The Saskatchewan Ministry of Finance has reinstated a previously repealed provincial sales tax (PST) exemption on permanently mounted equipment (PME) used in the oil and gas industry. As a retroactive change, PST that had been paid on now-exempt equipment can be claimed back as refunds (as tax paid in error).
BACKGROUND
Historically, Order in Council 1436/67 (dated August 16, 1967) exempted from PST on qualified PME used in the exploration and development of oil and gas resources.
On July 17, 2017, the Saskatchewan Ministry of Finance published Information Notice IN 2017-04, Elimination of Provincial Sales Tax Remission for Permanently Mounted Equipment, indicating that effective April 1, 2017, the remission order was repealed. Consequently, both owned PME assigned to a branch or location in Saskatchewan and leased PME located in Saskatchewan became subject to PST. Non-Saskatchewan resident businesses bringing PME into Saskatchewan or leasing PME located in Saskatchewan also had to self-assess PST on its temporary use. The PST had to be paid on related repairs as well.
PST EXEMPTION
In December 2018, a new section 18.61 and Table 1 of Appendix of The Provincial Sales Tax Regulations, RRS c E-3 Reg 1 were introduced by Order in Council 608/2018. A brief overview of the reinstatement is provided in the new Information Notice IN 2018-10, Provincial Sales Tax Exemption Oil and Gas Industry Equipment and the amended Information Bulletin PST-13 Petroleum Drilling & Well Servicing Contractors. The amendments re-introduce an exemption from PST on drilling rigs, service rigs, specified well servicing equipment and repairs made to such equipment. The exemption is retroactively effective to April 1, 2017 – the day the exemption under the remission order was repealed.
The refunds of tax paid in error are available up to four years from the date the tax was paid and can be claimed by filing an Application for Refund, providing detail and supporting documentation.
