BC PST on AI Subscriptions: What Burnaby Owners Owe

Your bookkeeping probably has one line called "software subscriptions" and it keeps getting longer. A chat assistant here, a transcription tool there, an API key for the thing that answers voicemail at 11pm. In B.C., almost all of that is taxable, and the province said so long before anyone was calling it AI.

B.C. taxes AI subscriptions as software, at 7%

The B.C. Ministry of Finance's Software page, published December 17, 2025, says that unless a specific exemption applies you pay 7% PST on the purchase price of software if you're in B.C. and you buy it for use on an electronic device ordinarily situated in B.C.

The definition is wide. That page lists software as a service (SaaS), infrastructure as a service (IaaS) and application programming interfaces (APIs) as taxable software, and states that PST applies "regardless of the location of the server hosting the software or the delivery method." Data backup is treated as electronic storage, so it lands in IaaS, so it's taxable too.

That covers nearly every AI tool a small business buys. A monthly seat in a writing assistant is SaaS. Metered calls to a model endpoint are an API purchase. The rented compute behind a custom agent is IaaS. Nothing gets a pass for being new.

The test is where the device sits, not where the bill goes

B.C.'s rule keys off the device, not the invoice. The Software page says stationary devices like desktop computers are ordinarily situated in B.C. if they're located at a B.C. address, and that mobile devices are generally judged by the billing address. If the billing address doesn't match where the device is, the ministry says the provider should use the address where they provide the software, or the device's IP address, instead. Its own example: a company downloads software for desktops at its B.C. office but all bills go to a Toronto head office, and PST still applies.

Vendors, understandably, bill off the address they hold. Google's Cloud Billing documentation states that in Canada "your tax rates are determined by the province of your invoice billing address" (Taxes in your country). Anthropic's help centre says "Your billing address determines how taxes are calculated on your Claude purchases" (Understanding your billing address and tax calculation, updated August 6, 2026). So a Burnaby team whose card is registered to an out of province parent can receive a clean invoice with no PST and still owe the tax.

When nobody charges you, you're the one who files

If you buy software and aren't charged PST, the Software page is blunt: you must self-assess and pay it directly. If you have a PST number, it goes on your next PST return. If you don't, you file a Casual Remittance Return (FIN 405) by the last day of the month following the month you bought the software in B.C., or the month you first used it here if you bought it elsewhere. The ministry's example: buy in March without paying PST, file and pay by April 30.

This comes up constantly with smaller AI vendors, and there's a clean reason why. Under Bulletin PST 001, Registering to Collect PST (revised August 2023), a business located outside B.C. that sells software for use on devices ordinarily situated here and accepts orders from B.C. customers must register only if its gross revenue from B.C. customers in the previous or next 12 months is more than $10,000. The niche tool with nine Canadian customers isn't required to register. Its invoice will look tax free. The obligation just moves to you.

Splitting usage across provinces

If you carry on business in B.C. and the same subscription is used on devices inside and outside the province, you can pay a proportional amount. The formula on the Software page is 7% × purchase price × (B.C. usage ÷ total usage). To buy without paying PST to the seller you give them a Certificate of Exemption, Self-Assessment on Software (FIN 443), then self-assess yourself.

The ministry's worked example: a two-year licence bought in B.C. for $5,000, with 5 of 15 computers in B.C., means $116.67 of PST rather than $350. You then reconcile at the end of the period. If more staff used it in B.C. than you estimated, you self-assess the difference. If fewer did, you can apply for a refund.

What isn't taxable

Four carve-outs matter for most owners:

• Services to software. You don't pay PST on services to test, install, configure, modify, repair or restore software, as long as no software is provided under the contract.
• Custom software. Software developed solely to meet the requirements of one specific person is exempt for that person. So is custom modified software, where the source code is changed solely for you and the modified price is more than double the unmodified price.
• Software bought for resale. Exempt if you're reselling the software or the rights to it, though not if you qualify as a small seller.
• Custom APIs. A stock API you bolt onto your app is taxable. One built specifically for you may qualify as custom software.

There's a trap inside the first bullet. Software bundled into a non-taxable service is only ignored if it's genuinely incidental, and the Software page carves out an exception: software that provides support or technical assistance for other software is never incidental. Its example is a New Westminster business buying IaaS plus a support plan, where the console and chat software you use to reach the engineer are taxable at fair market value. Ask your integrator to itemize.

Where this doesn't apply

This isn't tax advice, and B.C.'s own page says the guidance "is not a replacement for the legislation." Talk to your accountant before you change what you remit.

Don't build a position on the court case you may have heard about. In *Hootsuite Inc. v. British Columbia (Finance)*, 2023 BCSC 358, the B.C. Supreme Court found that the cloud storage, computing and support services at issue were not taxable, because their fundamental nature was an on-demand infrastructure service and technical expertise (Notice 2023-005, June 2023). The province then legislated the other way. B.C.'s Tax Interpretation Manual records that Bill 3, Budget Measures Implementation Act, 2024 amended the relevant provisions and that "the amendment was retroactive to April 1, 2013, to clarify that it applies since the reimplementation of the PSTA" (Part 4, Taxes in Relation to Software, last updated December 3, 2024).

The proportional rule also isn't free. Estimating usage, filing FIN 443, tracking seats and reconciling at period end is real work. On a $60 a month tool, the paperwork costs more than the tax.

And 7% shouldn't decide whether you automate. Statistics Canada found 19.2% of Canadian businesses used AI to produce goods or deliver services in the 12 months before its second quarter 2026 survey, up from 6.1% in the second quarter of 2024, with cost named as a barrier by 10.6% of businesses and cybersecurity or privacy concerns by 13.4% (Analysis on artificial intelligence use by businesses in Canada, June 11, 2026). Tax is a rounding error next to those two. If a tool only saves twenty minutes a month, don't buy it, and if it replaces a real bottleneck, the PST won't change the answer.

Finally, this is B.C. PST only. GST is a separate federal matter, other provinces have their own rules, and nothing here covers software on a CD or USB stick, which is taxed as goods.

Sources

• British Columbia Ministry of Finance. *Software* (PST guidance, formerly Bulletin PST 105), published December 17, 2025. https://www2.gov.bc.ca/gov/content/taxes/sales-taxes/pst/publications/software
• British Columbia Ministry of Finance. *Bulletin PST 001, Registering to Collect PST*, revised August 2023. https://www2.gov.bc.ca/assets/gov/taxes/sales-taxes/publications/pst-001-registering-to-collect-pst.pdf
• British Columbia Ministry of Finance. *Notice 2023-005, Notice to Providers and Purchasers of Cloud Software and Services*, June 2023. https://www2.gov.bc.ca/assets/gov/taxes/sales-taxes/publications/notice-2023-005-notice-to-providers-purchasers-cloud-software-services.pdf
• British Columbia Ministry of Finance. *Provincial Sales Tax Act, Part 4, Taxes in Relation to Software* (Tax Interpretation Manual), last updated December 3, 2024. https://www2.gov.bc.ca/gov/content/taxes/tim/pst/parts/pt-4
• Google. *Cloud Billing: Taxes in your country*, Google Cloud documentation, accessed September 2026. https://docs.cloud.google.com/billing/docs/resources/vat-overview
• Anthropic. *Understanding your billing address and tax calculation*, Claude Help Center, updated August 6, 2026. https://support.claude.com/en/articles/12997130-understanding-your-billing-address-and-tax-calculation
• Statistics Canada. *Analysis on artificial intelligence use by businesses in Canada, second quarter of 2026*, catalogue no. 11-621-M, June 11, 2026. https://www150.statcan.gc.ca/n1/pub/11-621-m/11-621-m2026010-eng.htm

Autana Solutions installs AI employees for small and mid-sized businesses across Burnaby, New Westminster and Vancouver, and we look at a lot of software invoices along the way. If you're not sure which of your AI subscriptions are taxable or where the devices using them actually sit, book a free call, bring your last two invoices, and we'll go through them with you.