A provincial sales tax (PST) is imposed on consumers of goods and particular services in many Canadian provinces. Several provinces have agreed to integrate their provincial sales taxes with the federal Goods and Services Tax (GST), charging a single Harmonized Sales Tax (HST) instead. The HST combines the GST with provincial sales taxes.
Ontario implemented the HST in 2010, joining Nova Scotia, New Brunswick, and Newfoundland and Labrador where HSTs had already been in effect for some time. British Columbia briefly implemented an HST but returned to a PST regime after rejecting the HST in a provincial referendum.
Businesses in most provinces must collect the PST, GST, HST, or some combination of these taxes.
Provincial Sales Tax Rates
As of 2018, the tax rates in those provinces with the HST are:
- Ontario: HST combined rate 13 percent
- New Brunswick: HST combined rate 15 percent
- Nova Scotia: HST combined rate 15 percent
- Newfoundland and Labrador: HST combined rate 15 percent
- Prince Edward Island: HST combined rate 15 percent
Additionally, four provinces have provincial sales taxes which they charge separately but in addition to the 5 percent GST. As of 2018, these provinces and their provincial sales tax rates are:
- British Columbia: 7 percent PST on retail price
- Manitoba: 8 percent retail sales tax (RST) on retail price
- Saskatchewan: 6 percent PST on retail price
- Quebec: 9.975 percent Quebec Sales Tax (QST) on retail price
Rates Can Vary Within Provinces
Provincial sales taxes can also vary within provinces depending on what product or service is being taxed. For example, although the usual provincial sales tax is 7 percent in British Columbia, you'll be charged 12 percent if you purchase a vehicle from a private individual, and 10 percent when you purchase alcohol.
It's the vendor's responsibility to determine which PST rates apply to the goods and services she sells.
Which Province's Tax Applies?
Businesses that are located in one province but sell taxable services or products to consumers in other provinces should generally charge the sales tax that's applicable in the consumer's province. Check with the Canada Revenue Agency (CRA) to be sure if you frequently make sales to outside provinces.
How and Where to Register
Canada requires that you register your business with your province and establish a GST/HST account if applicable. Your business is automatically registered for the HST when you register for the GST, even if your province doesn't impose the HST.
Small suppliers do not have to register. These businesses are those that have had $30,000 or less in total revenue in the last four quarters, or in any calendar quarter. Corporations, sole proprietorships, and partnerships qualify if they can meet this rule.
Do You Have to Charge PST, RST, or QST?
An operator of a business in any of the provinces that has a PST must charge, collect, and remit the provincial sales tax on applicable goods and services. Unlike with the GST and HST, there is no small supplier exception for provincial sales tax except for in British Columbia. Some British Columbia vendors must register for the B.C. PST.
Exceptions for Exempt and Zero-Rated Goods and Services
Some goods and services are exempt or zero-rated, which means that you don't have to charge the PST, RST, or QST on customer invoices.
The difference between exempt and zero-rated goods and services is that you can claim input tax credits (ITCs) to recover the PST, RST, or QST you paid or owe for zero-rated goods and services business purchases and/or expenses.
What qualifies PST/RST/QST-exempt or zero-rated can vary between provinces. Check with your province or the CRA. But some examples of PST-exempt items include food for human consumption—basic groceries and prepared food such as restaurant meals—books, newspapers, magazines, child-sized clothing, or adult clothing for kids under 15 years of age.
Also exempt are bicycles, prescription medications, household medical aids such as cough syrup and pain medications, health and medical products, equipment for persons with disabilities, school supplies, safety equipment and protective clothing, farming, fertilizers, fishing, and aquaculture, purchases by First Nations individuals and bands on reserve land, and goods purchased for resale or lease.
Some of these items require documentation.
Zero-Rated Goods and Services
Examples of QST zero-rated services and supplies include sales of prescription drugs, certain medical devices, basic groceries, certain property used in the farming and fishing sectors, certain goods or services exported outside Canada or outside Québec for QST purposes, certain passenger or freight transportation services, and printed books that have an International Standard Book Number (ISBN). These books qualify under the QST system only, however.