CA Partial Sales Tax Rate Exemption

June 23, 2015

Effective July 1, 2014 through July 1, 2030, the California Department of Tax and Fee Administration (CDTFA) is offering a reduced sales/use tax rate on equipment purchased for research and development in biotechnology, physical engineering, and life sciences.

Qualified Property

  • Machinery and equipment that will be used at least 50% of the time, and for over one year, in research and development anywhere in California.
  • Must meet the established UC definition for capital equipment, including the following threshold for capitalization:  
    • Infrastructure and buildings: $35,000
    • Equipment: $5,000
    • Fabrication: Cumulative Expense $5,000 
  • Leased equipment, special purpose buildings, and non-inventorial equipment such as computers that are subject to the same requirements stated above.
  • Equipment or devices used or required to operate, control, regulate, or maintain the machinery, including, but not limited to, computers, data-processing equipment, and computer software, together with all repair and replacement parts with a useful life of one or more years, whether purchased separately or in conjunction with a complete machine and regardless of whether the machine or component parts are assembled by the qualified person or another party.
  • Computers used to acquire data and or control research instrumentation are eligible.

Please note that UC Berkeley must have taken title to the equipment on or after July 1, 2014 in order for the purchase to qualify.

The SBOE has limited the partial rate exemption to $200 million in purchases in a calendar year UC system-wide, which will be monitored by Accounts Payable.

The exemption reduces the current sales tax rate by 3.9375%, resulting in an effective rate of 5.3125% for research equipment use in biotechnology, physical engineering, and life sciences delivered to Berkeley. The effective rate may change if equipment is delivered to a different city in California.

Note: Suppliers need to be aware of the exemption at the time the order is placed and a separate exemption certificate needs to be obtained for each qualifying purchase.

Qualified property DOES NOT include

  • Consumables with a useful life of less than one year
  • Tangible personal property used primarily in administration, general management, or marketing
  • Furniture, inventory, and equipment used in the extraction process, or equipment used to store finished products that have completed the manufacturing, processing, refining, fabricating, or recycling process
  • Computers/PCs used for administrative tasks
  • Property that will not be used in California at least 50% of the time

Leases of qualified property are eligible for the partial sales tax exemption when payments are due and paid in the exemption period of July 1, 2014 through July 1, 2030, regardless of the lease inception date.

UCB Permit Number

SR-CH-21-135302

Contacts

Tax inquires:
Accounts Payable Help Desk
disburse@berkeley.edu(link sends e-mail)

All other inquires:
BearBuy Help Desk
(510)664-9000, Option 1, Option 2
bearbuyhelp@berkeley.edu(link sends e-mail)

Resources 

CA Partial Sales Tax Exemption Certificate(link is external)

CA Partial Sales and Use Tax Exemption Job Aid

UCB CA Partial Sales Tax Exemption FAQ

UCB CA Partial Sales Tax Exemption Training Video(link is external)

UCOP Guidelines - CA Partial Sales and Use Tax Exemption