B.C.’s PST exemption for zero-emission vehicles is ending; here’s what that means for buyers and lessees

British Columbia’s provincial sales tax (PST) exemption for used zero-emission vehicles (ZEVs) will end after April 30, 2025 — two years earlier than originally scheduled.

The exemption for used zero-emission vehicles introduced in Budget 2022 was set to expire in 2027. The province announced the accelerated timeline in its most recent provincial budget on March 4, 2025.

What this means

Effective May 1, 2025, used zero-emission vehicles will be subject to provincial sales tax at the applicable ZEV rate. The PST rates that apply to qualifying ZEVs purchased or leased between May 1, 2025, and February 22, 2027, are provided on page 5 of Bulletin PST 116, Motor Vehicle Dealers and Leasing Companies.

After February 22, 2027, the PST rates revert to the general PST rates applicable to vehicles.

For existing leases of used ZEVs: lease and buyout payments due after February 22, 2022, and before May 1, 2025, are eligible for the exemption.

Any lease or buyout payments due after April 30, 2025, are not eligible for this exemption. These will be subject to provincial sales tax (PST) at the applicable ZEV rate regardless of when the lease was entered into.

Existing leases are not grandfathered under the previous exemption. The PST rate is based on the vehicle’s tax rate value at the inception of the lease. Dealers are advised to review their lease portfolios well before April 30, 2025, to prepare for any changes to customer payment amounts and automated payment schedules.