), and $70 to the expense account. The GST flows through; the PST lands permanently.
Bookkeepers who learned their craft in Ontario, Alberta, or the Atlantic provinces frequently get this wrong in their first BC engagement. The tax codes in QuickBooks or Xero need to be configured specifically for BC — "GST + PST BC" as a combined rate for purchases, with the PST portion expensed rather than held as a recoverable. If the setup is wrong, the books either understate expenses or overstate recoverable tax, and both errors compound until reconciled.
Who registers for GST, who registers for PST, who registers for both
Five common BC business profiles and what each registers for.
A Vancouver consulting firm selling services to businesses. GST: yes (above $30K). PST: no, because consulting services are not on the PST taxable-services list.
A Coal Harbour retail shop selling clothing and gift items. GST: yes. PST: yes — tangible goods sold in BC.
A restaurant in Yaletown. GST: yes. PST: yes on alcohol, no on food — restaurants navigate this every day.
A North Vancouver software company licensing cloud software to Canadian customers. GST: yes (across Canada, with place-of-supply rules). PST: yes — software is PST-taxable in BC.
A Burnaby contractor doing residential construction. GST: yes. PST: complicated — generally no on the labour portion, yes on materials the contractor supplies, with specific rules for real-property contracts.
The fifth case is the one where BC businesses routinely get the tax wrong without specialist support. If your business is in that zone, the honest answer is to get a bookkeeper who knows BC PST rather than learning through CRA correspondence.
Where GST and PST overlap on the invoice
When both apply, the two taxes stack on the pre-tax price — they do not compound. A $100 taxable sale charges $5 GST and $7 PST, not $5 GST plus $7.35 PST on the post-GST amount. The total is $112. This matters because small misconfigurations in invoicing software routinely calculate one tax on top of the other, which inflates the customer bill and creates reconciliation errors on both returns.
Where GST and PST diverge
Several categories are treated differently by the two regimes, and each is a place where bookkeeping errors accumulate.
- Professional services (legal, accounting, consulting): GST applies. PST applies only to legal services.
- Software and cloud subscriptions: GST applies. PST applies to most software sold to BC customers.
- Residential rent: Neither applies (exempt from both).
- Commercial rent: GST applies. PST does not.
- Insurance premiums: Neither applies (specific exemption in both).
- Meals at a restaurant: GST applies. PST does not apply to food, but does apply to alcohol.
- Books (printed): GST applies but is rebateable. PST does not apply.
- Prescription drugs: Neither applies.
For the full filing mechanics — rates, frequencies, penalties, and the 2026 deadline calendar — see the GST and PST filing guide for BC businesses.
Common errors BC businesses make
Three recurring errors worth flagging.
Claiming ITCs on PST-paid inputs. The business pays $70 PST on a supply, records it in the GST-recoverable account instead of expensing it, and overclaims recoverable tax. The CRA reviews this on audit; the adjustment plus interest is expensive.
Charging PST on non-taxable services. The business applies 7% PST to every service invoice on the assumption that all services are taxable, when in fact most are not. Customers notice eventually; refunds and corrections follow.
Filing one return and assuming both are filed. GST goes to the CRA, PST goes to eTaxBC, and filing one does not file the other. Missing a PST filing does not trigger a CRA letter — it triggers a BC Ministry of Finance letter, on a separate schedule, with separate interest.
When to get help
For most BC owner-operators, GST and PST filings are routine once the setup is right and the bookkeeper understands the distinction. The time to bring in a specialist is at the start — when tax codes are being configured, when a new product category is being added, or when a catch-up period needs to be filed correctly before penalties compound. GST and PST filing handles both tax streams as part of the monthly close; catch-up cleans up periods where filings are already behind.
Where to read more
- The BC Ministry of Finance's PST guide for the full list of taxable goods and services.
- CRA's GST/HST for businesses page for the federal side.
- Coal Harbour's registration guide for BC businesses for the step-by-step registration walkthrough.
Two taxes, two governments, two separate disciplines. The businesses that get them right treat each one as its own monthly workstream and reconcile both to the ledger every close.