So a heat pump quote should show no PST at all?

On the heat pump equipment, yes — the exemption covers the unit and the parts included with it on the initial purchase. Parts bought separately alongside it are not covered, so a quote can legitimately show some PST. Ask for it as its own line.

Does this mean a heat pump is cheaper than a furnace?

It means the tax is twelve points apart. The installed prices and the rebates are separate questions and this site answers them on their own pages. Tax is one line in that comparison, not the comparison.

I am keeping my gas furnace and adding a heat pump. What is taxed?

The heat pump is exempt and the furnace is not, because a retrofit into an existing furnace is not a single factory-integrated unit. Only a hybrid built as one unit at the factory is treated as a heat pump throughout.

Is an air conditioner really taxed at 12%?

An air conditioner is on the province’s list of fossil fuel combustion systems. The definition turns on the system, so this is a question to put to your installer with your specific equipment named, not one to settle from a web page.

Do I pay PST on a heat pump, and what about the furnace I would otherwise buy?

Is there PST on a heat pump in BC?

Direct answer · reviewed 2026-10-06

No. A heat pump has been exempt from provincial sales tax in British Columbia since 1 April 2022, and on the same day the rate on fossil fuel combustion systems went the other way, from seven percent to 12%. So the tax is not a detail at the bottom of the quote: on the same house, in the same week, the heat pump carries no PST and the gas furnace or air conditioner carries the fossil-fuel rate. GST of 5% applies to the job either way, which is why most Greater Victoria quotes are shown before tax.

Conditions and exceptions

The exemption covers parts and components included with the unit on the initial purchase. Parts sold separately alongside it are not covered.
It is the equipment that is exempt, not the whole invoice — ask for tax as its own line so two quotes compare on the same basis.
This page quotes the Ministry of Finance notice. Your installer's accountant applies it to your invoice; confirm the treatment in writing before you sign.

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Local evidence

Every figure below is quoted from the source shown or is our labelled estimate. Verified dates are the day we last checked the source; a figure whose check is overdue is withheld rather than shown.

PST on a heat pump in BC: Exempt — 0%; Parts sold separately rather than included with the unit are not covered by the exemption · GST of 5% still applies to the job; Ministry of Finance, Province of British Columbia · quoted · verified 2026-10-06
PST on a furnace, boiler or air conditioner in BC: 12%; Was 7% before 1 April 2022; Ministry of Finance, Province of British Columbia · quoted · verified 2026-10-06
PST on a factory-integrated hybrid (heat pump plus furnace): Exempt — it counts as a heat pump; A heat pump and a separate furnace installed as two units is not a single factory-integrated unit; Ministry of Finance, Province of British Columbia · quoted · verified 2026-10-06
Deadline to claim a refund of PST paid on a heat pump: 1 April 2026 — now passed; Applied to PST paid under a contract straddling the 1 April 2022 change; Ministry of Finance, Province of British Columbia · quoted · verified 2026-10-06

Twelve points, in opposite directions, on the same day

British Columbia changed both numbers at once, deliberately. A heat pump: Exempt — 0%. A furnace, boiler, water heater or air conditioner: 12%.

The second number is easy to miss because it is not new any more — it replaced the ordinary seven percent on 1 April 2022, so a homeowner comparing a quote today against what a neighbour paid in 2021 is comparing two different tax regimes. On the equipment portion of a central system, twelve percent against nothing is the largest single piece of local money on this site that is not a rebate.

The notice is explicit that the two categories are exclusive: a fossil fuel combustion system does not include a heat pump. There is no middle case for a plain system — except one, below, that catches people out.

The hybrid case, which goes the way most people do not expect

If a heat pump and a furnace arrive as one factory-built unit, the province treats the whole thing as a heat pump: Exempt — it counts as a heat pump

That is the opposite of the intuition that adding a gas burner must pull you into the taxed category. The distinction is the factory, not the fuel. A heat pump installed alongside a separate furnace — the usual Greater Victoria dual-fuel retrofit, where a coil goes into an existing furnace plenum — is not a single factory-integrated unit, so the two pieces are taxed as what they are.

This is worth asking about by name, because it changes the comparison between a hybrid unit and a retrofit that look similar on a quote.

GST is unchanged, and quotes here are shown before it

The provincial exemption does not touch the federal tax. GST of 5% applies to a heat pump installation as it does to any other contract for work on a home, and Greater Victoria installers almost always quote before tax. The number to budget is the quote plus that five percent, and the PST line should read nothing.

If a quote shows the fossil-fuel rate or a combined rate on heat pump equipment, that is worth a question rather than an assumption. It may be an error, or it may be that part of the job is not heat pump equipment at all.

The refund window, now closed

There was a transitional route for people who paid PST on a heat pump under a contract that straddled the 2022 change: 1 April 2026 — now passed

It is on this page because a refund that has expired is still an answer, and a page that quietly omits it leaves a reader hunting for something that is no longer there.

Questions homeowners ask

So a heat pump quote should show no PST at all?: On the heat pump equipment, yes — the exemption covers the unit and the parts included with it on the initial purchase. Parts bought separately alongside it are not covered, so a quote can legitimately show some PST. Ask for it as its own line.
Does this mean a heat pump is cheaper than a furnace?: It means the tax is twelve points apart. The installed prices and the rebates are separate questions and this site answers them on their own pages. Tax is one line in that comparison, not the comparison.
I am keeping my gas furnace and adding a heat pump. What is taxed?: The heat pump is exempt and the furnace is not, because a retrofit into an existing furnace is not a single factory-integrated unit. Only a hybrid built as one unit at the factory is treated as a heat pump throughout.
Is an air conditioner really taxed at 12%?: An air conditioner is on the province’s list of fossil fuel combustion systems. The definition turns on the system, so this is a question to put to your installer with your specific equipment named, not one to settle from a web page.

Your next step

Tax is one line. The installed price and the rebate you actually qualify for move the total far more.

Put real numbers on the comparison

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Sources

Notice 2022-003 — Provincial Sales Tax on Fossil Fuel Combustion Systems and Heat Pumps (issued February 2022, revised July 2022) — Ministry of Finance, Province of British Columbia, accessed 2026-10-06

Prices are the site's estimates calibrated to published local figures; rebate, rate and bylaw figures are quoted from the sources above. Not legal, financial or energy-advisor advice; programs decide eligibility. Report a correction.