Tax Tips Category

Tax Tips for your personal and business needs.

In this blog post we will provide all the information you will need to confidently charge, collect and remit PST in Canada. So what is PST? PST is a provincial sales tax that is payable when a taxable good, software or service is purchased for personal or business use, unless a specific exemption applies.

What goods and services are taxable?

PST Taxable Goods:

  • Alcoholic beverages
  • Art and art supplies
  • Building materials
  • Clothing
  • Computers, software, and software updates
  • Cosmetics and grooming aids
  • Flowers
  • Furniture and appliances
  • Motor vehicles and automotive parts
  • Natural gas, heat, and electricity for business use
  • Pets
  • Souvenirs

Most services are PST exempt, however, there are some services that you will have to charge PST on:

  • Automobile maintenance, repairs, painting, and cut polishing
  • Camera repairs
  • Engine tune-ups
  • Furniture repair, re-upholstery, and refinishing
  • Maintenance of plants planted in portable containers
  • Protective treatments applied to maintain taxable goods (Fabric protection, rust-proofing, painting)
  • Repairs to business equipment (cash registers, photocopiers, fax machines)
  • Setting up temporary display counters, shelves, booths, and similar items at trade fairs/conventions
  • Television, stereo, and computer repairs
  • Watch repair and maintenance

Exempt Goods:

  • Food products for human consumption
  • Water and non-alcoholic beverages
  • Candies and confections
  • Vitamins and dietary supplements
  • Drugs and medicines sold on the prescription of a physician, dentist, or veterinarian
  • Children's clothing and footwear (children under the age of 15)
  • Non-motorized two-wheeled bicycles

Exempt Goods (with conditions)

  • Books, newspapers, magazines
  • Specified safety equipment
  • Specified energy conservation materials
  • Specified medications and health-related equipment and supplies

What rate to charge to out of province/territory customers and foreign customers?

When you sell goods or services to a customer that lives out of province/territory you will charge tax that applies in your customer's province/territory. If your customer is out of the country then there is no PST to be charged at all.

New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island are all HST participating provinces, therefore, you're only required to charge HST in the amount that is applicable in each province (the chart below outlines these rates). You'll be happy to know that if you are selling to Alberta, Northwest Territories, Nunavut or the Yukon you do not have to charge any tax (PST) other than the GST rate that applies to each province or territory. Thus, leaving only British Columbia, Manitoba, Quebec and Saskatchewan where PST applies; and this is not so straight forward! Each of these provinces has their own rate: British Columbia has a rate of 7%, Manitoba is at 8%, Quebec at 9.975% and Saskatchewan's is 6%. It is important to note that Manitoba does not refer to their tax as PST, but as Retail Sales Tax (RST). GST and PST (or RST) will need to be charged out at their appropriate rates and have their own line items on invoices and receipts.

Province/TerritoryTypeGST (%)PST (%)Total Tax Rate (%)
Alberta GST 5 0 5
British Columbia GST + PST 5 7 12
Manitoba GST + PST 5 8 13
Northwest Territories GST 5 0 5
Nunavut GST 5 0 5
Quebec GST + PST 5 9.975 14.975
Saskatchewan GST + PST 5 6 11
Yukon GST 5 0 5
Ontario HST 5 8 13
New Brunswick HST 5 10 15
Newfoundland and Labrador HST 5 10 15
Nova Scotia HST 5 10 15
Prince Edward Island HST 5 10 15

 

As you are now aware, if you are doing business in a province that does not charge PST but you are shipping across Canada you still have to register with the provinces that do. You will need to keep organized records in order to charge, record and remit PST.

As you can tell, it is very important to know the rules of PST (and RST) in order to charge, record and remit the correct amount. We hope this blog on PST has given you the knowledge to handle all aspects of your PST with confidence!

 

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