British Columbia has updated Bulletin PST 105, “Software,” and Bulletin PST 107, “Telecommunication Services,” to clarify the application of PST on gift certificates and gift cards, and optional unscheduled software maintenance agreements.
The bulletins specify that the sale of prepaid gift cards or gift certificates are taxable where the gift card may only be used to acquire taxable software or telecommunication services. The bulletins provide examples of the taxable gift cards, including gift cards that provide online video game access and software downloads gift cards, for software such as apps. Where exempt items may be purchased with the gift card, the sale of the prepaid gift card would not be subject to BC PST.
The province has indicated that the inclusion of software updates, including a right to receive the updates, in an optional software maintenance agreement would make the agreement subject to British Columbia PST.