Non-resident companies doing business in Canada who have registered for Canadian sales taxes often ask us to provide a chart that contains Canada’s sales tax rates. There isn’t a single sales tax rate for all of Canada. There are differences across the country and non-resident businesses need to ensure that they are following the sales tax rules for the jurisdictions in which they carry on business or sell goods to consumers.
Canada imposes a federal sales tax called “goods and services tax” (or GST). Some provinces (Ontario, Quebec, Nova Scotia, New Brunswick, Newfoundland/Labrador, and Prince Edward Island) have harmonized their sales tax with the GST. The provincial portion is called “harmonized sales tax” (or HST). Some provinces (British Columbia, Alberta (which does not have a sales tax), Saskatchewan and Manitoba) have not harmonized their provincial sales taxes with the federal GST and charge provincial sales tax or retail sales tax on a different base than the GST. Alberta and the territories (Yukon, Northwest Territories and Nunavut) do not impose a sales tax at the provincial/territorial) level. You need to charge the correct rate depending on where supplies are made.
Canada’s sales tax rates chart must be changed again as Manitoba will decrease its provincial sales tax rate to 6% as at July 1, 2019. Canadian businesses and foreign businesses carrying on business in Canada must update their systems to reflect the new rate for Manitoba.
Canadian Sales Tax Rates Chart
As at May 1, 2019
|Province/Territory||Provincial Sales Tax||GST/HST Rate||GST Included in PST Tax Base||Combined Rate|
|Manitoba||8% (will decrease to 7% on July 1, 2019)||5%||No||13% (to decrease to 12% on July 1, 2019)|
|Prince Edward Island||N/A||15%||N/A||15%|
* Ontario maintains retail sales tax on insurance and private sales of used vehicles.
The PST rate for Manitoba will decrease from 8% to 7% on July 1, 2019. The existing reduced PST rate charged on electricity used in qualifying manufacturing, mining and processing operations in Manitoba will also decrease from 1.6% to 1.4% on July 1, 2019. The existing reduced sales tax rate for home heating, heating and cooling of farm buildings, and operating farm grain dryers remains unchanged at 1.4%. The existing reduced sales tax rate on mobile, modular and ready-to-move homes decreases from 4.5% to 4%. The prorate vehicle tax rates also decrease.
The PST rate for Saskatchewan increased from 5% to 6% on March 23, 2017. Saskatchewan also made certain exempt items taxable. Be sure to verify sales tax status.
The GST/HST rate for Prince Edward Island increased to 15% from 14% effective October 1, 2016.
The GST/HST rate for Newfoundland/Labrador increased to 15% from 13% effective July 1, 2016.
The GST/HST rate for New Brunswick increased to 15% from 13% effective July 1, 2016.
As of April 1, 2013, British Columbia reverted back to PST and the HST no longer applies to supplies in British Columbia.
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?
- Have you updated your computerized records to reduce the recapture rate?