CA Partial Sales Tax Rate Exemption

Updated Partial Sales Tax Exemption Certificate

Please note that effective May 5th, 2021, the exemption certificate required in order to request the California partial sales tax exemption for Research and Development has been updated. Please begin using the updated form immediately when submitting a BearBuy requisition for a qualifying order.

We have replaced the form provided by the State with our own UC Berkeley substitute CDTFA-230-M form in order to add some additional fields that will be useful in ensuring compliance with the State’s requirements for the partial reduction in sales tax. The key changes to the form are as follows:

  • If checking the box that the qualifying purchase will be used for research and development, you will be required to add the sponsored research award’s seven digit chartfield value.
  • Additionally, if checking that same box, you will be required to check an additional box in the next section of the form to indicate what discipline the research and development will be conducted in.
  • Lastly, at the bottom of the form, we ask that you include the name of the department that is making the purchase.

We appreciate your cooperation in using this updated substitute CDTFA-230-M form. The university saves over $1 million annually from this sales tax reduction and using the updated form will help to ensure that we continue to take full advantage of this opportunity. If you have any further questions about this process or the new form, please don't hesitate to contact the Accounts Payable help desk at disburse@berkeley.edu.

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 and use tax rate on equipment purchased for research and development in biotechnology, physical engineering, and life sciences.

For more information, please refer to the Tax Guide for Manufacturing and Research and Development Equipment Exemption page on the CDTFA website.

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.
    • Research and Development equipment is identified in the General Ledger as coded to program code 44
  • 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 6.3125% for research equipment use in biotechnology, physical engineering, and the life sciences delivered to Berkeley, and an effective rate of 5.8125% for research equipment use in biotechnology, physical engineering, and the life sciences delivered to Richmond. 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.

UC Berkeley Permit Number

SR-CH-21-135302

Contact

Tax inquires:
Accounts Payable Help Desk
disburse@berkeley.edu

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

Resources

UC Berkeley substitute CDTFA-230-M form

CA Partial Sales and Use Tax Exemption Job Aid

UCB CA Partial Sales Tax Exemption FAQ

UCOP Guidelines - CA Partial Sales and Use Tax Exemption