What is the Provincial Sales Tax (PST) in Saskatchewan?
Saskatchewan’s Provincial Sales Tax (PST) is a 6% tax levied on the retail sale of most goods and certain services. It is a consumption tax, meaning that it is ultimately borne by the end consumer. Businesses that sell taxable goods or provide taxable services are responsible for collecting PST at the point of sale and remitting it to the Saskatchewan Ministry of Finance.
Unlike the Goods and Services Tax (GST), which is a federal tax applied uniformly across Canada, PST is administered at the provincial level. Each province with a sales tax has its own rules, exemptions, and rates. In Saskatchewan, PST is distinct and applies to a specific list of goods and services, which we’ll explore in more detail later.
Who is Required to Register for PST?
a) Businesses
If your business operates in Saskatchewan and sells taxable goods or services, you are required to register for PST. This includes both residents and non-residents who conduct business in the province. The obligation to collect PST extends to businesses that make retail sales, lease or rent taxable goods, or provide taxable services.
b) Out-of-Province Businesses
Even if your business is not physically located in Saskatchewan, you may still be required to register for PST if you sell goods or services to customers in the province. This applies to businesses operating through online platforms, making digital sales, or shipping products to Saskatchewan. Out-of-province businesses that meet specific thresholds must also collect and remit PST.
c) PST Registration Process
To register for PST in Saskatchewan, businesses must complete an application through the Saskatchewan eTax Services (SETS) platform. Once registered, businesses will receive a PST account number, which they must use for all transactions and filings related to sales tax.
Scope of Saskatchewan PST: What is Taxable?
The Provincial Sales Tax in Saskatchewan applies to a broad range of goods and services. Let’s break it down into different categories:
a) Taxable Goods
PST is charged on the sale, rental, or lease of most tangible personal property (goods) in Saskatchewan. Common taxable goods include:
- Clothing and footwear: Standard retail clothing, shoes, and accessories.
- Electronics: Phones, computers, televisions, and other consumer electronics.
- Furniture and appliances: Household furniture, kitchen appliances, and home decor items.
- Automobiles: PST applies to the sale of new and used vehicles, including private sales. The tax is calculated based on the sale price or the vehicle’s market value.
- Building materials: Items such as lumber, flooring, and hardware are subject to PST.
- Alcoholic beverages: All alcoholic drinks are taxed at the point of sale.
b) Taxable Services
In addition to goods, Saskatchewan PST also applies to certain services. Some of the most common taxable services include:
- Telecommunications: Services such as cell phone plans, internet, and cable.
- Insurance premiums: PST is charged on various types of insurance, including group insurance and individual health and life insurance policies.
- Repair and maintenance: Services for repairing or maintaining taxable goods (e.g., vehicle repairs, appliance servicing).
- Construction services: Labor and materials for real property construction, including both residential and commercial projects.
c) Real Property and PST
PST applies to real property services under certain conditions. Contractors and builders must pay PST on the materials they purchase for construction. However, when contractors sell the final property to a consumer, PST is considered embedded in the price and not separately charged.
Exemptions from Saskatchewan PST
While PST applies to many goods and services, there are several exemptions. These exemptions reduce the tax burden for certain industries and consumers, and knowing them can help both businesses and individuals avoid overpayment.
a) Exempt Goods
Several categories of goods are exempt from PST in Saskatchewan. Common exemptions include:
- Basic groceries: Unprepared food items such as fruits, vegetables, meat, dairy, and bread are exempt.
- Prescription drugs: Medications prescribed by a doctor are exempt from PST.
- Medical devices: Items like wheelchairs, hearing aids, and prosthetic devices are also exempt.
- Agricultural goods: Specific items used for farming and production, such as seeds, fertilizers, and feed, are PST-exempt. Livestock is also exempt from the tax.
b) Exempt Services
Certain services are also exempt from PST. These include:
- Professional services: Legal, accounting, and engineering services are generally exempt.
- Education: Most educational services, including tuition fees for post-secondary institutions, are exempt.
- Personal services: Haircuts, beauty treatments, and other personal care services are PST-exempt.
c) Exemptions for Indigenous Persons
Indigenous persons and businesses on reserves are entitled to specific exemptions under Saskatchewan PST rules. Purchases made by Indigenous individuals with proper documentation (e.g., a Certificate of Indian Status) are exempt from PST when goods are delivered to a reserve.
Out-of-Province and Online Purchases
In an increasingly digital world, consumers in Saskatchewan frequently purchase goods and services from outside the province. Saskatchewan’s PST rules have evolved to account for this trend, particularly regarding online purchases and out-of-province transactions.
a) Out-of-Province Purchases
When Saskatchewan residents purchase goods from another province or country, they are still required to pay PST on those goods if they are brought into Saskatchewan for use. This includes items purchased while traveling or ordered from online retailers. Businesses that make significant sales into Saskatchewan may be required to register for and collect PST on these transactions.
b) Online Sales and Digital Goods
In recent years, Saskatchewan has expanded PST applicability to digital goods and services. This means that items such as e-books, music downloads, and subscription-based streaming services may be subject to PST, even if the seller is located outside the province.
How to Collect, File, and Remit PST
For businesses in Saskatchewan, compliance with PST rules is crucial. Once a business is registered for PST, they must charge the tax on all taxable sales and remit it to the provincial government.
a) Collecting PST at the Point of Sale
Businesses must charge PST at the point of sale and display it as a separate line item on customer receipts. This applies to both in-person and online sales. If a business sells a combination of taxable and non-taxable items, it must calculate PST only on the taxable portion of the sale.
b) Filing PST Returns
Businesses are required to file PST returns regularly, typically on a monthly, quarterly, or annual basis, depending on their revenue. These returns detail the amount of tax collected from customers and must be submitted through the Saskatchewan eTax Services (SETS) portal.
c) Remitting PST
After filing their PST return, businesses must remit the amount of tax collected to the Saskatchewan Ministry of Finance. This can be done electronically through SETS. Late filings or remittances may result in penalties or interest charges.
PST Audits and Compliance
The Saskatchewan Ministry of Finance periodically conducts audits to ensure businesses comply with PST regulations. Businesses should maintain thorough records of all sales, purchases, and PST filings to facilitate the audit process and avoid potential penalties.
a) Keeping Records
Businesses must keep detailed records of:
- Sales and receipts showing PST collected.
- Purchases of taxable goods or services.
- Invoices and documents for items purchased from out-of-province.
These records must be kept for at least six years and be available for review during an audit.
b) Penalties for Non-Compliance
If a business is found to be non-compliant with PST regulations, they may face penalties, including fines, interest on unpaid taxes, or even suspension of their PST registration. Common compliance issues include failing to collect PST, underreporting sales, or late remittance of collected taxes.
Impact on Consumers
For consumers, Saskatchewan PST is a tax they must factor into their everyday purchases. While many essential goods, such as groceries and prescription medications, are exempt, consumers should be aware that most retail goods and services are subject to the 6% PST rate.
a) Purchasing Vehicles
A notable impact of PST is seen in vehicle sales. When buying a new or used vehicle in Saskatchewan, the 6% PST applies to the sale price. Even private sales between individuals are subject to PST, and the buyer must pay the tax when registering the vehicle.
b) Out-of-Province Purchases
Saskatchewan consumers who purchase goods from other provinces or countries may face PST when bringing those goods into the province. If the seller does not collect PST, the consumer is responsible for self-assessing and remitting the tax.
