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Canadian Sales Tax Overview for Entrepreneurs

Introduction​

Entrepreneurs operating in Canada must navigate the complexities of both federal (GST/HST) and provincial (PST, RST, QST) sales taxes. This quick overview is designed to provide a deeper understanding of each tax, including details about the overseeing tax authority and the population representation of each province.

Waiting to register for provincial accounts

Initial GST/HST registration is common while most entrepreneurs wait to register for specific provincial accounts until they start selling to those provinces to reduce their reporting burden.

Federal Sales Tax: GST/HST (5% to 15%)​

  1. Overview
    • The Goods and Services Tax (GST) is a 5% federal tax applicable to the majority of sales in Canada.
    • Some provinces charge Harmonized Sales Tax (HST), which combines a provincial sales tax with the GST.
    • Rates of GST/HST will vary from province to province:
      • 5% (GST) in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon
      • 13% (HST) in Ontario
      • 15% (HST) in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island
    • GST and HST are administered by the Canada Revenue Agency (CRA), except in Quebec where it is administered provincially.
  1. Requirement to Register

British Columbia - PST (7%)​

  1. Overview

    • Administered by the British Columbia Ministry of Finance.
    • Provincial retail sales tax at 7%.

  2. Requirement to Register

    • Register if conducting business activities in B.C., including selling taxable goods and delivering them to B.C. customers.

  3. Population Representation

    • British Columbia's population: 5 million, representing 14% of Canada's population.

Manitoba - RST (7%)​

  1. Overview

    • Administered by the Manitoba Finance Taxation Division.
    • Retail Sales Tax (RST) at 7%.

  2. Requirement to Register

    • Register if selling to Manitoba residents and meeting specific criteria related to delivery, solicitation, and inventory.

  3. Population Representation

    • Manitoba's population: 1.3 million, representing 4% of Canada's population.

Quebec - QST (9.975%)​

  1. Overview

    • Administered by Revenu Québec.
    • Quebec Sales Tax (QST) at 9.975%.

  2. Requirement to Register

    • Register under the specified QST system if taxable supplies exceed $30,000 in a 12-month period.

  3. Population Representation

    • Quebec's population: 8.5 million, representing 23% of Canada's population.

Saskatchewan - PST (6%)​

  1. Overview

    • Administered by the Saskatchewan Ministry of Finance.
    • Provincial Sales Tax (PST) at 6%.

  2. Requirement to Register

    • Register if selling in Saskatchewan, including the sale or lease of tangible personal property, taxable services, or insurance contracts.

  3. Population Representation

    • Saskatchewan's population: 1.1 million, representing 3% of Canada's population.

Registration with Various Tax Entities​

  1. Federally. Register with the Canada Revenue Agency.

  2. British Columbia. Register for PST.

  3. Manitoba. Register for RST.

  4. Quebec. Register for QST.

  5. Saskatchewan. Apply for a PST Number.

Ribbon Makes Business Easy​

To keep a corporation compliant is challenging. Ribbon gives entrepreneurs the tools to help them stay compliant. From setting up minute books, maintaining registers to annual filings, Ribbon let's Entrepreneurs focus on their business. Learn more about Ribbon or email support@getribbon.ai.

Conclusion​

Entrepreneurs, understanding Canadian sales tax is crucial for your business. Stay informed, meet registration requirements, and file on time to ensure smooth operations and compliance. This guide provides a comprehensive overview, including the population representation of each province. Always check the latest regulations for any updates.