Our guide to charging and collecting sales tax will provide you with an understanding of your responsibilities, as well as some valuable resources. Ideal for calculating taxes and subtotals from credit card bills and bank statements, or if you sell products with tax included. Hst, provincial taxes, canadian sales tax calculator of 2020. 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. 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.
Sales tax calculator, gst and pst 2020 calculconversion. Provincial sales tax pst bulletin software government of b. Gst is a valueadded tax levied by the canadian federal government. The small business owners guide to provincial sales tax. This free canadian invoice template charges both gst goods and services tax and pst provincial sales tax.
A business trying to determine which canadian sales taxes to charge and how much to charge should consider a number of factors, including. This page explains how to use goldenseal accounting software for the canadian gst, hst and pst sales taxes. If you charge clients outside of province, you dont need to collect pst, and if outside of canada, you dont need to collect gst. 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. 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. 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. 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. For a summary of the changes, see latest revision at the end of this document.
Overview of charging and collecting sales tax canada. 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. Software maintenance and other forms of technical support. What makes software a bit complex is that in this day and age when we no.
Provincial sales taxes pst, levied by the provinces. 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. Gsthst internet file transfer gift an uploading tool used to submit text files to the cra website for filing gsthst returns and remitting payments. This applies to the supply of goods and services in canada. 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. Gst sometimes knows as the gst g ouge and s crew t ax. Ontario, newfoundland, new brunswick and nova scotia use the combined hst, which is charged regardless of the canadian buyers province. 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. Understand sales tax 101 for canadian startups inside quaderno. 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. 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. Four canadian provinces ontario, newfoundland and labrador, nova scotia, and new brunswick do not collect pst. Calculating taxes for quebec residents to other provinces of canada in 2020. If you operate a small business in canada, get essential information on sales taxes and invoicing, including tips, templates, and provincial tax rates.
Enter in the name and tax rate percentage for the national goods and services. Gst zero rated for exports and associated services. The information on this report contains actual tax data by company and order type for each tax ratearea. As of july 1, 2010, british columbia bc harmonized its provincial sales tax with the gst to implement the hst in. Some provinces charge their own pst rate in addition to the gst. 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.
In addition to gst, every province except alberta levies a provincial tax called pst provincial sales tax. 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. It works most like the gst in that it is charged at each step of the economic process. For example, a company with offices across canada purchases software in kamloops for use on their computers in bc and throughout canada. 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. Learn the three types of tax that small business owners must know in 2020.
Goods and services tax gst harmonized sales tax hst, a valueadded tax levied by the federal government. Check table bellow what kind of sales tax applies to each canadian provinceterritory. This applet will calculate all three types of canadian sales tax, gst g oods and s ervices t ax, hst h armonised s ales t ax and pst p rovincial s ales t ax. 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. This sales tax calculator can be used as gst calculator, pst or hst calculator depending on selected province or territory. Whether it is currently registered for gst hst, provincial sales tax pst or quebec sales tax qst. Guide rc4022, general information for gst hst registrants. Simple and easy to use add or remove tax from an included amount easy reverse calculations calculates live as you typejust type in the. Regarding the sale of the book, only the gst must be taken into account in this type of calculation. Gsthst find out about the gsthst and ecommerce, if you need to register. This bulletin provides information on how the provincial sales tax pst applies to related services. Depending on your business location, you may have to charge a combination of pst and gst, gst only, or hst only.
Overview of charging and collecting sales tax canada business. In canada, there are two types of sales taxes levied. Does your canadian business need to charge the gsthst. Oct 29, 2015 hst is the provincial sales tax pst, and gst combined. 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. Do i need to collect gstpst for providing software services to. The tax situation for canadian startups is super confusing, especially if you. Before you generate a gift file, set up your software identification code, sales tax code, and sales tax group. 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. This is combined in most provinces with the local pst, which are set between 5% and 9%, to create a harmonised sales. Nov 06, 2019 the tax situation for canadian startups is super confusing, especially if you have an online business that sells globally. If so, the issue is generally when to charge a particular tax, e. Although the pst is always calculated after the gst is calculated, in some cases it is based on the pregst value and in other cases it is based on the value after gst has been added in effect, a tax on a tax.
However, in some provinces, harmonized sales tax hst must be used. A friendly reminder from your trusted adviser to not overlook gsthst tax savings opportunities in areas outside the traditional accounts payable vendor invoice. 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 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. Jan 15, 2019 information about gst, hst, pst and payroll taxes for small canadian businesses. The goods and services tax is defined in law at part ix of the excise tax act. In quebec, the gst is called the tps taxe sure let produits en services literally. Provincial sales tax pst bulletin british columbia. 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. Sell taxable goods, taxable software or telecommunication services to. The qst is the combination of the gst rate and the quebec provincial tax.
Purchasing digital products a comparison of canadian and u. Currently, pst or qst in quebec ranges from 6 to 10 percent. Goods you import into canada are subject to the gst or the federal part of the hst, except for items specified as nontaxable importations. 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 gst applies to most goods and services made in canada. A federal tax called gst goods and services tax is levied by the federal government in every province in canada. 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. This post assumes that you are eligible to charge gst, hst or pst. Gst sometimes knows as the gst gouge and screw tax. The canada gst help page will help you understand how to configure and manage your goods and services taxgst, provincial sales taxpst, and. In all the other provinces, the canada revenue agency cra administers the gst and hst. The hst includes the provincial portion of the sales tax but is administered by the canada revenue agency cra and is applied under the.
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. Whether it is currently registered for gsthst, provincial sales tax pst or quebec sales tax qst. Goldenseal construction payroll software canada gst, hst. Discover the cloudbased, online accounting software wolters kluwer canada provides to assist small businesses with tax preparation and practice. Generally the gst rate is 5% except for certain items that are either zero rated or exempt. 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 gsthst is calculated on the canadian dollar value of the goods, including duty and excise tax, and is collected at the. Canadian gst hst pst tpstvqqst sales tax calculator. All other provincial taxes are charged as a consumption tax. 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. This bulletin explains how the pst applies to intangible software e. 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. These are accounts to track gstpst collection and payments in the course of doing business.
Doing business in canada gsthst information for nonresidents. The treaty does not address any of sales tax obligations. Its designed to help business owners, shoppers and travellers quickly add or remove tax from sales prices. 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. The gst and pst tax report lists canadian tax information from the tax detail file f0018 based on dream writer data selection and sequencing. There were no sales tax rates modification for 2020. This is applied in provinces who have harmonized both pst and gst into a single tax. Can set up gsthst and post a purchase order with tax on. Tax rate for all canadian remain the same as in 2016. 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. 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. This program provides a report to separate gst and pst amounts.
If the item being invoiced is a service, gst is charged. In some provinces in canada, only a gst is collected. If youre charging gst hst on your goods or services, follow the canada revenue agencys requirements for the information. Each province will have either hst or a combination of a gst and pst. Canada tax treaty does not apply to sales taxes on either side of the border. Finally, some provinces apply the 5% gst as well as a pst. It was designed to define taxation of certain incomes between the two countries e.
In fact, the last increase in hst was for prince edward island a raise of 1% on october 1 st 2016 see the article. The main difference with the qst is that quebec administers the gst and the qst. If you have never looked at whether your invoices are in canadian dollars or usd, you may have a problem and should go look. Qst, the quebec provincial sales tax, is treated as a valueadded tax. 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. Click on the manage invoice and tax settings button in the invoice settings section. Tax treatment of imported computer software canada. Hst harmonized sales tax is a blend of the two types of tax. 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. Surprising tax facts about doing business in canada. The provinces of british columbia, manitoba, quebec and saskatchewan levy a provincial sales tax over and above the federally levied gst. The revision bar identifies changes to the previous version of this bulletin dated february 2014. 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.
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. Its designed to help business owners, shoppers and. The provincial sales tax applied in quebec is called. To avoid gsthst obligations, a nonresident vendor can deliver or make available goods to its canadian customer outside 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. 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. Each province can calculate pst in one of two ways. The taxability of services related to the sales of software e. Hint these instructions also apply to most other countries that use a gst or vat tax on sales and services tax agency setup. 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.
Pst is a sales tax levied by the individual province. 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. A software package, such as wordperfect or lotus 123, is imported from a u. The revision bar identifies changes to the previous version of this bulletin dated september 20. 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. 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. On march 23, 2017, the saskatchewan pst as raised from 5% to 6%. Hst combines federal and provincial sales takes in one tax. How does gsthst apply when exporting tangible goods from canada.