How to calculate sales tax in BC

Calculate sales tax in British Columbia by applying 5% GST and 7% PST separately to the item’s pre-tax price. British Columbia applies two separate sales taxes — a 5% federal Goods and Services Tax (GST) and a 7% Provincial Sales Tax (PST) — for a combined total of 12% on most retail goods and services.

Unlike provinces that use a single Harmonized Sales Tax (HST), BC keeps these taxes separate, which means two registrations, two filings, and two tax authorities.

This guide shows how to calculate sales tax in British Columbia accurately and stay compliant with GST and PST rules.

Step 1: Understand how PST and GST work in British Columbia

Before you can calculate British Columbia sales tax, it’s essential to understand that the province applies two separate taxes:

• Goods and Services Tax (GST): a federal 5% value-added tax, administered by the Canada Revenue Agency (CRA).
• Provincial Sales Tax (PST): a provincial  % retail-level tax, administered by the BC Ministry of Finance.

Together, these form a combined rate of 12% on most retail goods and taxable services — but unlike Ontario’s harmonized tax (HST) system, GST and PST are calculated and filed separately.

How GST and PST apply

• GST (5%) applies to most goods and services sold or used in Canada. Businesses registered under the regular GST/HST regime can claim Input Tax Credits (ITCs) — credits that let you recover the GST paid on business expenses such as supplies, rent, or software.
• PST (7%) applies to most goods and some services consumed in BC, such as software, legal services, and telecommunications. PST is a final-stage retail tax with no input credits.

GST is recoverable and federal; PST is non-recoverable and provincial. They are both applied to the pre-tax sale price — never on top of each other.

Helpful resources:

1. CRA: When to register for and start charging the GST/HST
2. BC Ministry of Finance: Overview of the Provincial Sales Tax (PST)

Step 2: Identify taxable and non-taxable goods and services

Most products and many services in British Columbia are subject to both the 5% GST and the 7% PST. Some items, however, are taxed only under GST or are fully exempt. Knowing the difference prevents over- or under-charging customers.

What is and what isn’t taxable in BC?

Taxable under both GST + PST (12% total)

• Retail goods – electronics, furniture, clothing, appliances
• Vehicles, boats, and aircraft
• Digital products and software (including SaaS and downloads)
• Legal, repair, installation, and telecommunication services

PST-exempt (GST still applies at 5%)

• Printed books (PST-exempt in BC)
• Children’s clothing or footwear (PST-exempt when criteria met and documentation kept)
• Certain energy-efficient items (e.g., heat pumps and qualified furnaces only — check BC Budget updates)
• Qualifying farm equipment for registered farmers only — not a blanket agricultural exemption

Fully exempt or zero-rated (0%)

• GST/HST zero-rated (0%) – basic groceries, prescription drugs, certain medical devices
• GST/HST exempt (no tax charged) – residential rent, child-care, many health-care and education services
• PST exempt items – most food products for human consumption, qualifying medical devices, and goods outside PST scope (such as rent and education services)

Where to verify taxability

• PST: What is taxable?
• PST: What isn’t taxable?
• PST: Provincial Sales Tax (PST) Publications (search by product or service type)
• GST/HST: Taxable supplies
• GST/HST: Zero-rated supplies
• GST/HST: Exempt supplies
• GST/HST: Rules for digital economy businesses

Charging the wrong rate or missing PST-eligible items can lead to interest and penalties. BC auditors often start with misclassified products or missing documentation. Automated tools like TaxCloud help categorize goods and services correctly and apply the right GST and PST rates.

Step 3: Calculate GST and PST amounts separately

We’ve covered how GST and PST work in BC. Now let’s look at how to calculate each tax on a transaction.

In British Columbia, both the 5% GST and 7% PST are calculated separately on the pre-tax price of the sale. Neither tax is applied on top of the other.

Formulas for calculating GST and PST in BC

• GST = Pre-tax price × 0.05
• PST = Pre-tax price × 0.07

Example: Calculating BC sales tax on a $200 item

Let’s say you sell a product for $200 to a BC customer, and both PST and GST apply.

You would calculate GST and PST using the following formulas:

Doing so shows that for the $200 item, you will charge $10 GST and $14 PST ( a combined total of $24 in sales tax).

Remember that some items (like books or children’s clothing) are PST-exempt, and many professional services only charge GST. Always confirm a product’s tax status before applying both rates.

Step 4: Calculate the total amount payable

After calculating both taxes, add them to the pre-tax price to determine the total amount charged to the customer.

Formula:

Total Price = Pre-tax price + GST + PST

Example:

$200 + $10 (GST) + $14 (PST) = $224 total

That’s the full price the customer pays at checkout.

Always calculate both taxes on the pre-tax price, confirm the item’s tax status before applying PST, and keep records of all taxable and exempt sales for at least six years.

If you sell across multiple provinces or channels, use TaxCloud to automate GST and PST calculations, apply the right rates at checkout, and simplify filing.

Sales tax compliance tips for BC sellers

Once you understand how GST and PST work, the next challenge is applying them correctly in daily operations. Whether you’re based in Canada or selling into BC from abroad, these compliance best practices help prevent filing errors, audit risk, and missed exemptions.

1. Map products correctly

• 12% (5% GST + 7% PST) – most taxable goods and services (e.g., electronics, furniture, software, repairs).
• 5% GST only – GST-taxable but PST-exempt (e.g., professional services, printed books, children’s clothing).
• 7% PST only – PST applies without GST (rare; e.g., private vehicle sales between individuals, certain leases).
• 0% (zero-rated) – basic groceries, prescription drugs, exports.
• Fully exempt – residential rent, healthcare, child care, financial services.

2. Track both GST and PST thresholds

GST/HST:

• Canadian-based sellers and foreign sellers carrying on business in Canada: register once worldwide taxable sales exceed $30,000 CAD in a single quarter or over the last four consecutive quarters (CRA RC4022 / RC4027).
• Remote foreign sellers not carrying on business in Canada: register under the simplified regime once Canadian-sourced taxable sales exceed $30,000 CAD in any 12-month period.

PST:

• Businesses with inventory or a physical presence in BC must register from their first taxable sale — the small-seller exemption does not apply.
• Out-of-province sellers (including non-residents such as U.S. businesses) must register for BC PST if they:
  • Maintain inventory or a physical presence in BC.
  • Solicit sales in BC by advertising or other means.
  • Exceed $10,000 in BC-sourced taxable sales in the previous 12 months or expect to in the next 12 months.

3. Sync your systems

Confirm Shopify, QuickBooks, marketplaces, and POS tools use distinct GST and PST codes. Reconcile collected amounts monthly before filing.

4. Keep complete records

Keep GST/HST records for six years (CRA requirement) and PST records for at least five years (BC Ministry of Finance requirement).

5. Register early

If your sales approach either threshold, register before you cross it. Both agencies can back-assess tax from the date liability began.

6. Show required tax details on invoices

Include your GST/HST registration number on invoices where required so customers can claim Input Tax Credits (ITCs).

For PST, show the tax charged and retain any exemption certificates or customer PST numbers as needed. BC does not require you to display your PST number on every invoice.

7. Automate compliance

Automation tools like TaxCloud monitor thresholds across provinces, calculate GST and PST at checkout, and prepare filing reports for CRA and eTaxBC.

Automate your sales tax compliance in Canada with TaxCloud

British Columbia’s sales tax system combines a 5% GST and a 7% PST, each filed separately. Knowing which items are PST-exempt, GST-only, or zero-rated keeps your calculations accurate and compliant.

If you sell across provinces or into Canada from abroad, use TaxCloud to automate GST and PST calculation, registration tracking, and filing — so you stay compliant in BC and across all your Canadian and U.S. sales.

Frequently asked questions

What is the combined sales tax rate in British Columbia?

Most goods and some services in BC are subject to a combined 12% sales tax — 5% federal GST and 7% provincial PST.

Do I need to register for PST if I sell into BC from another province?

Yes. If you exceed $10,000 in BC-sourced taxable sales, you must register for PST with the BC Ministry of Finance.

Are digital products and SaaS taxable in BC?

Yes. Digital goods, subscriptions, and SaaS platforms are generally subject to both GST and PST, even for non-resident sellers.

How can I simplify GST and PST compliance in Canada?

Use software like TaxCloud to calculate, collect, and file GST and PST automatically.