GST and PST (Provincial Sales Tax) Rates for Small Businesses in Canada
GST and PST Rates for All Provinces and Territories in Canada
Do you have to charge provincial sales tax or retail sales tax (PST or RST) on the products and/or services your small business offers? In spite of attempts by the Government of Canada to convince provinces that charge provincial sales taxes to combine their PST with the federal goods and services tax (GST) to create a harmonized sales tax (HST) not all provinces have done so.
If you're fortunate enough to be doing business in Alberta, Yukon, Nunavut, or the Northwest Territories, you don't need to worry about charging provincial sales taxes on the goods or services that you sell in your province or territory, because there are none.
But in the rest of the country, the provincial sales tax situation is more complicated. Ontario, Nova Scotia, New Brunswick, PEI and Newfoundland and Labrador operate under a "harmonized" tax system; that is they have combined their provincial sales taxes with the federal goods and services tax (GST), so when selling retail goods and services in these provinces, instead of charging GST and PST separately, you charge the single HST (Harmonized Sales Tax).
Manitoba, Saskatchewan, and British Columbia, and Quebec treat the provincial sales tax as separate from the federal goods and services tax, so PST and GST are charged as separate line items on invoices in these provinces. To make matters even more confusing, Manitoba refers to its provincial sales tax systems as Retail Sales Taxes instead of as PST - and then there's Quebec, which has its own tax entirely (the Quebec Sales Tax or QST).
The provincial sales tax rate differs from province to province, and is normally charged on the selling price of the item before the GST is applied.
Provinces That Charge Goods and Services Tax (GST) Only
Provinces That Charge Harmonized Sales Tax (HST)
Provinces That Charge GST and PST Separately
- British Columbia - GST 5% and 7% PST (This came into effect April 1, 2013: see Does Your Business Need to Register for BC PST? for more information.)
- Saskatchewan - GST 5% and PST 6%
- Manitoba - GST 5% and RST 8% (Retail Sales Tax)
- Quebec - GST 5% and QST (Quebec Sales Tax) 9.975% (Note that as of January 1, 2013, the QST is no longer charged on GST.)
While the PST is referred to as a Retail Sales Tax in many provinces, that doesn't mean that the PST only applies to retail businesses. Provincial sales taxes are charged on retail goods and services, whether you operate a traditional retail business or not.
However, exactly which goods and services are taxable varies from province to province, and there are even variable rates of PST within a particular province, so it's important that you familiarize yourself with the categories of taxable, non-taxable, and tax-exempt goods and services that apply to the province you do business in.
Check Before You Ship
And if you ship goods or services out of province, you will also need to be familiar with (and even register for the collection of) PST in those provinces and territories you ship to; see What Business Owners Should Know About Provincial Sales Tax.
HST, GST, and PST Rules for First Nations Individuals and Entities
In general, GST/HST/PST is not charged to status Indians, Indian bands, or band entities for goods or services sold on reserve lands. The same applies for goods/services purchased off-reserve but delivered to a reserve. Proper documentation, such as a Certificate of Indian Status Card, may be requested by the vendor. For more information on GST/HST rules for first nations see the GST/HST and indigenous peoples (Canada Revenue Agency). For information on PST rules for first nations in British Columbia see Sales to First Nations.
While federal or provincial taxes may not be applicable on reserves some bands have enacted their own tax laws which may include sales taxes. Other bands have enacted sales or goods and services taxes that are administered by the Canada Revenue Agency, such as the FNST (First Nations Sales Tax) or the FNGST (First Nations Goods and Services Tax). For more information, including a list of bands that have made taxation agreements with Revenue Canada see Fact Sheet - Taxation by Aboriginal Governments.
It's All About Knowing the Rules
Charging, recording, and remitting provincial sales taxes isn't that difficult a task once you know what the rules are and how to apply them to your business. Hopefully this primer about provincial sales taxes has given you some of the knowledge you need to handle Retail Sales Taxes. If you will also need to charge GST on your sales, you'll want to read Grappling With the GST/HST.