How to Charge Provincial Sales Tax on Online SalesBrian Jang ON May 9, 2019
If you are doing business online and are unsure of how to handle sales tax for customers in other provinces, you had best continue reading. Uncertainty is common enough, but it is important to clear up the confusion to avoid any potential issues, especially since there are different rules for the different provinces.
About the GST and HST
You will be charging the Goods and Services Tax (GST) on any goods or services sold to Canadian customers and remitting this to the federal government. This applies only to Canadians, and not to customers in other countries.
There is an exception to this, however. If you are considered to be a small supplier, you will not be responsible for charging the GST. You will, however, continue to be responsible for provincial tax in all provinces save BC.
With 5 provinces charging the Harmonized Sales Tax, it is in your best interest to voluntarily register for the GST. Doing so will also allow you to claim Input Tax Credits on business-related goods and services that you purchase.
Which Taxes Apply?
There are some general rules that indicate which taxes apply to your Canadian e-commerce sale. They are the following:
- When selling goods or services out of province to Alberta, The Northwest Territories, Nunavut, or Yukon, all of which have no provincial sales tax, you would simply charge the GST (5%) on the sale.
- When selling goods or services out of province to other locations in Canada, you would charge the GST/ HST rate of the destination province.
- Selling goods or services in your own province requires that you simply follow your province’s tax rules.
What About the PST?
So, what happens when selling to a customer in BC, Manitoba, Saskatchewan, or Quebec? These provinces all have provincial sales tax, and so you should register for, collect, and remit provincial sales taxes as appropriate. Some provinces simply make the request that this be done, but others have created legislation to this effect.
Collecting Taxes, Province- by- Province
Here is a guide to the taxes you should be collecting and remitting on your online sales shipping across Canada:
- Northwest Territories, Nunavut, Yukon: 5%
- BC: 5% GST and 7% PST (if PST is required)
- Alberta: 5% GST
- Saskatchewan: 5% GST and PST 6% (voluntarily, unless your home province)
- Manitoba:5% GST and 7% PST (called Retail Sales Tax RST)
- Ontario: 13% HST
- Quebec: 5% GST and 9.975% QST
- New Brunswick: 13% HST
- Nova Scotia: 15% HST
- Newfoundland and Labrador: 13% HST
- PEI: 14% HST
Note that in your home province, registering for PST/ RST is mandatory when selling taxable goods/ services. Consequently, you should register with each province you will be dealing with as a Provincial Sales Tax Vendor.
There are a few special conditions to be aware of:
In Manitoba, the PST is called the Retail Sales Tax (RST) and out-of- province businesses will be required to register as a vendor, collecting the RST if the following conditions exist:
- The seller solicits the order for sale in Manitoba, by any means (IE advertising, in person, etc.)
- The seller accepts orders originating in Manitoba
- The goods being sold are for use or consumption in Manitoba (not for resale)
- The goods are delivered to Manitoba
Saskatchewan also requires sellers to become licensed and collect the tax on taxable sales made in Saskatchewan. If a non-resident business does not collect the PST at the time of sale, the buyer is required to submit the tax themselves. This also holds true for Quebec residents.
Case- by- Case Taxation
This is to be taken as a guide, given that the actual situation can be further complicated by such circumstances as goods or services being tax-exempt in one province, but not in another. When in doubt, be sure to consult the Finance/ Revenue Ministries of the provinces involved, as you will definitely not want to make a mistake where taxes are concerned.
- Who Can Claim Moving Expenses?
- What are the Implications of Being Declared a Personal Services Business?
- How to Charge Provincial Sales Taxes on Online Sales
- Why You Should Rethink Your Accounting Strategy
- What Can Happen If You Submit Your Taxes After the Deadline?