How To Charge Retail Sales Tax (RST) in Manitoba
RST Tax and Your Small Business
If you own a retail business in the province of British Columbia, Saskatchewan, Quebec, or Manitoba, you must charge provincial sales tax on items sold (unless the item is exempt) in addition to the federal Goods and Services Tax (GST. That is because these provinces have not integrated their provincial taxes with the GST, unlike other provinces such as Ontario which charge a single Harmonized Sales Tax (HST).
In Manitoba, provincial sales tax is called Retail Sales Tax (RST) and is charged at a rate of 8%. Here's how to charge RST tax in Manitoba.
For the purposes of illustration, let's assume that you operate a small business in Manitoba, selling stained glass ornaments and art objects that you've designed.
1) Do you have to charge Retail Sales Tax (RST)?
RST must be charged on the sales of all tangible property, unless exempt. The Government of Manitoba defines "tangible property" as "anything that can be seen, weighed, measured, felt, or touched; that is, anything that we can perceive with our senses." It also includes computer programs, and electricity.
So every time you sell one of your stained glass pieces, you'll charge provincial sales tax as well as GST. Summary of Taxable and Exempt Goods and Services provides more details about what is and what is not taxable in Manitoba.
2) How do you do invoice RST?
In Manitoba, the Retail Sales Tax owing is calculated based on the selling price of the article before GST has been applied.
So let's suppose that the price you're charging for one particular stained glass ornament is $24.95. The GST is 5%, which is $1.25 and the RST is 8% in Manitoba, which is $2.00. You will list these charges separately on your sales invoice, along with the total of $28.20:
|Stained glass ornament||$24.95||1||$24.95|
How to Invoice provides a sample invoice you can use as a template and explains in detail what has to be on your invoice.
(Note that while this is also how Provincial Sales Tax is applied in Saskatchewan as well, Quebec is the exception to this rule; in Quebec, PST (known as QST or Quebec Sales Tax) is charged based on the total of the selling price plus GST.)
3) But what if you ship your products out of the province?
You are responsible for collecting the Retail Sales Tax for sales within Manitoba. So if you ship a stained glass ornament to someone in another province (or in the U.S.), you don't charge them the RST tax. (Be sure, though, that you keep all your bills of lading and other shipping documents to prove that this was an out-of-province sale.)
4) What do you do with the Retail Sales Tax you've collected?
You remit the Retail Sales Tax you collect to the province. The first step is to register as a vendor. In Manitoba, this means that you fill out an RST Application for Registration. You can do this online through the Manitoba Finance website or by filling out a paper application form which you can get at any Manitoba Tax Division office. Registration as a provincial sales tax vendor is free.
Then, just as you do with the GST, it's a matter of keeping track of the Retail Sales Tax you collect and filling out and filing an RST return form. The form comes with line-by-line instructions.
In Manitoba, how often you have to file your RST returns (and pay what you owe) is determined by the amount of RST you charge your customers each month; the government will tell you how often you have to file when you register.
Note that unlike the GST, there is no Small Supplier classification for the Retail Sales Tax. In other words, even if your sales are small, if you're selling taxable goods and/or services, you must obtain a Vendor's Permit and report your Retail Sales taxes.
5) What about the Retail Sales Tax you've paid for business supplies?
In Manitoba, you have to pay RST on any equipment or supplies that you purchase for use in your business.
In fact, if you buy equipment or supplies from a supplier outside of Manitoba, you have to self-assess RST when you bring the goods into Manitoba.
However, you can claim an exemption from RST for any taxable goods or taxable services that you purchase and intend to resell, such as your inventory. To do this in Manitoba, you give your supplier your Retail Sales Tax number.
More Information on Provincial/Retail Sales Tax and the Goods and Services Tax
- The PST for Small Businesses (provides a chart of the PST, GST and/or HST rates of all Canadian provinces and territories)
- Grappling With the GST/HST
- Does Your Business Need to Register for BC PST?
- How To Charge and Remit Retail Sales Tax in Saskatchewan