Ponders of PST and Pedalling
While Fernie arguably gained its fame for its legendary powder, it is fast gaining popularity as a mountain bike destination. With over 100 diverse trails, there is something for every level of rider to enjoy. Fernie truly is a mountain bike town where bicycles often rival the number of cars on Main Street.
In my work, I am often asked questions about some of the quirky and less known provincial sales tax (PST) rules and exemptions. The Ministry of British Columbia currently has 99 PST Bulletins covering everything from registration, industry specific rules and specific exceptions. Therefore it is not surprising to discover that our PST program is not all that straightforward.
I find PST Bulletin 204 “Bicycles and Tricycles” especially interesting. In a town where a large contingent of the population takes pride in owning a bicycle that is worth more than their vehicle, I thought this would be a good topic.
For our visiting Alberta friends who often cringe at our 7% PST, there is relief for everyone on bicycle purchases. Purchase your bicycle from the knowledgeable staff at one of Fernie’s many great bike shops and there is no PST.
While most people are likely aware of the PST tax exemption on bicycles, there is a myriad of other specific PST rules in the wide world of pedalling and accessories that are less known.
Let’s start with the basics. What exactly qualifies for the PST exemption when it comes to pedalling? The exemption applies to all non-motorized bicycles and adult sized non-motorized tricycles, where each wheel has a diameter of 350mm or more. Admittedly, I had to look at an image online of an adult tricycle to get a visual!
There are two main key points here. First, the unit must be non –motorized. While that may seem a simple concept - bicycle versus motorcycle - consider the ever expanding electric bicycle (e-bicycle) market. Many of these bikes look like regular bicycles, and require pedal assistance to engage the electric motor or assist kit. So where do they fall? Under the “old” PST system these bikes were exempt for a time, however the exemption period expired during the HST realm and e-bicycles were not granted exemption status with the return of PST in April 2013. I’ll discuss a more on e-bicycles and associated rules further on.
The second key point is the number of wheels. Two wheels or three (over 350mm) are exempt. For those travelling on one wheel, plan on dishing out the extra 7% on your purchase. There is no exemption in place for unicycles.
With the basics of a qualifying unit established, let’s dive into parts, accessories, safety, and service. For simplicity, I will use the term bicycle to refer to a qualifying unit.
Parts that are essential to the basic operation of a bicycle are exempt. This includes items such as handlebars, forks, tires, pedals, chains, seats, brakes on so on. Pretty straightforward stuff.
Accessories are much more exciting! A little planning in this department can save you dollars. Basic items such as baskets, saddlebags, bottle cages, toe clips, kickstand and even streamers are PST exempt if purchased and installed/attached on the bike at the time of purchase. This is the case, even if the items are itemised individually on your receipt. Decide the next day that you want a horn, mirror, and flag on your bicycle and you will be paying the 7% PST. So load it up at the time of purchase with all the bells and horns, so to speak.
While the BC government wants to give those travelling under self-propelled power a tax break, they also incentivise doing it safely. Bicycle lights, reflectors and personal safety gear such as helmets and high visibility vests are exempt. In both cases there is no need to prove the safety equipment will be installed on a bicycle or that the person purchasing the safety gear will be riding a bicycle.
PST is not charged on service of bicycles or on the service of installing attachments after the bike is purchased. It is however charged on accessories brought in for repairs not attached to the bikes. For example, if you had a broken toe clip PST would not be charged on the service to repair the clip if attached to the bicycle, but would be if only the toe clip was brought in!
I talked briefly about e-bicycles and the fact that they do not qualify for the exemption. What about the case where a bicycle is converted to an electric bicycle? In this case, PST is not charged on the bicycle, however is charged on the electric assist kit. PST is not charged on the install of the kit, however once the kit is installed all future parts and service to the e-bicycle have PST as it is no longer a non-motorized unit. This includes parts, such as disc brakes, that may be designed for non-motorized bicycles, but are for an e-bicycle.
For more information on the how PST relates to your specific situation please consult with your professional tax advisor.