Canada

VAT Standard rate

The standard VAT (GST) rate in Canada in 2023 is 5%.

Goods and Services Tax is set at a country level and it is 5%. Canada consists of 10 provinces. Some provinces have also PST (provincial sales tax) or RST. For example VAT rate (HST- harmonized sales tax) for Ontario is 13% = 5% GST +8% PST.  Out-of-country sellers after VAT registration in Canada need to calculate GST or HST according to customer location.

Here is a table of GST/HST rates for all Canadian provinces.

Threshold

If your business meets the definition of “cross-border digital products and services” and the threshold exceeds $30,000 CAD, you must register for the GST/HST.

E-services list

• downloads or streaming of music, games, and other media;
• software, apps, SaaS, or other website subscriptions;
• ebooks and some newspaper subscriptions;
• application hosting and data warehousing;
• telecom services.

Pieces of evidence

To determine the bid correctly, it is necessary to establish the location of the client. To do this, it is essential to accurately establish two proofs of the customer’s location, such as

• the home address of the customer;
• the business address of the customer;
• the billing address of the customer;
• the Internet Protocol address of the device used by the customer or similar data obtained through a geolocation method;
• payment-related information of the customer or other information used by the payment system;
• the information from a subscriber identity module, or another similar module, used by the customer;
• the place at which a landline communication service is supplied to the customer;
• any other relevant information that the Minister may specify.

Registration procedure

To register, you need to fill out an application and send it by fax or mail.

Tax representative

The appointment of a tax representative is not a prerequisite.

GST filing and payment

The deadline is the end of the month after the end of the reporting period (as rule – quarterly).

Penalties

If you do not file a return after an official request from the tax authority, the fine can be up to 250,000 Canadian dollars.

Keeping records

Six years.

Quebec provincial sales tax

Standard rate

The Quebec provincial sales tax rate is 9,975%, and is also called QST.

Threshold

If sellers carry on commercial activities in Québec and their business exceeds 30,000 CAD, they must register for the QST. If the business income does not exceed 30,000 CAD QST registration is not required.

Also, the sellers must register for the QST if they carry any of the following activities in Québec:

– Sales of tobacco at retail.

– Sales of fuel at retail.

– Sales of alcoholic beverages (unless you hold a reunion permit).

– Sales or leasing of new tires.

– Sales or leasing of new or used road vehicles, other than a road vehicle that is your capital property, for a period of 12 months or more.

It may also be required to register for the Quebec sales tax for make supplies of certain products, regardless of the amount of total taxable supplies and your registration for the GST.

Sales of tax-free products and services

There are some QST exempt supplies of goods and service in Quebec which are include the following:

• Sales of most residential complexes that are not new.
• The lease of a dwelling for one or more months.
• The provision of most health, education, childcare and legal-aid services.
• The provision of certain services by public sector bodies (that is, governments and public service bodies).
• The provision of most financial services.

  Online Marketplaces

Non-resident businesses selling to unregistered Québec customers through online platforms (Includes a website, an electronic portal, a gateway, an online store, a distribution platform and any other similar electronic interface, but excludes electronic interfaces that solely process payments) are obligated to register for the QST under a specified registration system and charge their customers appropriately, even if their business does not have a presence in Québec.

Sales tax payment and filing date

The deadline to file and pay QST is one month after the last day of monthly or quarterly reporting period and three months after the last day of annual reporting period.

Filing frequency (monthly, quarterly or annual) is shown on confirmation of seller`s registration in Quebec.

Penalty and interest

Anyone who neglects to file a QST return is liable to a penalty of 25 CAD per day until the return is filed, to a maximum of 2,500 CAD.

Anyone who neglects to collect a provincial sales tax amount in Quebec is liable to a penalty equal to 15% of the amount in question.

Anyone who neglects to pay or remit an amount within the prescribed time period is liable to a penalty equal to:

– 7% of the amount for the first 7 days late.

– 11% of the amount for the 8th to 14th day the payment is late.

– 15% of the amount as of the 15th day the payment is late.

British Columbia provincial sales tax

Standard rate

The British Columbia provincial sales tax is called PST and amounts to 7% (Goods including cannabis products, carbonated beverages and tobacco, software, legal services, online marketplace services, telecommunications services and related services).

Threshold

Businesses must register to collect PST if they sell or lease taxable goods, or provide software or taxable services in the ordinary course of business in British Columbia (B.C.).

PST registration in British Columbia is required under these conditions:

• gross revenue in the previous 12 months from all sales and provisions of software and telecommunication services to B.C. customers is more than 10,000 CAD, or
• estimated gross revenue in the next 12 months from all sales and provisions of software and telecommunication services to B.C. customers is more than 10,000 CAD.

Sales of tax-free products and services

Cases when PST in British Columbia doesn’t need to be paid on purchases or leases:

• Food for human consumption (e.g. basic groceries and prepared food such as restaurant meals).
• Books, newspapers and magazines.
• Children-sized clothing.
• Bicycles.
• Prescription medications and household medical aids such as cough syrup and pain medications.

Other PST exemptions are available in certain circumstances and may require documentation. Tap for more.

Online Marketplaces

An online marketplace service is a taxable service for PST purposes in British Columbia. This means certain persons selling taxable online marketplace services will be required to register to collect and remit provincial sales tax in B.C. An online marketplace service is any of the following services provided by a marketplace facilitator, or by an agent, partner, joint venturer or associated corporation of the marketplace facilitator, to a marketplace seller:

• Listing sales of goods, software or taxable services.
• Advertising or promoting.
• Customer service.
• Storage.
• Fulfilling orders or bookings.
• Collecting or facilitating payments, either directly or indirectly, and transferring payments to the marketplace seller.
• Accepting or assisting with cancellations, changes, returns or exchanges of goods, software or taxable services.
• Other services to facilitate a marketplace seller’s sale of goods, software or taxable services through the online marketplace.

 Marketplace facilitators (or their agents, partners, joint venturers or associated corporations) located outside British Columbia, must also register to collect and remit PST on taxable online marketplace services. However, they are not required to register if, in respect of B.C., their gross revenue from all retail sales of goods, software and taxable services (including online marketplace services):

• in the preceding 12 months was 10,000 CAD or less, or
• for the next 12 months is reasonably estimated to be 10,000 CAD or less.

The marketplace sellers are not required to register to collect and remit PST in British Columbia if they make sales only through a marketplace facilitator who is registered to collect and remit PST. In this case, the marketplace facilitator is responsible for collecting and remitting PST on seller`s taxable sales. However, businesses can be required to register to collect and remit B.C. provincial sales tax if they make taxable sales outside the online marketplace (e.g. through own website or physical business location in British Columbia).

Sales tax payment and filing date

The completed tax return and payment of PST in British Columbia must be received on or before the last day of the month following the end of the reporting period. All businesses must follow their assigned reporting period when report and pay taxes.

The businesses must file PST Returns on a monthly, quarterly, semi-annual or annual basis depending on the amount of tax they report per year as follows:

• monthly – over 12,000 CAD per year.
• monthly or quarterly – from 6,000 CAD to 12,000 CAD.
• quarterly or semi-annual – from 3,000 CAD to 6,000 CAD.
• quarterly, semi-annual or annual – less than 3,000 CAD.

Penalty and interest

10% Penalty – on first assessments if the facts indicate the businesses were aware of the obligation but did not charge, collect, pay or remit the correct amount as required. It will be also generally applied a 10% penalty to all assessments if the business was previously advised of an error (e.g. failing to charge, collect, pay or remit as required) and it makes the same error again.

25% Penalty – if the business wilfully misused PST number to improperly acquire goods for it`s own use exempt from tax.

 100% Penalty – if the business is registered to collect PST and it collected tax in British Columbia, but wilfully did not report and remit the tax collected (e.g. knowingly understated the tax collected).

It may also be applied PST penalties in British Columbia in the following situations:

• wilfully failed to register for PST.
• did not remit PST electronically when required.

 The business will be charged a 30.00 CAD administrative fee on all dishonoured payments. This fee is in addition to any fees the financial institution may charge.

Saskatchewan provincial sales tax

Standard rate

The Saskatchewan provincial sales tax (PST) rate is 6%.

Threshold

All businesses operating in Saskatchewan must be licensed or registered with the Ministry of Finance for PST purposes.

Businesses located outside Saskatchewan that make retail sales in the province, or lease taxable goods in the province, including tangible personal property, taxable services, or contracts of insurance that are acquired for use or consumption in or relating to Saskatchewan, are required to become licensed to collect Saskatchewan provincial sales tax.

Sales of tax-free products and services

There are some exempt from PST goods including basic groceries, reading materials, agricultural equipment and prescription drugs and medicine in Saskatchewan.

Online Marketplaces

Operators of electronic distribution platforms and online accommodation platforms, as well as online marketplace facilitators must be licensed for purposes of collecting and remitting Saskatchewan PST.

The accommodation service provider or marketplace seller is responsible for collecting and remitting Saskatchewan provincial sales tax on sales through all other channels, including sales made through unregistered online accommodation platforms and unregistered marketplace facilitators.

Sales tax payment and filing date

The businesses must file PST returns in Saskatchewan on a monthly, quarterly or annual basis depending on the amount of tax they report per year as follows:

• monthly – over 12,000 CAD per year.
• quarterly – from 4,800 CAD to 12,000 CAD.
• annually – less than 4,800 CAD.

The deadline to file and pay PST in Saskatchewan is the 20th of the month following the reporting period.

Penalty and interest

Non-resident businesses that do not collect and remit the tax due on sales to Saskatchewan consumers could be assessed penalty and interest charges in an audit, in addition to the taxes that are due.

PST penalty and interest charges in Saskatchewan are applied to taxes that are not remitted by the due date. A penalty of 10 per cent of the tax payable, to a maximum of 500 CAD, is applied to each return period.

Manitoba provincial sales tax

Standard rate

The Manitoba`s provincial sales tax is called retail sales tax (RST) and it`s rate is 7%.

 Threshold

Businesses under the threshold are required to register and collect RST in Manitoba after their sales exceed the 10,000 CAD annual threshold. Businesses are given one month to register and implement a system to collect and remit RST on their sales.

Sales of tax-free products and services

There are categories of goods and services that are not charged provincial sales tax in Manitoba. These are defined by Manitoba’s Retail Sales Tax Act. These rebates and exemptions are separate from the ones granted on a national level. The sale of land, buildings and other real property and certain services are not taxed in Manitoba.

Examples of items exempt from RST in Manitoba include:

• Baby supplies such as diapers and food.
• Sandbags.
• Certain supplies used for farm use, such as fencing and barbed wire and agricultural feed.
• Books published for educational purposes.
• Certain children’s clothing and footwear.
• Natural gas.
• Water (except when sold in single-serving units).
• Basic groceries.
• Certain items related to medical care, including many products designed to assist those with disabilities.
• Used clothing and furniture.

Businesses can review a helpful informational bulletin from Manitoba Finance that lists an array of exempt products. These exemptions are important because if a company only sells exempt items, registration for the Manitoba RST is often not required.

Online Marketplaces

Manitoba retail sales tax applies on streaming services and media purchases of music (including individual songs), audio programs (excluding audiobooks), television programs, movies or other video and ring tones (including text tones and other alert tones) sold to purchasers that are ordinarily resident in Manitoba.

RST applies to all taxable retail sales made through online sales platforms.

Sales tax payment and filing date

The deadline to file and pay RST in Manitoba is the 20th of the month following the reporting period.

The filing frequency of sales tax in Manitoba is based on the average retail sales tax collected per month:

• monthly – the tax collected is 5,000 CAD or more.
• quarterly – the tax collected range from 500 CAD to 4,999 CAD.
• annually – the tax collected less than 500 CAD.

Penalty and interest

The RST return and remittance should be received by the Manitoba Taxation Division by 4:30 p.m. on the due date, otherwise a penalty charge will be assessed in the amount of 10 per cent of the tax due. The minimum penalty is 10 CAD.

Outstanding RST debts will be subject to interest compounded monthly. The interest rate payable is set every January 1st and July 1st. and is posted on the Manitoba Taxation Division web site.

Prince Edward Island Harmonized Sales Tax 

The Harmonized Sales Tax (HST) in Prince Edward Island is a a value-added tax, which is collected from consumers at the point of sale and consists of a federal GST (5%) and a provincial part of 10%. The combined rate of HST in Prince Edward Island is 15%. It operates in the same way as the GST and applies to the same types of goods and services.

The Prince Edward Island HST is administered by the federal government through the Canada Revenue Agency (CRA) and all the businesses (or individuals registered to collect the HST on taxable sales in Prince Edward Island) collect one sales tax, remit and report to CRA.

Other participating provinces include New Brunswick, Newfoundland & Labrador, Ontario and Nova Scotia.

Ontario Harmonized Sales Tax 

The Harmonized Sales Tax (HST) is 13% and applies to the most types of goods and services in Ontario. It is a value-added tax and it consists of a federal GST part of 5% and a retail sales tax (RST) part of 8%. RST in Ontario is a separate tax from the HST, which still applies on certain purchases of insurance and benefits plans, as well as on private purchases of specified vehicles. However, Ontario provides a rebate on the 8% provincial portion of the HST on specific items through a point-of-sale rebate.

The Canada Revenue Agency (CRA) administers and collects the HST on behalf of the Government of Ontario and all the businesses (or individuals registered to collect the HST on taxable sales in Ontario) collect one sales tax, remit and report to CRA.

Other participating provinces include New Brunswick, Newfoundland and Labrador, Prince Edward Island and Nova Scotia.

Nova Scotia Harmonized Sales Tax 

The Harmonized sales tax (HST) in Nova Scotia is a value-added tax and it consists of a federal GST (5%) and a provincial part of 10%. The HST in Nova Scotia applies to the same base of goods and services as the federal GST at the total rate of 15%.

This harmonized sales tax in Nova Scotia is also administered by the federal government like the GST through the Canada Revenue Agency (CRA). All the businesses or individuals registered to collect the HST on taxable sales in Nova Scotia collect one sales tax, remit and report to CRA.

Other participating provinces include New Brunswick, Ontario, Prince Edward Island  and Newfoundland and Labrador.

Newfoundland & Labrador Harmonized Sales Tax

The Harmonized sales tax (HST) in Newfoundland and Labrador is a value-added tax and it consists of a federal GST (5%) and a provincial part of 10%. The total HST rate in Newfoundland & Labrador is 15%.

The HST in Newfoundland & Labrador operates in the same way as the Goods and Services Tax (GST),  and applies to the same types of goods and services. It is administered by the federal government through the Canada Revenue Agency (CRA) and all the businesses (or individuals registered to collect the HST on taxable sales in Newfoundland and Labrador) collect one sales tax, remit and report to CRA.

Other participating provinces include New Brunswick, Ontario, Prince Edward Island  and Nova Scotia.