For businesses beginning to provide goods and/or services into a new jurisdiction, a frequent question is whether they have an obligation to register and collect sales tax. An often-underappreciated aspect of the Canadian federal value added tax system was the decision to harmonize the provincial sales tax with the administration of the federal goods and services tax, together forming GST/HST. Currently five provinces have opted for their provincial sales tax to form part of the federal GST/HST system (Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island). The GST/HST system requires one registration and return that covers the federal tax and the provincial tax for each of the harmonized provinces.

Currently, four provinces administer their own provincial sales tax (“PST”) outside of the GST/HST system. Each province has its own tax and legislation which determines its PST rate as well as which goods and services are subject to or exempt from PST.

This article covers the PST levied by British Columbia, Saskatchewan, Manitoba, and Quebec, specifically focused on businesses located outside of the respective province.

British Columbia

You must register to collect and remit PST if you are located outside British Columbia (BC) but within Canada and do all of the following in the ordinary course of your business:

• Sell taxable goods to customers in BC
• Accept orders from customers located in BC (including by telephone, mail, email or Internet) to purchase goods
• Deliver the goods you sell to your BC customers to locations in BC (this includes goods you deliver through a third party, such as a courier)
• Meet the minimum BC revenue threshold:
  • your gross revenue in the previous 12 months from all retail sales and leases of goods and all sales and provisions of software and telecommunication services to BC customers is more than $10,000, or
  • your estimated gross revenue in the next 12 months from all retail sales and leases of goods and all sales and provisions of software and telecommunication services to BC customers is more than $10,000

BC applies 7% PST on taxable goods and services.

Saskatchewan

Unlike BC, Saskatchewan does not set a minimum revenue threshold for corporations whereby registration is not required if the threshold is not exceeded. Only individuals who operate from their home and produce goods such as craft items that are sold to other individuals on a small scale or non-commercial basis with annual sales of less than $10,000 are generally not required to register for Saskatchewan PST.

Businesses located outside Saskatchewan that make retail sales in the province, or lease taxable goods in the province, including tangible personal property, taxable services, or contracts of insurance that are acquired for use or consumption in or relating to Saskatchewan, are required to become licensed to collect PST.

Retail sales in the province include retail sales by persons who do not otherwise carry on business in Saskatchewan, and include situations where a person selling or providing tangible personal property to a consumer or user:

• Makes tangible personal property available for purchase in Saskatchewan;
• Accepts orders to purchase tangible personal property that originate in Saskatchewan; and,
• Causes the tangible personal property to be delivered in Saskatchewan.

Saskatchewan applies 6% PST on taxable goods and services.

Manitoba

Any person carrying on a business in Manitoba (except for small businesses with annual taxable sales under $10,000) must have a valid Retail Sales Tax (“RST”) number issued under The Retail Sales Tax Act before making any taxable sales in the province.

Out-of-province businesses that sell/lease taxable goods to Manitoba purchasers who are acquiring the goods for consumption or use in Manitoba i.e. not for resale, are required to be registered as a vendor under the Act and to collect the RST if:

1. The seller
   i. causes the goods to be delivered in Manitoba,
   ii. solicits the order for the sale in Manitoba, directly or through an agent, by advertising or any other means, e.g. in person, by telephone, mail, e-mail, fax, posters, television or newspaper advertisement, and
   iii. accepts orders originating in Manitoba to purchase tangible personal property. The order can be originated by telephone, Internet, e-mail, fax, letter or any other means from a location in Manitoba to the seller or agent located in or out of Manitoba; or
2. The seller holds inventory of taxable goods in the province, available for sale to Manitoba customers. Manitoba applies 7% RST on taxable goods and services.

Quebec

Quebec Sales Tax (“QST”) legislation is closely modelled after GST/HST legislation. For businesses located outside of Quebec, you may either be required to register for the QST under the specified system or the general one.

Under the general QST system, every person who makes a taxable supply in Quebec in the course of a commercial activity engaged in by the person in Quebec is required to be registered, except where:

• the person is a small supplier;
• the only commercial activity of the person is making supplies of immovables by way of sale otherwise than in the course of a business; or
• the person is not resident in Quebec and does not carry on any business in Quebec.

Generally, a person is a small supplier if the total value of the consideration for taxable supplies made by the person in the previous four calendar quarters does not exceed $30,000.

Where or not a company is carrying on business in Quebec will depend on a number of factors including:

• the place where agents or employees of the non-resident are located;
• the place of delivery;
• the place of payment;
• the place where purchases are made or assets are acquired;
• the place from which transactions are solicited;
• the location of assets or an inventory of goods;
• the place where the business contracts are made Footnote 15 ;
• the location of a bank account;
• the place where the non-resident’s name and business are listed in a directory;
• the location of a branch or office;
• the place where the service is performed; and
• the place of manufacture or production.

Under the specified QST system, you are required to register if:

• you are a supplier outside Quebec;
• you are registered under the general GST/HST system;
• you have made taxable supplies of corporeal movable property, incorporeal movable property or services;
• the taxable supplies were made in Quebec to individuals whose usual place of residence is situated in Quebec and who do not show that they are registered under the general QST system; and
• your threshold amount, that is, the total value of such taxable supplies (other than supplies of incorporeal movable property or services made through a specified distribution platform), is more than $30,000 for a 12-month period.

Quebec applies 9.975% QST on taxable goods and services.

In addition to the registration requirements imposed on businesses located outside of each province, it is also important to verify the sales tax treatment of each specific good or service being offered in each province.

Below is a table to summarize GST/HST and PST rates across Canada.

Please note that this article does not include a comprehensive discussion of all sales tax registration requirements and is only intended as an overview for those doing business in multiple provinces. For advice specific to your situation, please contact your RLB advisor.

To learn more about nexus and the tax implications and requirements in the United States, please click here.