Written by Stephen Beard, Managing Director of Plyo Bookkeeping, a Vancouver-based bookkeeping firm.
In Canada, the Provincial Sales Tax (PST) is a consumption tax levied by individual provinces. Each province has its own rules and rates for PST, making it essential for businesses to understand how PST works in their specific location. In this guide, we’ll provide an overview of PST, including the registration threshold for each province.
What is Provincial Sales Tax (PST)?
PST is a retail sales tax imposed on the sale or rental of taxable goods and certain services within a province or territory. The tax generally applies to goods, with most services exempt. However, the tax rules can vary significantly from one province to another, so it’s always essential to check whether your product or service is required to charge PST.
Which Provinces Don’t charge PST?
In certain provinces, the GST and PST have merged to form the HST (Harmonized Sales Tax). HST registration occurs automatically when you register for GST, meaning that there is no PST tax or registration for these provinces. HST provinces are:
- Ontario
- New Brunswick
- Newfoundland and Labrador
- Nova Scotia
- Prince Edward Island
PST Registration Thresholds by Province
To determine if your business needs to register for Provincial Sales Tax (PST) in a specific province, you should be aware of the registration thresholds. If your business’s annual taxable sales or revenues exceed the threshold, you are required to register and collect PST. Below are the current registration thresholds for each province:
- British Columbia (BC): CAD 10,000
- Alberta: Alberta does not have a provincial sales tax.
- Saskatchewan: CAD 10,000
- Manitoba: CAD 10,000
- Quebec: Quebec has the Quebec Sales Tax (QST) and the Goods and Services Tax (GST). The threshold for GST is CAD 30,000, and the registration for QST is also $30k if your business is based in Quebec. If your business is not based in Quebec but does have sales to Quebec, then the threshold rules are more complicated. Here’s a link to some useful guidance on registering for QST as a non-Quebec-based business.
Out-of-Province Sales – What Rate to Charge
As a general rule of thumb, you charge the PST tax rate applicable to where your customer will ‘consume’ the product or service you provide. This may be the province where their head office is based, but it could also be in another province where the good or service will be utilized.
For example, if you’re a BC business making a sale of goods to an Albertan business, then you won’t need to charge them any PST, as Alberta is the customer’s home province, and they don’t charge PST.
However, if you’re a BC business and you sell goods to a Saskatchewan-based customer, you’ll need to charge them the Saskatchewan PST rate of 6%.
How to Register for PST in Each Province
The process for registering for PST can vary from province to province. Most provinces now provide an online registration option. It’s advisable to visit the official government websites of the respective provinces and territories or consult with a tax professional for the most up-to-date and accurate information on PST registration in your area.
Understanding and complying with PST requirements is crucial for Canadian businesses, as failure to do so can result in penalties and fines. Be sure to keep accurate records and stay informed about any changes in tax deadlines or regulations that may affect your business.