BC Ministry of Finance now requires that leases of furnished or equipped premises break out the taxable goods component

Subject to exceptions, s. 26(3) of the Provincial Sales Tax Act (B.C.) deems the purchase price of a “taxable component” (namely “tangible personal property, software or a taxable service that would be subject to tax under this Act if purchased separately from other property or services”) to equal the fair market value of the taxable component. The BC Ministry of Finance has revised its Bulletin on Bundled Sales and Services to indicate that:

If, for a single price, you lease a taxable good together with an exempt good or real property, you must charge PST on the fair market value of the lease of the taxable good. …

It provides an example of a lease of a restaurant building with affixed machinery (beer tap equipment) and various furniture for a rent of $15,000 per month. Although a building lease is exempt, PST is required to be charged on what would be the FMV of a lease of the beer tap equipment and the furniture (of $2,500 and $1,000 per month, respectively). However, this requirement to bifurcate does not apply if “the right to use the goods is merely incidental to an agreement for the right to use real property.”

The concept of “incidental” is defined quite narrowly in PST 315.

Neal Armstrong. Summary of Bulletin PST 316 "Bundled Sales and Leases" under Other Legislation – BC – Provincial Sales Tax Act – s. 26(3).