Provincial Sales Tax (PST) is a tax levied by the provincial government on the sale or supply of goods and services in certain provinces in Canada. If you are a business owner or self-employed individual in Ontario or any other province that has PST, you need to understand how it works, when it applies, and how to properly collect and remit the tax.
In this blog post, we will cover everything you need to know about Provincial Sales Tax for business and self-employed individuals in Canada.
What is Provincial Sales Tax?
Provincial Sales Tax (PST) is a tax imposed by the provincial government on the sale or supply of goods and services within the province. The tax is added to the selling price of the goods or services and collected from the purchaser by the seller. The rate of PST varies depending on the province and the type of goods or services being sold.
Which provinces have PST?
Provincial Sales Tax is levied in the following provinces in Canada:
- British Columbia
- Saskatchewan
- Manitoba
- Quebec
In Ontario, there is no Provincial Sales Tax. Instead, Ontario has the Harmonized Sales Tax (HST), which combines the federal Goods and Services Tax (GST) and the Ontario Retail Sales Tax (ORST).
When is PST applicable?
PST is applicable when a business sells or supplies goods or services within the province. The tax applies to a wide range of goods and services, including:
- Tangible personal property, such as furniture, clothing, and appliances
- Certain services, such as repair and maintenance services
- Telecommunication services, such as cell phone plans
- Software and digital products
- Accommodation and short-term rentals
It’s important to note that certain goods and services are exempt from PST, such as basic groceries, prescription drugs, and medical devices.
How do I register for PST?
If you are a business owner or self-employed individual selling taxable goods or services in a province with PST, you must register for PST with the provincial government. The registration process varies depending on the province, but typically involves filling out an application and providing information about your business.
Once you are registered for PST, you will be assigned a PST number, which you will need to include on your invoices and receipts.
How do I collect and remit PST?
When you sell taxable goods or services, you must collect PST from the purchaser and remit it to the provincial government. The amount of PST you collect is based on the selling price of the goods or services, including any shipping or delivery charges.
You are responsible for keeping accurate records of the PST you collect and remit. Depending on the province, you may be required to file periodic PST returns and remit the tax on a monthly, quarterly, or annual basis.
What are the penalties for non-compliance?
If you fail to register for PST or fail to collect or remit the tax as required, you may be subject to penalties and interest charges. The amount of the penalties and interest varies depending on the province and the amount of tax owing.
In British Columbia, for example, the penalty for failing to register for PST is $500, while the penalty for failing to remit PST is 10% of the amount owing. In Saskatchewan, the penalty for late payment of PST is 1% per month.
Conclusion
Provincial Sales Tax (PST) is an important consideration for businesses and self-employed individuals in certain provinces in Canada. If you sell taxable goods or services within a province with PST, you must register for the tax, collect it from purchasers, and remit it to the provincial government. Failure to comply with PST requirements can result in penalties and interest charges.
We hope this blog post has provided you with a better understanding of Provincial Sales Tax for business and self-employed individuals in Canada