It was designed to define taxation of certain incomes between the two countries e. This is combined in most provinces with the local pst, which are set between 5% and 9%, to create a harmonised sales. Click on the manage invoice and tax settings button in the invoice settings section. The provincial sales tax pst levied by the provinces, sometimes called the retail sales tax the valueadded harmonized sales tax hst, a single blended combination of the gst and pst the hst is collected by the canada revenue agency, which then remits the. If you charge clients outside of province, you dont need to collect pst, and if outside of canada, you dont need to collect gst. Its designed to help business owners, shoppers and travellers quickly add or remove tax from sales prices.
Each province can calculate pst in one of two ways. The canada gst help page will help you understand how to configure and manage your goods and services taxgst, provincial sales taxpst, and. Finally, some provinces apply the 5% gst as well as a pst. This free canadian invoice template charges both gst goods and services tax and pst provincial sales tax. Gst is a valueadded tax levied by the canadian federal government. Jul 01, 2019 the canadian sales taxes include the provincial sales tax pst, the quebec sales tax qst, the goods and services tax gst, and the harmonized sales tax hst which is a combination of the provincial sales tax portion and the gst in some provinces. Gst includes real and personal property the federal tax of canada is the gst, which applies to almost all goods and services within the country.
Can set up gsthst and post a purchase order with tax on. If you operate a small business in canada, get essential information on sales taxes and invoicing, including tips, templates, and provincial tax rates. Some provinces and territories add a tax on top of the gst and require businesses to register and remit the pst separately for the specific province. For example, a company with offices across canada purchases software in kamloops for use on their computers in bc and throughout canada. Gsthst internet file transfer gift an uploading tool used to submit text files to the cra website for filing gsthst returns and remitting payments.
In spite of attempts by the canadian government to convince provinces to combine their pst with the federal goods and services tax gst to create a harmonized sales tax hst, not all provinces have done so. Surprising tax facts about doing business in canada. The owner or importer of record is responsible for paying the gst hst on imported goods. The hst includes the provincial portion of the sales tax but is administered by the canada revenue agency cra and is applied under the same legislation as the gst. As of july 1, 2010, british columbia bc harmonized its provincial sales tax with the gst to implement the hst in. The system is designed to track tax collection and recoverable tax payments in separate accounts for clarity but you can choose to change and use the same account, which will provide a net tax amount. There were no sales tax rates modification for 2020. Tax treatment of imported computer software canada. Hst, provincial taxes, canadian sales tax calculator of 2020. Ontario, newfoundland, new brunswick and nova scotia use the combined hst, which is charged regardless of the canadian buyers province. Before you generate a gift file, set up your software identification code, sales tax code, and sales tax group. In all the other provinces, the canada revenue agency cra administers the gst and hst.
Jan 15, 2020 do you have to charge provincial sales tax or retail sales tax pst or rst on the products or services your small business offers. As of july 1, 2010, ontario harmonized its retail sales tax with the gst to implement the hst in ontario at the rate of % 5% federal part and 8% provincial part. A software package, such as wordperfect or lotus 123, is imported from a u. Oct 29, 2015 hst is the provincial sales tax pst, and gst combined. As a result, any inputs into the sales of zerorated goods that are subject to gst hst, can have the taxes paid claimed as an input tax credit.
Simple and easy to use add or remove tax from an included amount easy reverse calculations calculates live as you typejust type in the. Its designed to help business owners, shoppers and. The provincial sales tax applied in quebec is called. Provincial sales taxes pst, levied by the provinces goods and services tax gstharmonized sales tax hst, a valueadded tax levied by the federal government. The small business owners guide to provincial sales tax. The gst and pst tax report lists canadian tax information from the tax detail file f0018 based on dream writer data selection and sequencing. A federal tax called gst goods and services tax is levied by the federal government in every province in canada. On march 23, 2017, the saskatchewan pst as raised from 5% to 6%. Although gsthst implications may arise if a nonresident has a permanent establishment in canada, the fundamental question is generally whether the nonresident is carrying on business in canada for gsthst purposes.
This post assumes that you are eligible to charge gst, hst or pst. The main difference with the qst is that quebec administers the gst and the qst. To avoid gsthst obligations, a nonresident vendor can deliver or make available goods to its canadian customer outside canada. The gst applies to most goods and services made in canada. This applies to the supply of goods and services in canada. Gst is levied on supplies of goods or services purchased in canada and includes most products, except certain politically sensitive essentials such as groceries, residential rent, and medical services, and services such as financial services. Do i need to collect gstpst for providing software services to. Overview of charging and collecting sales tax as a canadian business owner, its important to know how and when to charge sales taxes for the goods and services you sell and supply to your customers. What makes software a bit complex is that in this day and age when we no. Guide rc4022, general information for gst hst registrants.
Provincial sales taxes pst, levied by the provinces. The hst includes the provincial portion of the sales tax but is administered by the canada revenue agency cra and is applied under the. If youre charging gst hst on your goods or services, follow the canada revenue agencys requirements for the information. You might already use an income tax calculator to manage your personal finances, the key difference with this cra calculator is that it is intended for businesses and calculates gst, pst, qst. Generally, canadian invoices should inform customers of the price of the goods or services theyre purchasing and the amount of tax theyre paying on those goods or services. Canadian provincial sales tax and gsthst in the provinces of ontario, nova scotia, new brunswick, prince edward island pei, newfoundland and labrador, you must charge hst because these provinces have combined the gst with their provincial sales tax pst to create a hst. The provincial sales tax pst levied by the provinces, sometimes called the retail sales tax the valueadded harmonized sales tax hst, a single blended combination of the gst and pst the hst is collected by the canada revenue agency, which then remits the appropriate amounts to the participating provinces. This is applied in provinces who have harmonized both pst and gst into a single tax.
Sales tax calculator, gst and pst 2020 calculconversion. In some provinces in canada, only a gst is collected. Goldenseal construction payroll software canada gst, hst. If you have never looked at whether your invoices are in canadian dollars or usd, you may have a problem and should go look. When gst hst does not have to be charged or paid according to the excise tax act and the canada revenue agency cra, for an exported good to be zerorated for gst hst purposes, the following must apply. Gsthst find out about the gsthst and ecommerce, if you need to register. Even if you are skilled at doing tax percentage calculations in your head theres no shame in using a canadian tax calculator. See more ideas about business and start a business from home. Some provinces charge their own pst rate in addition to the gst. In quebec, the gst is called the tps taxe sure let produits en services literally. Overview of charging and collecting sales tax canada.
Our guide to charging and collecting sales tax will provide you with an understanding of your responsibilities, as well as some valuable resources. Nov 06, 2019 the tax situation for canadian startups is super confusing, especially if you have an online business that sells globally. All other provincial taxes are charged as a consumption tax. Qst, the quebec provincial sales tax, is treated as a valueadded tax. If you collect hst, gst andor pst tax or if you receive a credit for gst taxes paid on purchases, set up an other cost account for the tax agency. Gst hst rates range from 5% for gst on its own, to 15% when hst applies, other than the 0% levied on specific goods and services. Gst sometimes knows as the gst g ouge and s crew t ax. Hst combines federal and provincial sales takes in one tax.
A business trying to determine which canadian sales taxes to charge and how much to charge should consider a number of factors, including. Four canadian provinces ontario, newfoundland and labrador, nova scotia, and new brunswick do not collect pst. Goods you import into canada are subject to the gst or the federal part of the hst, except for items specified as nontaxable importations. The revision bar identifies changes to the previous version of this bulletin dated september 20. Jan 15, 2019 information about gst, hst, pst and payroll taxes for small canadian businesses.
In addition to gst, every province except alberta levies a provincial tax called pst provincial sales tax. This bulletin provides information on how the provincial sales tax pst applies to related services. The canadian purchaser is the importer and therefore responsible for paying the gst under division iii of the excise tax ac t if the software is considered to be imported goods within the meaning of section 212. The gst hst is calculated on the canadian dollar value of the goods, including duty and excise tax, and is collected at the border at the same time as these duties and taxes.
Enter in the name and tax rate percentage for the national goods and services. A friendly reminder from your trusted adviser to not overlook gsthst tax savings opportunities in areas outside the traditional accounts payable vendor invoice. Each province will have either hst or a combination of a gst and pst. Gst goods and services tax 5% sales tax charged by the federal government of canada hst harmonized sales tax 15% combined provincial and federal sales tax rate qst quebec sales tax 9.
Goods and services tax gst harmonized sales tax hst, a valueadded tax levied by the federal government. Whether it is currently registered for gsthst, provincial sales tax pst or quebec sales tax qst. Discover the cloudbased, online accounting software wolters kluwer canada provides to assist small businesses with tax preparation and practice. Registration for gsthst and pst in canada you can find out which businesses licenses or permits you may or may not need according to the type of business youre starting and the province in which you will be doing business in by visiting industry canadas bizpal pal. Generally the gst rate is 5% except for certain items that are either zero rated or exempt. Add a second line item within the same account for out of scope tax code, or for any goods that dont apply to the gst or pst, and 0. Learn the three types of tax that small business owners must know in 2020. The tax situation for canadian startups is super confusing, especially if you. This bulletin explains how the pst applies to intangible software e. These are accounts to track gstpst collection and payments in the course of doing business. The taxability of services related to the sales of software e. The harmonized sales tax hst is a combination of the canadian goods and services tax gst and provincial sales tax pst that is applied to taxable goods and. This tax is managed by the canada revenue agency and results in a 5 percent charge on supplies purchased in canada unless they are zerorated or exempt. This is combined in most provinces with the local pst, which are set between 5% and 9%, to create a harmonised sales tax hst rate.
Tax rate for all canadian remain the same as in 2016. However, in some provinces, harmonized sales tax hst must be used. In canada, there are two types of sales taxes levied. The canadian purchaser is the importer and therefore responsible for paying the gst under division iii of the excise tax act if the software is considered to be imported goods within the meaning of section 212. Depending on province sales taxes in canada consist of gst good and services tax and pst provincial sales tax combination or hst harmonized sales tax only. Currently, pst or qst in quebec ranges from 6 to 10 percent. Understand sales tax 101 for canadian startups inside quaderno. The only exception is pei which adds up gst first and then calculates pst. The goods and services tax is defined in law at part ix of the excise tax act. The provinces of british columbia, manitoba, quebec and saskatchewan levy a provincial sales tax over and above the federally levied gst.
If you sell taxable goods and services to residents of manitoba, you are required to register under the retail sales tax act and collect retail sales tax, if all of the following apply. Purchasing digital products a comparison of canadian and u. Calculating taxes for quebec residents to other provinces of canada in 2020. May 22, 2017 if your accounting software records usd and you report gst hst collected and input tax credits in usd rather than canadian dollars, you are making a mistake. Pst is a sales tax levied by the individual province. Depending on your business location, you may have to charge a combination of pst and gst, gst only, or hst only. If the seller is in the same province as the buyer, both gst and pst are normally charged so you should leave the no pst box deselected. The combination of gst and pst the total tax that you have to think about paying is called hst harmonized sales tax in the provinces of new brunswick, newfoundland and labrador, nova scotia, ontario and prince edward island. Other provinces and territories have an hst, which is a combination of a pst and the gst that allows businesses to remit the entire amount to the canada revenue agency instead of dealing with the separate provinces. The revision bar identifies changes to the previous version of this bulletin dated february 2014. The gsthst is calculated on the canadian dollar value of the goods, including duty and excise tax, and is collected at the. In general, canada follows what is called the place of supply rule and determining gsthst is sort of straightforward, its all those darn pst provinces that really mess stuff up. If the item being invoiced is a service, gst is charged. Does your canadian business need to charge the gsthst.
Hint these instructions also apply to most other countries that use a gst or vat tax on sales and services tax agency setup. Hst harmonized sales tax is a blend of the two types of tax. Canadian gst hst pst tpstvqqst sales tax calculator. Provincial sales tax pst bulletin software government of b. In fact, the last increase in hst was for prince edward island a raise of 1% on october 1 st 2016 see the article. Understand the basics of bcs provincial sales tax, find out if you must register for pst, and also learn how it applies to the goods and services you purchase for your business manitoba. Introduced at an original rate of 7%, the gst rate has been lowered twice and currently sits at rate of 5%, since january 1, 2008. Canada tax treaty does not apply to sales taxes on either side of the border. Whether it is currently registered for gst hst, provincial sales tax pst or quebec sales tax qst. This program provides a report to separate gst and pst amounts. The hst includes the provincial portion of the sales tax but is administered by the canada revenue agency cra and is applied under the same legislation. Software maintenance and other forms of technical support. Doing business in canada gsthst information for nonresidents. It works most like the gst in that it is charged at each step of the economic process.
How does gsthst apply when exporting tangible goods from canada. Regarding the sale of the book, only the gst must be taken into account in this type of calculation. Check table bellow what kind of sales tax applies to each canadian provinceterritory. Gst zero rated for exports and associated services. British columbia 7% provincial sales tax pst manitoba 7% retail sales tax rst quebec 9. If so, the issue is generally when to charge a particular tax, e. Gst sometimes knows as the gst gouge and screw tax. This sales tax calculator can be used as gst calculator, pst or hst calculator depending on selected province or territory. Goods imported into canada are also within scope of these taxes, and its the importers responsibility to be aware of and abide by the gsthst requirements. The qst is the combination of the gst rate and the quebec provincial tax.
465 1624 34 690 1596 295 779 222 1493 194 1087 1504 826 1398 1287 251 631 109 1197 1033 1107 159 1241 258 197 246 355 915 284 830 961 379 534 1514 741 460 1328 706 1384 1464 883 1235