If you own a retail business in the province of British Columbia (BC), Saskatchewan, Quebec or Manitoba, you must charge provincial sales tax (PST) on all items sold, unless exempt, in addition to the federal goods and services tax (GST. Unlike other Canadian provinces, these provinces have not yet integrated their provincial taxes with the GST. Provinces such as Ontario 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%. For purposes of illustration, assume you operate a small business in Manitoba, selling stained glass ornaments and art objects that you've designed and need to know how to charge RST.
Retail Sales Tax Requirements
RST must be charged on the sale 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." This also includes computer programs and electricity. Therefore, every time you sell a stained glass piece, you'll charge RST as well as GST.
How to Invoice Retail Sales Tax
In Manitoba, the RST owing is calculated based on the selling price of the article before GST has been applied. For example, you are charging $24.95 for a stained glass ornament. The GST is 5%, which is $1.25; and the RST is 8%, which is $2.00. You list these charges separately on your sales invoice, along with the total of $28.20 as follows:
|Stained glass ornament||$24.95||1||$24.95|
An invoice template can assist you in creating the proper invoice. Also note that in Saskatchewan the Manitoba method of applying PST is also used. However, in Quebec, PST, also known as Quebec sales tax (QST), is charged based on the total of the selling price plus GST.
Products Shipped Out of the Province
You are responsible for collecting RST for sales within Manitoba. However, you don't need to charge sales tax for items shipped to another province or the United States. 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.
Remitting Collected Retail Sales Tax
Once RST is collected, you must remit it to the province. To do this, you must first be registered as a vendor. In Manitoba, you are required fill out an RST Application for Registration form, which can be accomplished online through the Manitoba Finance website or by filling out a paper application form that you can get at any Manitoba Tax Division office. Registration as a provincial sales tax vendor is free.
Like the GST, you are to keep track of the RST you collect and fill out and file an RST return form. The form comes with line-by-line instructions. In Manitoba, how often you are required to file your RST returns and pay any debts 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 RST. In other words, even if your sales are small, if you're selling taxable goods or services, you must obtain a vendor's permit and report your RST.
Retail Sales Tax on Business Supplies
In Manitoba, you are required 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 will need to give your supplier your RST number.
If you own a business in Manitoba, be sure to understand how to charge and remit RST for products and services, as well as business expenses, that are not exempt. Also make sure to obtain other required business permits and licensing to ensure you stay compliant with provincial laws.