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B.C. Reg. 97/2013
O.C. 130/2013
Deposited March 1, 2013
effective April 1, 2013
This consolidation is current to June 21, 2022.
Link to consolidated regulation (PDF)
Link to Point in Time

Provincial Sales Tax Act

Provincial Sales Tax Exemption and Refund Regulation

[Last amended October 12, 2021 by B.C. Reg. 262/2021]

Part 5 — Production Machinery and Equipment

Division 1 — Definitions and Interpretation

Definitions

90   (1) In this Part:

"cost of development", in relation to Part 4 software, means the

(a) direct cost of materials,

(b) direct cost of labour, and

(c) Part 4 software development overhead

of the software developer, but does not include tax under Part IX of the Excise Tax Act;

"cost of extracting or processing", in relation to petroleum, natural gas or minerals, means the

(a) direct cost of materials,

(b) direct cost of labour, and

(c) extraction or processing overhead

of the oil and gas producer or mine operator, but does not include tax under Part IX of the Excise Tax Act;

"develop", in relation to Part 4 software, does not include

(a) providing a service, or

(b) testing the Part 4 software, unless the testing is one step in, or occurs immediately after, the development of the Part 4 software and occurs at the software development site;

"local government body" has the same meaning as in Schedule 1 of the Freedom of Information and Protection of Privacy Act;

"local government corporation" means a corporation whose taxable income, determined for the purposes of the Income Tax Act (Canada), is exempt from tax imposed under section 149 (1) (d.5) or (d.6) of that Act;

"logging" means

(a) felling or bucking trees,

(b) skidding or otherwise moving trees or logs to a landing or other first point of accumulation, or

(c) loading, unloading, sorting, storing or processing trees or logs at landings, log dumps, sort yards, dry land sorts, booming grounds or mill yards,

but does not include

(d) construction or maintenance of landings, log haul roads or other roads, or

(e) silviculture;

"machinery or equipment" includes apparatus;

"manufacture", subject to subsection (2), means

(a) to fabricate or manufacture tangible personal property to create a new product that is substantially different from the material or tangible personal property from which the new product was made, or

(b) to process tangible personal property by performing a series of operations or complex operation that results in a substantial change in the form or other physical or chemical characteristics of the tangible personal property,

but does not include performing a non-qualifying activity;

"manufacturer" means a person who manufactures a particular class of tangible personal property

(a) for sale, if there is a reasonable expectation that the total value of sales of that class of tangible personal property will exceed $30 000 per year,

(b) for lease or for the person's own business use, if there is a reasonable expectation that the total manufacturing cost of that class of tangible personal property will exceed $30 000 per year, or

(c) for both a purpose referred to in paragraph (a) and a purpose referred to in paragraph (b), if there is a reasonable expectation that the total manufacturing cost of that class of tangible personal property will exceed $30 000 per year;

"manufacturing cost", in relation to a manufacturer or a local government body or local government corporation that manufactures tangible personal property, means the

(a) direct cost of materials,

(b) direct cost of labour, and

(c) manufacturing overhead

of the manufacturer, local government body or local government corporation, but does not include tax under Part IX of the Excise Tax Act;

"marketable product" means petroleum or natural gas, whether it occurs naturally or results from the refining or processing of petroleum or natural gas, that is

(a) available for sale for direct consumption as a domestic, commercial or industrial fuel or as an industrial raw material, or

(b) delivered to a storage facility;

"mine operator" means a person who extracts or processes minerals

(a) for sale, if there is a reasonable expectation that the total value of sales of those minerals will exceed $30 000 per year,

(b) for the person's own business use, if there is a reasonable expectation that the total cost of extracting or processing those minerals will exceed $30 000 per year, or

(c) for both a purpose referred to in paragraph (a) and a purpose referred to in paragraph (b), if there is a reasonable expectation that the total cost of extracting or processing those minerals will exceed $30 000 per year;

"non-qualifying activity" means any of the following:

(a) growing, harvesting or producing agricultural or aquaculture products, or raising livestock;

(b) logging;

(c) the production of television programs, radio programs, motion pictures, commercials, master films or master video tapes, or any similar product in electronic format;

(d) providing a service, other than a service described in section 103 (2) or (3) [service providers];

(e) in respect of manufacturing tangible personal property or processing petroleum, natural gas or minerals, carrying out an activity that is

(i) cleaning, painting, staining, blending, combining, grading, grouping, mixing, packaging, re-packaging, sorting, storing, screening, cutting, drying or testing,

(ii) transforming tangible personal property from a gaseous, liquid or solid state to another one of those states by means of a change in temperature or pressure, or

(iii) generating heat,

unless,

(iv) in the case of manufacturing tangible personal property, the applicable activity

(A) is combined with another activity that is not a non-qualifying activity, and

(B) occurs at the qualifying part of the manufacturing site,

(v) in the case of processing petroleum or natural gas, the applicable activity

(A) is combined with another activity that is not a non-qualifying activity, and

(B) occurs at the well site or at the qualifying part of the processing plant or refinery, or

(vi) in the case of processing minerals, the applicable activity

(A) is combined with another activity that is not a non-qualifying activity, and

(B) occurs at the qualifying part of the mine site;

(f) in respect of manufacturing tangible personal property, carrying out an activity that is

(i) changing the voltage of electricity,

(ii) crushing, dismantling, compressing, breaking down or shredding tangible personal property for the purposes of recycling of that tangible personal property, or

(iii) for the purposes of disposing of tangible personal property,

unless such activity is combined with another activity that is not a non-qualifying activity and occurs at the qualifying part of the manufacturing site;

"oil and gas producer" means a person who extracts or processes petroleum or natural gas

(a) for sale, if there is a reasonable expectation that the total value of sales of that petroleum or natural gas will exceed $30 000 per year,

(b) for the person's own business use, if there is a reasonable expectation that the total cost of extracting or processing that petroleum or natural gas will exceed $30 000 per year, or

(c) for both a purpose referred to in paragraph (a) and a purpose referred to in paragraph (b), if there is a reasonable expectation that the total cost of extracting or processing that petroleum or natural gas will exceed $30 000 per year;

"primarily" means more than 50%;

"process" does not include performing a non-qualifying activity;

"processing plant" means a plant in which petroleum or natural gas is processed and includes any of the following units, or a unit that is a combination of any of the following units:

(a) a dehydrator;

(b) a separator;

(c) a sweetener;

(d) a treater;

"qualifying minerals", in relation to a mine operator, means minerals extracted or processed by the mine operator

(a) for sale by the mine operator, or

(b) for the mine operator's own business use;

"qualifying part", in respect of

(a) a manufacturing site, means the part of the manufacturing site from the point at which the raw material is received to the point at which the finished product is first stored or first placed on a vehicle, railway rolling stock, vessel, aircraft or other conveyance for removal from the manufacturing site, whichever occurs first,

(b) a processing plant or refinery, means the part of the processing plant or refinery up to the point at which the petroleum or natural gas being processed or refined has become a marketable product, and

(c) a mine site, means the part of the mine site from the point at which the raw material is extracted from the ground to the point at which the finished product is first stored or first placed on a vehicle, railway rolling stock, vessel, aircraft or other conveyance for removal from the mine site, whichever occurs first;

"qualifying petroleum or natural gas", in relation to an oil and gas producer, means petroleum or natural gas extracted or processed by the oil and gas producer

(a) for sale by the oil and gas producer, or

(b) for the oil and gas producer's own business use;

"qualifying software", in relation to a software developer, means Part 4 software developed by the software developer

(a) for sale by the software developer, or

(b) for the software developer's own business use;

"qualifying tangible personal property", in relation to a manufacturer, means tangible personal property

(a) in the particular class of tangible personal property referred to in the definition of "manufacturer" in this subsection, and

(b) manufactured by the manufacturer

(i) for sale by the manufacturer, or

(ii) for the manufacturer's own business use;

"software developer" means a person who develops Part 4 software

(a) for sale, if there is a reasonable expectation that the total value of sales of that Part 4 software will exceed $30 000 per year,

(b) for the person's own business use, if there is a reasonable expectation that the total cost of development of that Part 4 software will exceed $30 000 per year, or

(c) for both a purpose referred to in paragraph (a) and a purpose referred to in paragraph (b), if there is a reasonable expectation that the total cost of development of that Part 4 software will exceed $30 000 per year;

"software development site" means the place at which a software developer is located when the software developer is developing Part 4 software, but, in respect of Part 4 software being developed for sale, does not include a place at which the purchaser of that Part 4 software is located.

(2) The definition of "substantially" in section 1 [definitions] of the Act does not apply to the definition of "manufacture" in subsection (1) of this section.

[am. B.C. Regs. 120/2013, s. 1; 90/2015, s. 2.]

Interpretation

91   (1) In this Part, a reference to use in relation to substantially or primarily does not include storing, keeping or retaining.

(2) Subject to subsections (3) and (4), in this Part, the use of machinery or equipment in the construction of buildings, site preparation or the construction or maintenance of roads is not a use that qualifies the machinery or equipment for an exemption.

(3) For the purposes of sections 94 [exploration for, discovery of or development of petroleum or natural gas] and 104 [logging], the use of machinery or equipment in site preparation is a use that qualifies the machinery or equipment for an exemption.

(4) For the purposes of sections 96 [exploration for minerals or development of mines] and 97 [extraction or processing of minerals], the use of machinery or equipment in the construction or maintenance of roads within the qualifying part of a mine site is a use that qualifies the machinery or equipment for an exemption.

[am. B.C. Reg. 90/2015, s. 3.]

Division 2 — Exemptions for Machinery and Equipment

Definition

91.1   In this Division, "qualifying person" means a manufacturer, an oil and gas producer, a mine operator or a person who is entitled to obtain machinery or equipment exempt under section 103 [service providers] of this regulation from tax imposed under the Act.

[en. B.C. Reg. 120/2013, s. 2.]

Manufacturing

92   (1) Subject to subsections (2) and (3), the following are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if obtained by a manufacturer:

(a) machinery or equipment obtained for use in British Columbia primarily and directly in the manufacture of qualifying tangible personal property;

(b) machinery or equipment obtained for use in British Columbia primarily and directly in

(i) the manufacture of tangible personal property, or

(ii) the development of Part 4 software

for use in British Columbia in the manufacture of qualifying tangible personal property.

(2) The exemption under subsection (1) applies only to machinery or equipment obtained for use primarily at the qualifying part of the manufacturing site.

(3) The exemption under subsection (1) does not apply to

(a) machinery or equipment, including transformers, pipes, valves, fittings, pumps, compressors and regulators, obtained for use in relation to the transmission or distribution of tangible personal property, or

(b) machinery or equipment obtained for use in relation to the transmission or distribution of Part 4 software.

[am. B.C. Reg. 216/2013, App. 1, s. 20.]

Software development

93   (1) Subject to subsections (2) and (3), the following are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if obtained by a software developer:

(a) machinery or equipment obtained for use in British Columbia primarily and directly in the development of qualifying software;

(b) machinery or equipment obtained for use in British Columbia primarily and directly in the manufacture of tangible personal property for use in British Columbia in the development of qualifying software.

(2) The exemption under subsection (1) applies only to machinery or equipment obtained for use primarily at the software development site.

(3) The exemption under subsection (1) does not apply to machinery or equipment obtained for use in relation to the transmission or distribution of Part 4 software or tangible personal property.

[am. B.C. Reg. 216/2013, App. 1, s. 20.]

Exploration for, discovery of or development of petroleum or natural gas

94   (1) Subject to subsections (2) and (3), machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the machinery or equipment is obtained

(a) by a person who, for commercial purposes, regularly engages in the exploration for, discovery of or development of petroleum or natural gas, and

(b) for use substantially in the exploration for, discovery of or development of petroleum or natural gas.

(2) The exemption under subsection (1) applies only to the following machinery or equipment:

(a) drilling rigs, including the following machinery or equipment that is part of a drilling rig:

(i) derricks;

(ii) substructures and foundations;

(iii) circulating systems;

(iv) pumps;

(v) cement equipment;

(vi) engines or power plants;

(b) truck-mounted service rigs;

(c) portable doghouses, portable winches and portable pickers;

(d) boilers and steamers, required for heating blowout preventers;

(e) parts of a pump truck, including

(i) pumps, tanks, lines, pipes, controls, manifolds, drop boxes, mixing hoppers and valves, and

(ii) engines and transmissions;

(f) hardware obtained for use during the drilling process, including drill bits, drill collars, drill pipes, blowout preventers, casing, tubing, fittings, couplings and thread protectors;

(g) machinery or equipment obtained for use in well logging and drill stem testing, including instrumentation;

(g.1) machinery or equipment obtained for use in hydraulic fracturing during the development of petroleum or natural gas, including hydration units or trailers, proppant blenders and fracturing pumps;

(h) machinery or equipment obtained for use during the production testing phase, including separator vessels, dehydrators and heaters, pressure piping systems and appurtenances, flare stacks, pumps and motors;

(i) shelters obtained for use substantially as protective coverings for machinery or equipment referred to in any of paragraphs (a) to (h);

(j) support mats obtained for use substantially to support machinery or equipment referred to in any of paragraphs (a) to (i) while the machinery or equipment is stationary.

(3) The exemption under subsection (1) does not apply to automotive units on which machinery or equipment, other than truck-mounted service rigs, referred to in subsection (2), is transported.

[am. B.C. Reg. 90/2015, s. 4.]

Extraction or processing of petroleum or natural gas

95   (1) Subject to subsections (2) and (3), the following are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if obtained by an oil and gas producer:

(a) machinery or equipment obtained for use in British Columbia primarily and directly in the extraction or processing of qualifying petroleum or natural gas;

(b) machinery or equipment obtained for use in British Columbia primarily and directly in

(i) the manufacture of tangible personal property, or

(ii) the development of Part 4 software

for use in British Columbia in the extraction or processing of qualifying petroleum or natural gas.

(2) The exemption under subsection (1) applies only to machinery or equipment obtained for use primarily at the well site or at the qualifying part of the processing plant or refinery.

(3) The exemption under subsection (1) does not apply to

(a) machinery or equipment, including transformers, pipes, valves, fittings, pumps, compressors and regulators, obtained for use in relation to the transmission or distribution of tangible personal property, or

(b) machinery or equipment obtained for use in relation to the transmission or distribution of Part 4 software.

(4) Generators to be located primarily at a well site are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the generators are obtained

(a) by an oil and gas producer, and

(b) for use in relation to the extraction or processing of qualifying petroleum or natural gas.

[am. B.C. Reg. 216/2013, App. 1, s. 20.]

Exploration for minerals or development of mines

96   (1) Subject to subsection (2), machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the machinery or equipment is obtained by a person who, for commercial purposes, regularly engages in the exploration for minerals or the development of mines and that machinery or equipment is

(a) obtained for use substantially and directly in the exploration for minerals or the development of mines,

(b) a generator or motor for use substantially and directly to operate machinery or equipment for the use referred to in paragraph (a) of this subsection, or

(c) safety equipment, a pump, ventilating equipment or a compressor obtained for use substantially in the exploration for minerals or the development of mines.

(2) The exemption under subsection (1) does not apply to cement trucks.

[am. B.C. Reg. 216/2013, App. 1, s. 21.]

Extraction or processing of minerals

97   (1) Subject to subsections (2) and (3), the following are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if obtained by a mine operator:

(a) machinery or equipment obtained for use in British Columbia primarily and directly in the extraction or processing of qualifying minerals;

(b) machinery or equipment obtained for use in British Columbia primarily and directly in

(i) the manufacture of tangible personal property, or

(ii) the development of Part 4 software

for use in British Columbia in the extraction or processing of qualifying minerals.

(2) The exemption under subsection (1) applies only to machinery or equipment obtained for use primarily at the qualifying part of the mine site.

(3) The exemption under subsection (1) does not apply to

(a) machinery or equipment, including transformers, pipes, valves, fittings, pumps, compressors and regulators, obtained for use in relation to the transmission or distribution of tangible personal property, or

(b) machinery or equipment obtained for use in relation to the transmission or distribution of Part 4 software.

[am. B.C. Reg. 216/2013, App. 1, s. 20.]

Geophysical surveying

98   (1) Subject to subsection (2), machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the machinery or equipment is obtained

(a) by a person who, for commercial purposes, regularly engages in the exploration for petroleum, natural gas or minerals or the development of petroleum, natural gas or mineral deposits, and

(b) for use substantially in the exploration for petroleum, natural gas or minerals or the development of petroleum, natural gas or mineral deposits.

(2) The exemption under subsection (1) applies only to the following machinery or equipment:

(a) magnetometers, gradiometers and magnetic susceptibility meters;

(b) gravity meters and other instruments designed to measure the elements, variations and distortions of the natural gravitational force;

(c) field potentiometers, meggers, non-polarizing electrodes and electrical equipment for making measurements in drill holes;

(d) equipment for electrical or electromagnetic surveying, including self-potential meters, resistivity survey equipment, time and frequency domain-induced polarization equipment, time and frequency electromagnetic surveying equipment and inductive conductivity probes;

(e) ground-penetrating radar equipment and side-looking aperture radar;

(f) equipment for remote sensing, including

(i) ultraviolet lamps, and

(ii) reflectance, infrared and hyperspectral spectrometers;

(g) instruments or equipment for seismic prospecting, including the recording system, seismic instrumentation, geophones, cables, data processing units, global positioning and navigation systems, recorder box, blasting system, blaster and controller, seismic drilling equipment, heli-drills, enviro-drills, vibrators and integrated navigation systems;

(h) scintillometers, spectral gamma-gamma density and Geiger-Muller counters, gamma-ray spectrometers, potassium gradiometers and other instruments for radioactive methods of geophysical prospecting;

(i) acoustical survey equipment, including sonar, side-scanning sonar and full wave form sonic loggers;

(j) electrical amplifying devices, electronic amplifying devices and electrical thermostats, designed for use with any of the machinery or equipment described in paragraphs (a) to (i).

Pollution control

99   Machinery or equipment obtained for use substantially and directly in the detection, prevention, measurement, treatment, reduction or removal of pollutants in water, soil or air is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the pollutants are attributable to

(i) the manufacture of tangible personal property, or

(ii) the extraction or processing of petroleum, natural gas or minerals, and

(b) the machinery or equipment is obtained by a qualifying person.

(c) Repealed. [B.C. Reg. 242/2020, s. 1 (c).]

[am. B.C. Reg. 242/2020, s. 1.]

Waste management

100   (1) In this section, "waste gas machinery or equipment" means pipes, valves, fittings, pumps, compressors and regulators, and other related machinery or equipment, obtained for use solely to transmit

(a) within a natural gas processing plant, or

(b) from a natural gas processing plant to a disposal well

waste gas composed primarily of hydrogen sulphide and carbon dioxide for use solely to inject the gas into the disposal well for permanent disposal.

(2) Waste gas machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the waste gas machinery or equipment is obtained by an oil and gas producer.

(3) Machinery or equipment obtained for use in British Columbia substantially and directly

(a) in carrying refuse or waste from machinery or equipment that is exempt under

(i) section 92 [manufacturing],

(ii) section 95 [extraction or processing of petroleum or natural gas], or

(iii) section 97 [extraction or processing of minerals], or

(b) for exhausting dust or noxious fumes from machinery or equipment referred to in paragraph (a)

is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(c) the refuse, waste, dust or noxious fumes are attributable to the manufacture of tangible personal property or the extraction or processing of petroleum, natural gas or minerals, and

(d) the machinery or equipment is obtained by a qualifying person.

(e) Repealed. [B.C. Reg. 242/2020, s. 2 (c).]

[am. B.C. Reg. 242/2020, s. 2.]

Transmission or distribution of tangible personal property or software

101   (1) Machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the machinery or equipment is obtained by a manufacturer for use in British Columbia primarily and directly in the transmission or distribution of tangible personal property or Part 4 software at the qualifying part of the manufacturer's manufacturing site,

(b) the tangible personal property or Part 4 software to be transmitted or distributed is primarily

(i) qualifying tangible personal property,

(ii) tangible personal property or Part 4 software that is to be attached to or processed, fabricated, manufactured or incorporated into qualifying tangible personal property, or

(iii) tangible personal property or Part 4 software that is to be attached to or processed, fabricated, manufactured or incorporated into tangible personal property or Part 4 software for use in the manufacture of qualifying tangible personal property, and

(c) the machinery or equipment is obtained for use primarily at the qualifying part of the manufacturing site.

(2) Machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the machinery or equipment is obtained by a software developer for use in British Columbia primarily and directly in the transmission or distribution of tangible personal property or Part 4 software at the software developer's software development site,

(b) the tangible personal property or Part 4 software to be transmitted or distributed is primarily

(i) qualifying software,

(ii) Part 4 software that is to be attached to or processed, fabricated, manufactured or incorporated into qualifying software, or

(iii) tangible personal property or Part 4 software that is to be attached to or processed, fabricated, manufactured or incorporated into tangible personal property or Part 4 software for use in the development of qualifying software, and

(c) the machinery or equipment is obtained for use primarily at the software development site.

(3) Machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the machinery or equipment is obtained by an oil and gas producer or mine operator for use in British Columbia primarily and directly in the transmission or distribution of tangible personal property or Part 4 software at the oil and gas producer's well site, the qualifying part of the oil and gas producer's processing plant or refinery or the qualifying part of the mine operator's mine site,

(b) the tangible personal property or Part 4 software to be transmitted or distributed is primarily, as applicable,

(i) qualifying petroleum or natural gas or qualifying minerals,

(ii) tangible personal property that is to be attached to or processed, fabricated, manufactured or incorporated into qualifying petroleum or natural gas or qualifying minerals, or

(iii) tangible personal property or Part 4 software that is to be attached to or processed, fabricated, manufactured or incorporated into tangible personal property or Part 4 software for use in the extraction or processing of qualifying petroleum or natural gas or qualifying minerals, and

(c) the machinery or equipment is obtained for use primarily at the well site, the qualifying part of the processing plant or refinery or the qualifying part of the mine site.

[am. B.C. Reg. 216/2013, App. 1, s. 20.]

Electrical machinery or equipment

102   (1) In this section, "electrical machinery or equipment" means

(a) transformers, and

(b) converters, inverters, regulators, breakers and switches, designed for use with transformers.

(2) Electrical machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the electrical machinery or equipment is obtained by a manufacturer of qualifying tangible personal property, other than electricity, for use in British Columbia substantially in the transmission or distribution of electricity at or to the qualifying part of the manufacturer's manufacturing site,

(b) the electricity is for use

(i) primarily and integrally in the manufacture of qualifying tangible personal property, or

(ii) primarily to power machinery or equipment that is exempt under the following provisions of this regulation:

(A) section 92 [manufacturing];

(B) section 99 [pollution control];

(C) section 100 [waste management];

(D) section 101 [transmission or distribution of tangible personal property or software];

(E) section 111 [machinery or equipment to operate, control or monitor qualifying machinery or equipment], and

(c) the electrical machinery or equipment is to be situated at the manufacturing site.

(3) Electrical machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the electrical machinery or equipment is obtained by a software developer for use in British Columbia substantially in the transmission or distribution of electricity at or to the software developer's software development site,

(b) the electricity is for use

(i) primarily and integrally in the development of qualifying software, or

(ii) primarily to power machinery or equipment that is exempt under the following provisions of this regulation:

(A) section 93 [software development];

(B) section 101 [transmission or distribution of tangible personal property or software];

(C) section 111 [machinery or equipment to operate, control or monitor qualifying machinery or equipment], and

(c) the electrical machinery or equipment is to be situated at the software development site.

(4) Electrical machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the electrical machinery or equipment is obtained by an oil and gas producer or mine operator for use in British Columbia substantially in the transmission or distribution of electricity at or to the oil and gas producer's well site, the qualifying part of the oil and gas producer's processing plant or refinery or the qualifying part of the mine operator's mine site,

(b) the electricity is for use

(i) primarily and integrally in the extraction or processing of qualifying petroleum or natural gas or qualifying minerals, or

(ii) primarily to power machinery or equipment that is exempt under the following provisions of this regulation:

(A) section 95 [extraction or processing of petroleum or natural gas];

(B) section 97 [extraction or processing of minerals];

(C) section 99 [pollution control];

(D) section 100 [waste management];

(E) section 101 [transmission or distribution of tangible personal property or software];

(F) section 111 [machinery or equipment to operate, control or monitor qualifying machinery or equipment], and

(c) the electrical machinery or equipment is to be situated at the well site, processing plant, refinery or mine site.

[am. B.C. Reg. 216/2013, App. 1, s. 22.]

Service providers

103   (1) In this section, "service" does not include a taxable service other than a related service.

(2) Machinery or equipment obtained by a person who provides a service to a manufacturer is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the service consists of manufacturing in British Columbia tangible personal property for the manufacturer and is provided to, or results in the creation of, tangible personal property that is to be, or is to be attached to or processed, fabricated, manufactured or incorporated into, the manufacturer's qualifying tangible personal property,

(b) the machinery or equipment is obtained for use primarily and directly in providing the service,

(c) the service is provided primarily at the qualifying part of

(i) the manufacturer's manufacturing site, or

(ii) the service provider's manufacturing site, and

(d) there is a reasonable expectation that the total value of sales of services, provided to manufacturers, that meet the requirements of paragraphs (a) to (c) will exceed $30 000 per year.

(3) Machinery or equipment obtained by a person who provides a service to an oil and gas producer or mine operator is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the service

(i) consists of manufacturing in British Columbia tangible personal property for the oil and gas producer or mine operator and is provided to, or results in the creation of, tangible personal property that is to be attached to or processed, fabricated, manufactured or incorporated into the oil and gas producer's qualifying petroleum or natural gas or the mine operator's qualifying minerals, or

(ii) consists of extracting or processing for the oil and gas producer or mine operator petroleum, natural gas or minerals in British Columbia that are to be, or are to be attached to or processed, fabricated, manufactured or incorporated into, the oil and gas producer's qualifying petroleum or natural gas or the mine operator's qualifying minerals,

(b) the machinery or equipment is obtained for use primarily and directly in providing the service,

(c) the service is provided primarily at

(i) the well site or qualifying part of the oil and gas producer's processing plant or refinery or the qualifying part of the mine operator's mine site, or

(ii) the qualifying part of the service provider's manufacturing site, processing plant, refinery or mine site, and

(d) there is a reasonable expectation that the total value of sales of services, provided to oil and gas producers or mine operators, as applicable, that meet the requirements of paragraphs (a) to (c) will exceed $30 000 per year.

[am. B.C. Reg. 216/2013, App. 1, s. 20.]

Logging

104   (1) In this section, "skidway" does not include a road or landing.

(2) Machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the machinery or equipment is obtained by a person who, for commercial purposes, regularly engages in logging and that machinery or equipment is obtained

(a) for use in logging substantially for

(i) felling or bucking trees,

(ii) removing logs from the stump and depositing the logs in a landing or other first accumulation point,

(iii) loading, unloading, sorting, storing or processing trees or logs at landings, log dumps, sort yards, dry land sorts, booming grounds or mill yards, or

(iv) developing skidways, or

(b) for use substantially on a vessel and substantially for

(i) launching or recovering, in relation to underwater logging operations, machinery or equipment that is exempt under paragraph (a) (i) of this subsection, or

(ii) producing, regulating, transmitting or distributing electricity to operate, in underwater logging operations, machinery or equipment that is exempt under this section.

Local government power generation

105   (1) Subject to subsections (3) and (4), machinery or equipment obtained for use in British Columbia is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the machinery or equipment is obtained by a local government body or local government corporation for use primarily and directly

(a) to generate electricity,

(b) to generate, at a cogeneration plant, electricity and heat, or

(c) in the manufacture of tangible personal property for a use described in paragraph (a) or (b) of this subsection.

(2) Subject to subsections (3) and (4), machinery or equipment that is obtained by a local government body or local government corporation for use primarily and directly in the transmission or distribution of tangible personal property at a manufacturing site, at which electricity, or electricity and heat, referred to in subsection (1) is generated, is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the tangible personal property transmitted or distributed is primarily

(a) electricity, referred to in subsection (1) (a), generated by the local government body or local government corporation,

(b) electricity and heat, referred to in subsection (1) (b), generated by the local government body or local government corporation at a cogeneration plant,

(c) tangible personal property that is for use as an input in the generation of electricity, referred to in subsection (1) (a), or the generation of electricity and heat, referred to in subsection (1) (b), at a cogeneration plant, or

(d) tangible personal property that is to be attached to or processed, fabricated, manufactured or incorporated into tangible personal property for use as an input in the generation of electricity, referred to in subsection (1) (a), or the generation of electricity and heat, referred to in subsection (1) (b), at a cogeneration plant.

(3) The exemptions under subsections (1) and (2) apply only to machinery or equipment that is obtained for use primarily at the manufacturing site, at which the electricity, or electricity and heat, referred to in subsection (1) is generated, from the point at which tangible personal property or a power source that is an input in the generation is received to the point at which the electricity, or electricity and heat, is first stored or first available for use, whichever occurs first.

(4) The exemptions under subsections (1) and (2) apply to a local government body or local government corporation only if the generation referred to in subsection (1) is for one of the following purposes:

(a) for sale, if the local government body or local government corporation has a reasonable expectation that the total value of sales will exceed $30 000 per year;

(b) for its own use, if the local government body or local government corporation has a reasonable expectation that the total manufacturing cost of the electricity, or electricity and heat, will exceed $30 000 per year;

(c) for both a purpose referred to in paragraph (a) and a purpose referred to in paragraph (b), if the local government body or local government corporation has a reasonable expectation that the total manufacturing cost of the electricity, or electricity and heat, will exceed $30 000 per year.

[am. B.C. Reg. 216/2013, App. 1, s. 20.]

Vehicle-mounted machinery or equipment

106   A vehicle on which is mounted machinery or equipment that would be exempt under this Division if the machinery or equipment were obtained separately from the vehicle is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, in respect of the portion of the purchase price or lease price of the vehicle that can reasonably be attributed to that machinery or equipment.

Division 3 — Related Exemptions

Definitions

107   (1) In this Division:

"excluded affixed machinery" means machinery or equipment

(a) that is described in paragraph (a), (b) or (c) of the definition of "affixed machinery" in section 1 [definitions] of the Act, and

(b) that, if the machinery or equipment were not described in any of those provisions, would be affixed machinery;

"exempt machinery or equipment" means

(a) machinery or equipment, or

(b) assembled machinery or equipment referred to in section 108 [parts and materials]

that would be exempt under Division 2 of this Part if the machinery or equipment or assembled machinery or equipment were obtained on the relevant date as set out in subsection (2);

"modify", in respect of qualifying machinery or equipment, means to facilitate or enhance the performance by the qualifying machinery or equipment of the function that the qualifying machinery or equipment performs in relation to the use that qualifies it as qualifying machinery or equipment;

"qualifying machinery or equipment" means machinery or equipment

(a) that is owned or leased by a qualifying person, and

(b) that is

(i) exempt machinery or equipment, or

(ii) excluded affixed machinery that would be exempt machinery or equipment if it were affixed machinery;

"qualifying person" means a person who is entitled to obtain machinery or equipment exempt under Division 2 of this Part from tax imposed under the Act.

(2) For the purposes of this Division, the relevant date, referred to in the definition of "exempt machinery or equipment" in subsection (1), in respect of qualifying machinery or equipment referred to

(a) in section 108 (1) [parts and materials] is the date on which the parts or materials referred to in that provision in relation to the qualifying machinery or equipment are obtained,

(b) in section 109 (1) [tangible personal property for use in providing services] is the date on which the tangible personal property referred to in that provision in relation to the qualifying machinery or equipment is obtained,

(c) in section 111 [machinery or equipment to operate, control or monitor qualifying machinery or equipment] is the date on which the machinery or equipment referred to in that provision in relation to the qualifying machinery or equipment is obtained,

(d) in section 112 (2) [software related to qualifying machinery or equipment] is the date on which the software referred to in that provision in relation to the qualifying machinery or equipment is obtained, or

(e) in section 113 [services related to qualifying machinery or equipment] is the date on which the related service referred to in that provision in relation to the qualifying machinery or equipment is provided.

[am. B.C. Reg. 120/2013, s. 3.]

Parts and materials

108   (1) Parts obtained by a qualifying person for use on qualifying machinery or equipment, or materials obtained by a qualifying person to repair, maintain or modify qualifying machinery or equipment, are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the parts or materials remain part of, or attached to, the qualifying machinery or equipment after, as applicable,

(a) the use of the parts or materials on the qualifying machinery or equipment, or

(b) the repair, maintenance or modification of the qualifying machinery or equipment.

(2) Parts or materials obtained by a qualifying person to assemble machinery or equipment that would be qualifying machinery or equipment under Division 2 of this Part, if the assembled machinery or equipment were obtained by the qualifying person on the date on which the parts or materials are obtained, are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the parts or materials remain part of, or attached to, the assembled machinery or equipment after assembly.

(3) Parts or materials obtained by a qualifying person to assemble a part that would be exempt under subsection (2) of this section, if the assembled part were obtained by the qualifying person on the date on which the parts or materials are obtained, are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the parts or materials obtained remain part of, or attached to, the assembled part after assembly.

Tangible personal property for use in providing services

109   (1) Subject to subsection (2), tangible personal property is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if

(a) the tangible personal property is obtained for use in British Columbia in the course of providing a service in relation to qualifying machinery or equipment,

(b) the tangible personal property is to remain part of, or attached to, the qualifying machinery or equipment after the service has been provided,

(c) either

(i) the service provided to the qualifying machinery or equipment is a related service, or

(ii) the qualifying machinery or equipment is excluded affixed machinery and the service provided to the qualifying machinery or equipment would be a related service if the qualifying machinery or equipment were affixed machinery, and

(d) the qualifying machinery or equipment is owned or leased by a qualifying person.

(2) The exemption under subsection (1) does not apply to

(a) tangible personal property, other than electricity used in an electrolytic process, obtained for use to produce energy or for use as a source of energy, or

(b) tangible personal property, if the service provider is to retain an interest in that tangible personal property after it has been made part of, or attached to, the qualifying machinery or equipment.

(3) Parts or materials obtained by a person providing a service referred to in subsection (1) of this section to assemble tangible personal property that would be exempt under that subsection, if the assembled tangible personal property were obtained by that person at the time the parts and materials are obtained, are exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the parts or materials remain part of, or attached to, the assembled tangible personal property after assembly.

Exclusions from exemptions under sections 108 and 109

110   Despite sections 108 [parts and materials] and 109 [tangible personal property for use in providing services], the following are not exempt under those sections:

(a) gases, liquids or consumable solids;

(b) tangible personal property obtained for use primarily for repairing, maintaining, modifying, assembling or making

(i) bases or foundations, that are or become a part of real property, for qualifying machinery or equipment, or

(ii) scaffolding, walkways, catwalks or similar items, unless such items

(A) are an integral part of the applicable qualifying machinery or equipment, and

(B) were obtained by the qualifying person as part of the applicable qualifying machinery or equipment.

Machinery or equipment to operate, control or monitor qualifying machinery or equipment

111   Machinery or equipment obtained by a qualifying person for use primarily to operate, control or monitor qualifying machinery or equipment is exempt from tax imposed under Part 3 of the Act, other than Division 9 of that Part, if the machinery or equipment is for use substantially at the applicable well site or the qualifying part of the applicable manufacturing site, processing plant, refinery or mine site.

Software related to qualifying machinery or equipment

112   (1) Subject to subsection (2), software is exempt from tax imposed under

(a) Part 3 of the Act, other than Division 9 of that Part, or

(b) Part 4 of the Act, other than section 109 of that Part.

(2) The exemption under subsection (1) applies only to software obtained by a qualifying person for use

(a) primarily to operate, control or monitor qualifying machinery or equipment, or

(b) to operate particular machinery or equipment for use primarily to operate, control or monitor qualifying machinery or equipment, if the particular machinery or equipment is for use substantially at the applicable well site or the qualifying part of the applicable manufacturing site, processing plant, refinery or mine site.

Services related to qualifying machinery or equipment

113   A related service provided in relation to qualifying machinery or equipment is exempt from tax imposed under Division 2 of Part 5 of the Act, other than section 120.1 of that Part, if the related service is purchased by a qualifying person.

Division 4 — Exclusions from Exemptions

Tangible personal property excluded from exemptions under Divisions 2 and 3

114   Despite Divisions 2 and 3 of this Part, the following are not exempt under those Divisions:

(a) buildings, furnishings, camp equipment or machinery or equipment related to the use of a building as a building, other than shelters that are exempt under section 94 (2) (i) [shelters for machinery or equipment for petroleum or natural gas exploration, discovery or development];

(b) logging trucks, well-servicing trucks or any other vehicles designed to be ordinarily used on a public highway, other than

(i) truck-mounted service rigs that are exempt under section 94 (2) (b) [truck-mounted service rigs for petroleum or natural gas exploration, discovery or development], or

(ii) bulldozers, backhoes and excavators that are exempt under section 96 [exploration for minerals or development of mines];

(c) vessels, other than

(i) boom boats obtained by a person described in section 104 (2) [logging] for use substantially for one or more of the purposes described in paragraph (a) (iii) of that section, or

(ii) vessels obtained by a person described in section 104 (2) for use substantially in underwater logging operations to carry machinery or equipment that is exempt under that section for use for one or more of the purposes set out in paragraph (a) (i) or (ii) or (b) of that section;

(d) railway rolling stock, locomotive engines and non-turbine aircraft;

(e) portable or mobile electric generators and portable or mobile electric alternators, including drive motors for them, portable or mobile generator and alternator sets, stand-by electric generators and stand-by electric alternators, including drive motors for them, and stand-by generator and stand-by alternator sets, other than machinery or equipment that is exempt under

(i) section 95 (4) [generators at well site],

(ii) section 96 (1) (b) [generator or motor for exploration for minerals or development of mines], or

(iii) section 104 (2) (b) (ii) [electrical equipment for underwater logging operations];

(f) the following machinery or equipment, other than machinery or equipment that is exempt under section 100 (2) [waste gas machinery or equipment]:

(i) machinery or equipment obtained for use in transporting or distributing petroleum or natural gas from a well site to a processing plant or refinery or between processing plants or refineries, or in transporting a marketable product, including pipes, valves, fittings, pumps, compressors and regulators;

(ii) machinery or equipment ancillary to the machinery or equipment referred to in subparagraph (i) of this paragraph;

(g) bases and foundations that become a part of real property;

(h) scaffolding, walkways, catwalks and similar items, unless such items

(i) are an integral part of tangible personal property that is exempt under this Part, and

(ii) are obtained as a part of that tangible personal property;

(i) office machinery or equipment, other than machinery or equipment that is exempt under section 93 [software development] or 111 [machinery or equipment to operate, control or monitor qualifying machinery or equipment];

(j) to (j.2) Repealed. [B.C. Reg. 90/2015, s. 5 (b).]

(k) software, other than software that is exempt under section 112 [software related to qualifying machinery or equipment];

(l) pallets and other packaging-related or transportation-related machinery or equipment, unless the machinery or equipment is

(i) obtained for use primarily in the transportation of tangible personal property within a well site or software development site or within the qualifying part of a manufacturing site, processing plant, refinery or mine site, and

(ii) intended to remain at the well site or software development site or the qualifying part of the manufacturing site, processing plant, refinery or mine site.

[am. B.C. Regs. 216/2013, App. 1, s. 23; 90/2015, s. 5.]

Persons excluded from exemptions under Divisions 2 and 3

115   (1) In this section:

"food product" does not include liquor, other than an alcohol-containing food product;

"qualifying Crown corporation" means any of the following:

(a) the British Columbia Hydro and Power Authority;

(b) the British Columbia Railway Company;

(c) the Columbia Power Corporation;

(d) the Insurance Corporation of British Columbia.

(2) Despite Divisions 2 and 3 of this Part, tangible personal property and software obtained, and related services purchased, by the following are not exempt under those Divisions:

(a) a person who is a caterer, if the person obtains the tangible personal property or software or purchases the related services in the person's capacity as a caterer;

(b) a restaurateur or other person who obtains the tangible personal property or software or purchases the related services in relation to the person's preparation of food products for retail sale on the premises where the food products are prepared, unless the retail sales of those food products comprise less than 10% of the restaurateur's or other person's total sales of food products;

(c) the government and its agents, including agencies, boards and commissions, other than qualifying Crown corporations;

(d) except as provided for in section 105 [local government power generation], a local government body or local government corporation;

(e) a corporation, other than a qualifying Crown corporation, whose taxable income, determined for the purposes of the Income Tax Act (Canada), is exempt from tax imposed under section 149 (1) (d) to (d.4) of that Act;

(f) schools, school boards and universities, including business, trade and vocational schools;

(g) hospitals;

(h) regional health boards and community health councils designated under the Health Authorities Act.

[am. B.C. Reg. 76/2016, Sch. 2, s. 5.]

Division 5 — Prescribed Provisions and Evidence Relating to Production Machinery and Equipment

Definition

116   In this Division, "tangible personal property exemption provisions" means the provisions in Divisions 2 and 3 of this Part, other than section 113 [services related to qualifying machinery or equipment].

Provisions prescribed for purposes of sections 89 (2), 90 (4), 99 (6) and 112 (2) of Act

117   (1) The tangible personal property exemption provisions are prescribed for the purposes of the following provisions of the Act:

(a) section 89 (2) [tax on acquisition of eligible tangible personal property];

(b) section 90 (4) [tax on eligible tangible personal property brought into British Columbia];

(c) section 99 (6) [tax on acquisition of exclusive product by independent sales contractor].

(2) Section 112 [software related to qualifying machinery or equipment] of this regulation is prescribed for the purposes of section 112 (2) [tax on purchase of software by small seller] of the Act.

Provisions prescribed for purposes of section 145 of Act

118   (1) The tangible personal property exemption provisions are prescribed for the purposes of section 145 (1) (a) [provisions providing exemptions in relation to tangible personal property] of the Act.

(2) Section 112 [software related to qualifying machinery or equipment] of this regulation is prescribed for the purposes of section 145 (1) (b) [provisions providing exemptions in relation to software] of the Act.

(3) Section 113 [services related to qualifying machinery or equipment] of this regulation is prescribed for the purposes of section 145 (2) [evidence required to claim certain exemptions in relation to taxable services] of the Act.

Declarations required under section 145 of Act

119   (1) For the purposes of section 145 (1.1) (a) [evidence required to claim certain exemptions in relation to tangible personal property or software] of the Act, in relation to a person who alleges that

(a) tangible personal property is exempt under any of the tangible personal property exemption provisions, or

(b) Part 4 software is exempt under section 112 [software related to qualifying machinery or equipment] of this regulation,

the collector is required to obtain a declaration in a form acceptable to the director.

(2) For the purposes of section 145 (2) (a) [evidence required to claim certain exemptions in relation to taxable services] of the Act, in relation to a person who alleges that a related service is exempt under section 113 [services related to qualifying machinery or equipment] of this regulation, the collector is required to obtain a declaration in a form acceptable to the director.

Declaration required under section 30 (7) (a) of Act

120   For the purposes of section 30 (7) (a) [evidence required to claim exemption in relation to tax payable in respect of vehicle] of the Act, in relation to a person who alleges that a vehicle is exempt under any of the tangible personal property exemption provisions, the Insurance Corporation of British Columbia is required to obtain a declaration in a form acceptable to the director.

Division 6 — Refund for Production Machinery and Equipment

Construction or maintenance of road for mine site

120.1   (1) If the director is satisfied that

(a) a person obtained machinery or equipment, other than by leasing the machinery or equipment as a lessee, and paid tax imposed under Part 3 of the Act, other than Division 9 of that Part, in respect of the machinery or equipment,

(b) the person, for commercial purposes, regularly engages in the exploration for minerals or the development of mines,

(c) the machinery or equipment was obtained for use substantially and directly for the construction or maintenance of a road within what became the qualifying part of a mine site as a result of the development of a mine, and

(d) the machinery or equipment would have been exempt under section 96 or 97 of this regulation if what became the qualifying part of a mine site had been a qualifying part of a mine site when the person obtained the machinery or equipment,

the director must refund to the person the amount of tax paid in respect of the machinery or equipment.

(2) Subsection (1) does not apply if, within 15 days after the date of purchase or the entry date of the machinery or equipment, the machinery or equipment is used, or allowed to be used, other than substantially and directly for the construction or maintenance of a road within what became the qualifying part of a mine site as a result of the development of a mine.

(3) If a person

(a) receives a refund under subsection (1) in respect of machinery or equipment, and

(b) subsequently uses the machinery or equipment, or allows the machinery or equipment to be used, for a purpose other than for use substantially and directly for the construction or maintenance of a road within what became the qualifying part of a mine site as a result of the development of a mine,

the person must repay to the government an amount equal to the tax that would have been payable under section 82 [tax if property used for new purpose] of the Act as if the tax were payable under that section in respect of the use of the machinery or equipment, or the allowed use of the machinery or equipment, referred to in paragraph (b) of this subsection.

(4) Subsection (3) does not apply if the person subsequently uses the machinery or equipment, or allows the machinery or equipment to be used, for a purpose for which that machinery or equipment would be exempt from tax under the Act if that machinery or equipment were to be used for that purpose.

[en. B.C. Reg. 117/2014, Sch. 4, s. 5.]

Machinery or equipment leased for construction or maintenance of road for mine site

120.2   (1) If the director is satisfied that

(a) a person leased machinery or equipment as a lessee and, in relation to a rental period under the lease, paid tax imposed under Part 3 of the Act, other than Division 9 of that Part, in respect of the machinery or equipment,

(b) the person, for commercial purposes, regularly engages in the exploration for minerals or the development of mines,

(c) at the time the lease was entered into the machinery or equipment was leased for use substantially and directly for the construction or maintenance of a road within what became the qualifying part of a mine site as a result of the development of a mine, and

(d) the person has not, before the end of the rental period, used that machinery or equipment, or allowed that machinery or equipment to be used, for a purpose other than

(i) the particular purpose referred to in paragraph (c) of this subsection,

(ii) for use substantially and directly for the construction or maintenance of a road in the qualifying part of a mine site, or

(iii) another purpose for which that machinery or equipment would be exempt under section 96 or 97 of this regulation,

the director must refund to the person the amount of tax paid in relation to the rental period under the lease.

[en. B.C. Reg. 117/2014, Sch. 4, s. 5.]

Contents | Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 5.1 | Part 6 | Part 7 | Part 8 | Part 9 | Schedule 1 | Schedule 2 | Schedule 3 | Schedule 4 | Schedule 5 | Schedule 6