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ARTICLE · 07 JULY 2023

B.C. Update: Retroactive Legislation To Reverse Court Decision And Tax Cloud Services

Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
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Under the Provincial Sales Tax Act (British Columbia), a software program, or a right to use a software program, purchased for use on an electronic device ordinarily situated in B.C. is subject to PST.

CanadaTax
Zvi Halpern-Shavim
Zvi Halpern-Shavim
Elena Balkos
Elena Balkos
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Under the Provincial Sales Tax Act (British Columbia), a software program, or a right to use a software program, purchased for use on an electronic device ordinarily situated in B.C. is subject to PST. However, the emergence of cloud computing, including software-as-a-service business models, challenged the application of PST.

In Hootsuite Inc. v. British Columbia (Finance) (Hootsuite) the Ministry of Finance assessed Hootsuite Inc., a social media management company, for failing to self-assess PST on cloud computing and storage services and support services purchased from a United States supplier. The B.C. Supreme Court agreed with Hootsuite and held that the cloud computing and storage were the purchase of on-demand computer infrastructure service and the support services were the purchase of technical expertise. On-demand computer infrastructure services allowed virtual access to the vendor's hardware and the support services were accessed through an online chat

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