Can a small business exist with GST

The PST (RST) for small businesses

Provincial Sales Tax Rates differ in different provinces

Do you need to collect sales tax or sales tax (PST or RST) on your small business's products and / or services? Despite attempts by the government of Canada to convince provinces that provincial sales taxes combine their PST with federal goods and services tax (GST) to create a harmonized sales tax (HST), not all provinces have done so.

If you are fortunate enough to do business in Alberta, Yukon, Nunavut, or the Northwest Territories, you don't have to worry about collecting sales taxes on the goods or services you sell in your province or area.

But in the rest of the country, the provincial tax hike situation is more complicated. Ontario, Nova Scotia, New Brunswick, PEI as well as Newfoundland and Labrador all operate under a "harmonized" tax system; That said, they've combined their state sales tax with federal goods and services (GST) tax. So when you sell goods and services in these provinces, you don't calculate the GST and PST separately, but the uniform HST (Harmonized Sales Tax).

In Manitoba, Saskatchewan, British Columbia and Quebec, provincial sales tax is treated separately from federal goods and services tax, so PST and GST are shown as separate items on invoices in those provinces. To make matters even more confusing, Manitoba refers to its provincial sales tax systems as retail sales taxes instead of PST - and then there's Quebec, which has its own tax (the Quebec Sales Tax, or QST).

The provincial sales tax rate differs from province to province and is usually applied to the sale price of the item prior to the application of the GST.

Provinces that only levy goods and services tax (GST)

  • Alberta - GST 5%
  • Northwest Territories - GST 5%
  • Nunavut - GST 5%
  • Yukon - GST 5%

Provinces that charge Harmonized Sales Tax (HST)

  • Ontario - HST - 13%
  • New Brunswick - HST 15% (as of July 1, 2016)
  • Nova Scotia - HST 15%
  • Newfoundland & Labrador - HST 15% (as of July 1st, 2016)
  • Prince Edward Island - HST 15% (as of October 1, 2016)

Provinces that calculate GST and PST separately

  • British Columbia - GST 5% and 7% PST (This went into effect April 1, 2013. For more information, see "Does your company need to register for BC PST?")
  • Saskatchewan - GST 5% and PST 6%
  • Manitoba - GST 5% and RST 8% (sales tax)
  • Quebec - GST 5% and QST (Quebec Sales Tax) 9.975% (Note that as of January 1, 2013, QST will no longer be calculated on GST.)

While the PST is referred to as a retail sales tax in many provinces, that doesn't mean the PST only applies to retail businesses. Country-specific sales taxes are levied on retail goods and services, regardless of whether you run a traditional retail business or not.

However, the exact taxable goods and services vary from province to province, and there are even variable rates of PST within a given province. Therefore, it is important that you familiarize yourself with the categories of taxable, non-taxable, and exempt goods and services that apply to the province in which you are doing business.

Check before you ship

And if you are shipping goods or services outside the province, you also need to be familiar with (and even register for the collection of) PST in the provinces and territories you are shipping to; see what business owners should know about provincial sales tax.

GST / HST / PST rules for First Nations individuals and entities

In general, GST / HST / PST is not charged to status Indians, Indian bands or gang companies for goods or services sold on reserve land. The same applies to goods / services that are not delivered in reserve, but in reserve. Proper documentation, e.g. B. a Certificate of Indian Status Card can be requested from the provider. For more information on GST / HST rules for First Nations, see GST / HST and Indigenous Peoples (Canada Revenue Agency). For information on PST rules for British Columbia First Nations, see First Nations Sales.

While federal or state taxes may not apply to reserves, some bands have their own tax laws that may include sales taxes. Other bands have introduced sales or goods and services taxes 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 tax deals with Revenue Canada, see Fact Sheet - Aboriginal Taxation.

It's about knowing the rules

Charging, recording and transferring sales tax in the provinces is not that difficult once you know what the rules are and how to apply them to your business. Hopefully this principle about provincial sales taxes has given you some of the knowledge you need to manage retail sales taxes. If you also need to calculate GST for your sales then you should check out Grappling Using the GST / HST.