In the provinces of Ontario, Nova Scotia, New Brunswick and Newfoundland & Labrador, the administration of GST and PST has been combined and the result referred to as Harmonized Sales Tax (“HST”). The allocation of provincial sales tax among these provinces are governed by “place of supply rules” contained in the federal legislation.
According to the place of supply rules, the province with jurisdiction is generally the one in which the supply occurs. For example:
- if the goods supplied are tangible personal property then the relevant province is generally the one in which the goods are delivered or made available to the recipient;
- if the supply is of real estate then the relevant province is generally the one in which that real estate is located;
- if the supply is of intangible personal property, jurisdiction will depend on a number of factors, including the place in which the property can be used and the location of the purchaser;
- different intangible properties are subject to different rules; and
- when services are supplied, the relevant province is generally determined according to the home or business address of the purchaser, although specific rules apply for certain types of services.
The place of supply rules are extensive and the above examples are general and for illustrative purposes only.
When property and services are brought into an HST province from another province (whether or not such other province is also an HST province) or from outside Canada for consumption, use or supply in that HST province, the supplier is required to self-assess since no actual purchase and sale occurs.
1. Alberta (no sales tax)
Alberta is the only province that does not have its own sales tax, relying instead on its oil revenues.
2. British Columbia
British Columbia’s sales tax applies to all goods and certain services sold at a retail sale in British Columbia. This generally applies to all consumer purchases, as distinguished from purchases for the purpose of resale.
Goods includes all tangible personal property and extends also to computer software and various fixtures.
The following services are generally taxable:
- legal;
- lodging;
- services to goods such as vehicle maintenance, furniture assembly and computer repair;
- telecommunications, including internet services and certain digital and electronic media content such as music and movies; and
- various services connected with tangible personal property.
Consulting, management and financial services are not taxable.
In determining whether a sale occurs in British Columbia, it is the place of delivery, not the residence of the purchaser, that governs. Goods and services delivered by a vendor, or by a common carrier on behalf of a vendor, to the purchaser’s premises outside the province are not, therefore, subject to British Columbia’s sales tax. If, however, the goods are subsequently brought into British Columbia for consumption or use in that province then such person must voluntarily self-assess and pay British Columbia’s sales tax at that time.
If the goods or services are exempt by reason of being delivered by the vendor or shipped by common courier outside the province, the vendor must retain the carrier’s bill of lading or the equivalent in order to substantiate the extra-provincial delivery.
3. Manitoba
Manitoba’s sales tax applies to all goods and certain services sold at a retail sale in Manitoba. This generally applies to all consumer purchases, as distinguished from purchases for the purpose of resale.
Goods includes all tangible personal property and extends also to computer software and various fixtures.
The following services are generally taxable:
- Lodging;
- Telecommunications;
- Various services connected with tangible personal property;
- Printing, binding and similar services;
- Film production;
- Sound recording;
- Legal;
- Accounting;
- Architectural;
- Engineering;
- Security;
- Private investigation; and
- Tanning.
In determining whether a sale occurs in Manitoba, it is the place of delivery, not the residence of the purchaser, that governs. Goods and services delivered by a vendor, or by a common carrier on behalf of a vendor, to the purchaser’s premises outside the province are not, therefore, subject to Manitoba’s sales tax. If, however, the goods are subsequently brought into Manitoba for consumption or use in that province then such person must voluntarily self-assess and pay Manitoba’s sales tax at that time.
If the goods or services are exempt by reason of being delivered by the vendor or shipped by common courier outside the province, the vendor must support the exemption as follows:
- If the goods are delivered by the vendor or its employee, the vendor and purchaser must sign a statement acknowledging that delivery was out of province; or
- If the goods are delivered by common carrier, the vendor must retain the carrier’s bill of lading or the equivalent in order to substantiate the extra-provincial delivery. It should be noted, however, that this exemption only applies if the vendor engages the carrier. If the purchaser engages the carrier then the good are considered to have been picked up in Manitoba on the purchaser’s behalf.
4. Prince Edward Island
Prince Edward Island (“PEI”) applies its sales tax to all goods and certain services sold at a retail sale in PEI. This generally applies to all consumer purchases, as distinguished from purchases for the purpose of resale.
Goods includes all chattels, i.e., personal property as distinguished from real estate, and also extends to computer software and related services.
The following services are generally taxable:
- Admissions;
- Telecommunications;
- Laundry and dry cleaning;
- Repair and installation labour;
- Accommodations;
- Golf;
- Legal;
- Accounting;
- Consulting;
- Engineering; and
- Architectural.
In determining whether a sale occurs in PEI, it is the place of delivery, not the residence of the purchaser, that governs. Goods and services delivered by the vendor, or by a common carrier on behalf of the vendor, to the purchaser’s premises out of province are not, therefore, subject to PEI’s sales tax. If the goods are, however, subsequently brought into PEI for consumption or use in that province then such person must voluntarily self-assess and pay PEI sales tax at that time.
If the goods or services are exempt by reason of being delivered by the vendor or shipped by common courier outside the province, the vendor must keep a record of such deliveries, including the name, the proper mailing address and the telephone number of the purchaser.
5. Quebec
A non-resident of Quebec that is not already a QST registrant is required become a QST registrant and to collect and remit QST on a supply made in Quebec of a movable property or service only if that supply is made in the course of carrying on business in Quebec. The factors generally considered to determine whether business is being carried on in a given jurisdiction include (but are not limited to) the following:
- the place where agents or employees of the non-resident are located;
- the place of delivery;
- 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;
- 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.
In addition to the foregoing considerations, a special rule requires a non-resident of Quebec that is not already a QST registrant to become a QST registrant and to collect and remit QST on a supply made in Quebec of a movable property or a service if that supply is of an admission in respect of an activity, a seminar, an event of a place of amusement unless the non-resident supplier acquired the admission from another person.
Place of supply rules
If it is determined that the supply is made in the course of carrying on business in Quebec, the place of supply rules apply to determine whether Quebec nevertheless concedes jurisdiction to another province. The place of supply rules apply equally to QST registrants and residents of Quebec.
According to the place of supply rules, the province with jurisdiction is generally the one in which the supply occurs. For example:
- if the goods supplied are tangible personal property (referred to in Quebec as “corporeal movable property”) then the relevant province is generally the one in which the goods are delivered or made available to the recipient;
- if the supply is of real estate then the relevant province is generally the one in which that real estate is located; and
- if the supply is of intangible personal property, jurisdiction will depend on a number of factors, including the place in which the property can be used and the address of the purchaser as provided to the supplier.
When services are supplied, the relevant province is generally determined according to the home or business address of the purchaser, although specific rules apply for certain types of services. Services related to real estate, for example, are deemed to be made in Quebec if that real estate is located in Quebec.
The place of supply rules are extensive and the above examples are general and for illustrative purposes only.
When property and services are brought into an HST province from another province (whether or not such other province is also an HST province) or from outside Canada for consumption, use or supply in that HST province, the supplier is required to self-assess since no actual purchase and sale occurs.
6. Saskatchewan
Saskatchewan’s sales tax applies to all goods and certain services sold at a retail sale in Saskatchewan. This generally applies to all consumer purchases, as distinguished from purchases for the purpose of resale.
Goods includes all tangible personal property and extends also to electricity and to gas used in the operation of internal combustion engines and turbines.
The following services are generally taxable:
- Computer services;
- Credit reporting and collection;
- Dry cleaning and laundry;
- Lodging;
- Real estate services;
- Repair or installation;
- Security or private investigation;
- Telecommunications;
- Telephone answering services;
- Veterinary services;
- Accounting;
- Advertising;
- Architectural;
- Commercial building cleaning;
- Employment placement;
- Engineering; and
- Legal.
In determining whether a sale occurs in Saskatchewan, it is the place of delivery, not the residence of the purchaser, that governs. Goods and services delivered by the vendor, or by a common carrier on behalf of the vendor, to the purchaser’s premises out of province are not, therefore, subject to Saskatchewan’s sales tax. If the goods are, however, subsequently brought into Saskatchewan for consumption or use in that province then such person must voluntarily self-assess and pay Saskatchewan’s sales tax at that time.
If the goods or services are exempt by reason of being delivered by the vendor or shipped by common courier outside the province, the vendor must keep a record of such deliveries, such was by a vehicle log or waybills.