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A Case Study on HST - Part III: Tangible Personal Property

01/04/2011


Located in Red Deer, Alberta Game Company has sold their board games throughout Canada and have come to MNP for assistance in determining the correct rate of GST/HST to charge.

Game Company has just signed a large contract to sell 1000 of their games to a retailer in Manitoba. They need guidance regarding what rate of tax to charge. Manitoba has a provincial sales tax of 7% and the GST of 5%. As this is a large contract, Game Company is wondering if they need to worry about the 7% PST in Manitoba.

Game Company explains further that the terms of this contract require them to deliver the games to the customer’s warehouse in Brandon, Manitoba. Freight is to be arranged by Game Company and then added to the invoice which is why they need to know what rate of GST/HST to charge and if they will need to charge PST as well.

GST/HST

Since Game Company is delivering the games into Manitoba, they are required to charge GST at 5%.

PST

Game company is not registered for Manitoba PST but the purchasing company is—and wants to provide Game Company with a PST exemption number. Under most provincial sales tax systems when someone is purchasing goods for resale they are able to provide their PST number and purchase the goods without paying PST as they will then be charging PST to their customers. Game Company is not required to charge PST in this situation for several reasons, including:

  1. The goods are for resale
  2. Game Company is not registered for PST in Manitoba

This concludes our look at three different situations involving Game Company and how the Place of Supply rules for Tangible Personal Property would be applied.

Stay tuned for Part IV, we will look at some of the issues Game Company faces when dealing with Place of Supply Rules for Services.

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More From This Series

Part I: The Place of Supply Rules
Part II: GST/HST Rates on Supplies