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When to Register for PST?

15/09/2009


Do you live in one of the PST provinces (B.C., Saskatchewan, Manitoba, Ontario, Quebec or PEI), do you need to register for PST?

Unless you are operating in Quebec, which has a sales tax very similar to the GST, there is no small supplier threshold. Therefore if you are carrying on a business and have taxable sales, you are required to collect PST right from the first dollar of sales. PST is charged to the customer. There are very few exceptions to having to collect PST. One exception is if you are a charity and have less than $10,000 of taxable sales or if you have only the odd taxable sale such as a garage sale. Generally provincial sales tax is applicable to the sale of most goods that can be seen and touched (tangible personal property). Each province is slightly different as to what services are taxable. Most will tax services to tangible personal property but not services to people; for example beauty services. It is very important to seek advice regarding the specific province that you are operating in. If you operate a hair dressing salon; such that the charge for hair cuts is not subject to PST, you will still be required to charge provincial sales tax if you are selling combs, brushes, hair products etc.

If you find that you have been carrying on business and not charging PST when you should have, you may want to consider filing a voluntary disclosure prior to remitting the past due taxes. If the voluntary disclosure is accepted penalties are waived leaving only the tax and interest owing.

If you are carrying on business in Quebec, there is a small supplier threshold similar to the GST. Once your sales (inside and outside Quebec) exceed the $30,000, you will be required to register for Quebec Sales Tax (QST). Generally if you are operating in Quebec and are required to be registered for GST, you will also be required to register for QST .

Why would you want to register for PST?
You would want to register for PST to be compliant with the rules of the province. Unlike the GST, you are not able to deduct the PST that you pay on your purchases, however when you are registered for PST you may be able to buy your inventory exempt from PST if you will be reselling it and charging PST.

QST does work the same way as the GST, so you are allowed to claim input tax refunds (ITRs); the QST paid on your purchases against the QST collected on your sales in Quebec.

The above is a very brief simplified summary of when registration is required. Please consult with your local MNP advisor to determine the specific issues for your particular situation.