GST and PST Rates for Small Businesses in Canada
Sales Tax Rates for All Provinces and Territories
Do you have to charge provincial sales tax or retail sales tax (PST or RST) on the products or services your small business offers? In spite of attempts by the Canadian government to convince provinces 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.
Taxes by Province
If you're fortunate enough to be doing business in Alberta, Northwest Territories, Nunavut, or Yukon, 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. New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island operate under a "harmonized" tax system. This means they have combined their provincial sales taxes with the federal GST, so when selling retail goods and services in these provinces, instead of charging GST and PST separately, you charge the single harmonized sales tax (HST).
British Columbia, Manitoba, Quebec, and Saskatchewan 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.
|Retail Sales Tax Rates By Province, 2020|
|Province||GST||PST||HST||Total Tax Rate|
|Newfoundland and Labrador||15%||15%|
|Prince Edward Island||15%||15%|
|Quebec (GST + QST)||5%||9.975%||14.975%|
Not Just for Retail
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, nontaxable, and tax-exempt goods and services that apply to the province in which you do business.
Check Before You Ship
If you ship goods or services out of your province, you will also need to be familiar with (and even register for the collection of) PST in those provinces and territories to which you ship. Be sure you check the applicable laws and rates with your accountant before you start selling to customers outside your province.
Rules for First Nations Individuals and Entities
In general, GST, HST, and PST are not charged to Status Indians, Indian bands, or band entities for goods or services sold on reserve lands. The same applies to goods or services purchased off-reserve but delivered to a reserve. Proper documentation, such as an Indian status card, may be requested by the vendor. For more information on GST and HST rules for first nations, see the GST/HST and indigenous Peoples. 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.
Know 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. Be sure you know all the steps required for registering, collecting, and filing your sales tax, so you're ready to run your business.
Government of Canada. "Doing Business in Canada – GST/HST Information for Non-Residents." Accessed Jan. 15, 2020.
Retail Council of Canada. "Sales Tax Rates by Province." Accessed Jan. 15, 2020.
Province of Manitoba. "Retail Sales Tax." Accessed Jan. 15, 2020.
Business Development Bank of Canada. "Does My Business Have to Collect Sales Taxes?" Accessed Jan. 15, 2020.
Government of Canada. "GST/HST and Indigenous Peoples." Accessed Jan. 15, 2020.
Government of Ontario. "Indian Status and Identification Cards." Accessed Jan. 15, 2020.
Government of Canada. "Fact Sheet—Taxation by Aboriginal Governments." Accessed Jan. 15, 2020.