EXEMPTING CHARITABLE FUNDRAISING ACTIVITIES FROM PST IN BRITISH COLUMBIA (2026)

Issue

BC currently requires registered charities to collect and remit Provincial Sales Tax (PST) on certain fundraising activities, including auctions and sales of donated goods. This approach imposes a disproportionate administrative burden on these often small, volunteer-driven organizations, may reduce net charitable proceeds, and risk discouraging business and community donations. The province should align with other Canadian jurisdictions by exempting bona fide charitable fundraising activities from PST.

Background

The charitable sector is a significant contributor to British Columbia’s economy and community wellbeing. Across Canada, the sector represents more than 8% of national GDP and employs over 2.7 million people, including approximately 360,000 workers in British Columbia.

In 2013, BC implemented rules requiring registered charities to collect PST on certain fundraising transactions, particularly charity auctions and sales of donated goods. For many years, this requirement saw limited enforcement. However, recent direction to at least one BC hospital foundation to begin collecting PST has created renewed uncertainty and concern across the charitable sector.

In BC, the PST applies depending on the relationship between the item’s value and the winning bid.  If the item’s fair value is 80% or more of the winning bid, PST is charged on the full bid amount, whereas if the value is less than 80% of the bid, PST is charged only on the fair value, recognizing the excess as a donation. For example, if at a charity auction a bidder pays $1,000 for a diamond ring which the charity reasonably determines to be worth $800, the value of the ring is 80% of the successful bid. In this example, the charity is then required to collect PST on the full $1,000 donated for the ring, totaling $70.

Most charities operate with extremely limited administrative capacity. Approximately 90% of charities employ 10 or fewer full-time staff, 77% operate on annual revenues under $500,000, and nearly 59% have no paid staff at all. Applying complex PST rules to fundraising activities requires charities to determine fair market value of donated items, calculate taxable versus donation portions of bids, register for and remit PST, and maintain compliance records. For volunteer-driven organizations and small foundations, these requirements divert scarce time and resources away from frontline community services.

The current policy also reduces the effectiveness of charitable fundraising. Under existing rules, PST may apply to all or part of a successful auction bid depending on the relationship between fair market value and the winning bid. This increases the effective cost to purchasers and can reduce net proceeds available for charitable purposes. In the example above, might the donor bid less generously if they know that PST will be applied to their donation?  Might they include the tax in the amount they are willing to spend, providing less revenue to the charity?

Other provinces in Canada provide exemptions where fundraising supports charitable purposes. Other provinces in Canada generally provide exemptions where fundraising supports charitable purposes. For example, Ontario exempts goods sold at charitable events from the HST if the proceeds support charitable activities, Manitoba exempts fundraising activities from the retail sales tax under similar conditions, and similar provisions exist in Nova Scotia and Saskatchewan. Aligning BC’s approach with these other jurisdictions would recognize the unique public-benefit charities provide, remove this lingering compliance risk, and have negligible fiscal impact given its current limited application. 

Providing a clear PST exemption for bona fide charitable fundraising activities—particularly charity auctions and sale of donated goods—would reduce administrative burden, improve consistency and certainty, and protect the fundraising capacity of organizations that deliver essential health, social, and community services across the province, at a time when needs are ever-increasing while resources fail to keep pace.

The Chamber Recommends

That the Provincial Government:

1. Amend the Provincial Sales Tax Act and/or associated regulations to exempt bona fide charitable fundraising activities, including auctions and their sale of donated goods by registered charities, from the requirement to collect and remit PST.