B.C. Raising Sales Tax on Fossil Fuel Appliances, Cutting Tax on Heat Pumps
March 2, 2022 | By HPAC Magazine
As of April 1, provincial tax on the purchase or lease price of fossil fuel combustion systems will increase from 7% to 12%, while heat pumps will be exempt from PST.
On February 22 the provincial government in B.C. announced changes to its tax laws with direct effects on the heating and cooling industry. Effective April 1, 2022, the provincial sales tax (PST) rate on the purchase or lease price of fossil fuel combustion systems will increase from 7% to 12%, while heat pumps will now be exempt from PST.
The PST rate increase applies to fossil fuel combustion systems that heat or cool indoor spaces or water including:
- boilers
- central forced air furnaces
- unit heaters
- storage water heaters
- instantaneous water heaters
- air conditioners
- fireplaces
Details on the transitional provisions for contractors in the process of purchasing and installing fossil fuel appliances or heat pump units in the period leading up to April 1 can be found in this NOTICE issued by the province.
Clean Buildings Tax Credit
The Province also proposed a temporary clean buildings tax credit for retrofits that would improve the energy efficiency of eligible commercial and multi-unit (four or more units) residential buildings. Still subject to approval of the legislature, the refundable income tax credit would be 5% of the qualifying expenditures paid on the retrofit. Qualifying expenditures would have to be part of agreements entered into after February 22, 2022 and paid before April 1, 2025.
