Provincial Sales Tax 101
I commonly see entrepreneurs who are unsure about whether they should be charging PST on their goods and services. The rules for PST are different depending on your industry and the goods and services which you sell. Therefore, I wanted to write this blog post to outline the rules around PST for startups and small businesses located in Saskatchewan.
Provincial Sales Tax (PST)
The Provincial Sales Tax is a 5% sales tax that applies to taxable goods and services consumed or used in Saskatchewan. PST applies to taxable goods and services purchased in Saskatchewan as well as taxable goods and services that are imported for consumption or use in Saskatchewan.
Do you have to charge PST?
Yes, if you sell or rent taxable goods or services then you are required to register for a PST Vendor's License and charge PST to your customers. Unlike GST, there is no 'Small Supplier Exemption" for PST, so if the goods or services which you sell or rent are taxable, then you are required to charge PST.
Taxable goods are typically defined as "tangible property" which means anything that can be seen, weighed, measured, felt, or touched.
Which Services are PST Taxable?
The following examples are services which are PST taxable:
- Accounting & Bookkeeping Services
- Advertising Services
- Commercial Janitorial Services
- Engineering Services
- Legal Services
- Photography Services
To find out if your services are PST taxable, you can read the PST Bulletins at the link below:
http://finance.gov.sk.ca/Bulletins/ProvincialSalesTaxBulletins
If I provide non-taxable services, do I still need to register for PST?
Businesses that provide non-taxable services are not licensed as vendors to collect PST, however, they are required to become Registered Consumers and are responsible for paying tax on equipment and supplies used to provide their services.
If you purchase equipment and supplies from a supplier outside Saskatchewan (i.e. office desk from IKEA in Calgary) for your business, then you are required to self-assess the PST when you bring the goods into Saskatchewan.
Do I have to pay PST on goods and services I purchase for resale?
No, a Vendor's License number allows you to purchase inventory and taxable services that are for resale exempt from PST by providing your supplier with your vendor's license number.
What do I do with the PST I have collected?
The first step is to register for a Vendor's License once you have determined that the goods and services which you are selling are PST taxable.
The next step is then to track the PST you collect from your customers on the sales of your goods and services. I recommend to clients that they use a cloud-based accounting system (such as QuickBooks Online) to track the PST which they collect from their customers.
Once you have tracked the PST which you have collected from your customers, then you need to file and pay the PST Return to the SK Ministry of Finance.
How do I file and pay my PST?
Your PST Return needs to be filed and paid 20 days after the end of your return period which can be Annual, Quarterly, or Monthly depending on how much PST you collect from your customers.
Once you have generated your PST report from your accounting system, then you have a few options on how to file the PST Return to the SK Ministry of Finance:
1) File and Pay your PST Return through your Online Banking Website
This is a convenient option for many entrepreneurs as they are comfortable with using online banking for their business.
2) File and Pay your PST Return through Sask Electronic Tax Service (SETS)
This option allows you to file and pay your PST Return directly through the SETS website at the link below:
http://finance.gov.sk.ca/taxes/efile/
Summary
The topic of sales taxes can be complex and entrepreneurs should seek the professional advice of an Accountant to analyze the facts of their situation and assist them in making the right decision. By taking the time upfront to properly understand which sales taxes apply to the goods and services which they sell, it can save an entrepreneur a lot of money and headaches further down the road. If you have any questions or comments on this blog post, I can be reached via email at jordan@liftaccounting.ca or via phone at (306) 713-2477.
Best,
Jordan N. Brown, CPA, CA
President, Lift Accounting
(Disclaimer: This blog post is for informational purposes only and is not, nor can it be interpreted or relied on as professional advice.)
