Another Canada Day and more changes to Canada’s sales tax rates. We seem to like to pick the mid-year point to implement sales tax rate increases.
Canadian Sales Tax Rates Chart
As at January 1, 2016
| Province/Territory | Provincial Sales Tax | GST/HST Rate | GST Included in PST Tax Base | Combined Rate |
| British Columbia | 7% | 5% | N/A | 12% |
| Alberta | Nil | 5% | N/A | 5% |
| Saskatchewan | 5% | 5% | No | 10% |
| Manitoba | 8% | 5% | No | 13% |
| Ontario | N/A | 13% | N/A | 13% |
| Quebec | 9.975% | 5% | N/A | 14.975% |
| New Brunswick | N/A | 15% | N/A | 15% |
| Nova Scotia | N/A | 15% | N/A | 15% |
| Newfoundland/Labrador | N/A | 15% | N/A | 15% |
| Prince Edward Island | N/A | 14% | Yes | 14% |
| Northwest Territories | Nil | 5% | N/A | 5% |
| Yukon | Nil | 5% | N/A | 5% |
| Nunavut | Nil | 5% | N/A | 5% |
The HST rate for Newfoundland/Labrador increased to 15% from 13% effective July 1, 2016.
The HST rate for New Brunswick increased to 15% from 13% effective July 1, 2016.
The ITC recapture rate in Ontario decreased to 50% as of July 1, 2016.
The HST rate for Prince Edward Island will increase to 15% (from 14%) on October 1, 2016.
Steps To Take
- Are you charging the correct amount of sales tax?
- Sales departments/accounts receivable departments that have programmed HST-included pricing will need to update the sales tax rates in their systems.
- Even companies that calculate sales tax separately will need to make sure that computer programs have been updated.
- Are you paying the correct amount of sales tax?
- Payroll departments will need to review invoices in the months following the sales tax increases to ensure that they are being charged the correct amount of sales tax.
- This means not paying the higher rate for property and services provided before July 1, 2016 and paying the higher rate, if applicable, after July 1, 2016.
- Are you claiming the correct amount of ITCs?
- The finance department will need to make sure that computerized programs that break out the amount of HST payable on invoices have been updated to reflect the higher HST rates.
- Are Ontario businesses not giving too much back?
- The ITC recapture rate in Ontario has decreased to 50% from 75%. This means the amount of ITCs that companies can claim may have increased for some large businesses.
- Have you updated your computerized records to reduce the recapture rate?
For more information, please contact Cyndee Todgham Cherniak at 416-307-4168 or at cyndee@lexsage.com. Alternatively, visit www.lexsage.com.