Canada is unique in its administration of sales tax. Not only are there multiple types of sales tax, but the requirements vary from province to province. It is not surprising that many businesses are left wondering which taxes they need to register for, collect, and remit. At Jeremy Scott Law, we offer practical guidance to businesses about which taxes they are subject to and how to ensure they are complying with local rules. With the recent uptick in e-commerce and digital services, rules are constantly changing about what goods are taxed. Call the experienced tax lawyer Jeremy Scott at 902-403-7201 if you would like to discuss whether you need to register for provincial sales taxes, and ensure your legal and financial rights remain protected.
Sales Tax in Canada
In Canada, sales taxes are levied by both the federal government and the provinces. The federal tax, called the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST), is a federal value-added tax. The GST applies across the country, while the HST is in effect only in certain provinces. In British Columbia, Manitoba, and Saskatchewan, there is a separate provincial sales tax called the retail sales tax (RST).
Most of the provinces, excluding Alberta, levy a sales tax, called the Provincial Sales Tax (PST). In some provinces, however, where the HST is in effect, the HST encompasses the provincial sales tax rate, so both the federal and provincial taxes are administered by the Canadian Revenue Agency. These provinces include Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. The goal of the HST is to “harmonize” federal and provincial sales taxes to simplify administration and reduce costs. In reality, however, businesses can face new complications from the varying tax rates across provinces.
Sales Tax by Province
Below is a grid depicting the various tax rates per province or territory.
|Province||Total Tax Rate||Tax Type|
|British Columbia||12%||GST & PST|
|Manitoba||12%||GST & RST|
|Newfoundland and Labrador||15%||HST|
|Northwest Territories||5%||GST only|
|Prince Edward Island||15%||HST|
|Quebec||14.975%||GST & QST*|
|Saskatchewan||11%||GST & PST|
* Quebec’s provincial sales tax is called the Quebec sales tax (QST). Note that Revenu Quebec administers both the QST and the GST/HST when applicable to Quebec businesses.
When Does a Retailer Need to Register for Provincial Sales Tax?
According to the Canadian Revenue Agency, a business must register for the GST/HST when:
- It makes taxable sales, leases, or other supplies in Canada, and
- It is not a small supplier
Canadian retailers generally need to register for and collect the GST or HST when their sales exceed $30,000 over one calendar year. However, each province has its own rules regarding eligibility for sales tax. For example, Manitoba’s threshold is only $10,000 of taxable sales, while Saskatchewan has no small seller exemption. Retailers are responsible for complying with all of the requirements of the federal tax and the tax of the province in which it is located.
If a province has adopted the HST, the retailer collects the total tax rate and then remits a proportional amount of the tax to the Canadian Revenue Agency and the appropriate provincial tax agency.
However, if a province has not adopted the HST, a business that sells or delivers taxable goods in that province is responsible for collecting the GST and the province’s PST separately and remitting those taxes to the appropriate agency. Canadian business owners should consider consulting with a lawyer to ensure their businesses are complying with local and federal sales tax requirements.
One factor that impacts whether you need to register for provincial sales taxes is the type of goods you sell. Under the GST/HST, necessities like groceries, medicine, and healthcare services are exempt from sales tax. Rules regarding exempt goods vary by province.
When Does an Out-of-Province Seller Need to Register for PST?
With the advent of e-commerce, sales taxes have become somewhat convoluted. Many out-of-province sellers are left wondering if they have all their bases covered. Generally, provincial sales taxes are only applicable to retailers that sell or deliver non-exempt goods in that province. However, remote, online sellers cannot evade this requirement.
Provincial governments are beginning to impose new requirements to ensure online retailers doing business there are subject to provincial sales tax. British Columbia, for example, enacted legislation that imposes the PST on out-of-province retailers that:
- Sell or deliver taxable goods to British Columbia,
- Solicit orders through advertising or other means to purchasers in British Columbia, and
- Accept purchase orders from customers in British Columbia
Note that these rules expand tax requirements beyond businesses that have a physical presence in British Columbia, although online advertising alone is probably not sufficient to establish “solicitation” for purposes of the tax.
Similarly, Saskatchewan amended its Provincial Sales Tax Act in 2020 when it required operators of “electronic distribution platforms” and “online accommodation platforms” to register for the provincial sales tax, as well as “marketplace facilitators.” This law is intended to require online businesses to register for the Saskatchewan PST and charge sales and remit sales tax on purchases made through those platforms, including digital purchases like movies and music.
Because each province is unique, it can be difficult to tell when you need to register for provincial sales taxes. If you are operating a Canadian e-commerce business, or simply want to ensure you are complying with local and federal sales tax obligations, consider consulting with an experienced business lawyer in your area.
Talk to an Experienced Canadian Tax Lawyer
If you are left wondering if you need to register for provincial sales taxes, you are not alone. Many business owners struggle to keep up with the constantly changing rules and regulations surrounding Canadian sales tax. Jeremy Scott Law provides clients with practical tax advice about when to register for GST/HST, as well as each province’s PST. We also represent clients during tax audits and when attempting to recover over-paid taxes. Call our legal team at 902-403-7201 or contact us online to raise questions or concerns about Canadian sales tax and learn more about all of your tax options.
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Please note the content above and throughout this website is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. I urge you to seek specific legal advice by contacting me (or your current legal counsel) regarding any legal issues you may face. I do not warrant or guarantee the quality, accuracy or completeness of any information found on this website and will not be held liable for anything contained in this document or any use you make of it. Finally, accessing the information on my website does not create a lawyer-client relationship.