New Brunswick Sales Tax

New Brunswick applies the Harmonized Sales Tax (HST), which combines both federal and provincial taxes into a single rate. The current HST rate in New Brunswick is 15%, consisting of the federal Goods and Services Tax (GST) of 5% and a provincial portion of 10%. This tax applies to most goods and services, although certain exemptions exist, such as basic groceries and some medical items. Businesses operating in New Brunswick are required to register for HST if their taxable revenue exceeds $30,000 annually. Below is a breakdown of the HST components in New Brunswick.

HST Applicability

The Harmonized Sales Tax (HST) in New Brunswick applies to the majority of goods and services, including items sold at retail, professional services, and digital products. However, there are exceptions to the rule where certain goods and services are either taxed at a zero rate or exempt altogether. Taxable items include everything from household goods to professional services like consulting and accounting.

Examples of Taxable Items:

• Clothing and footwear
• Restaurant meals
• Electronics
• Professional services (e.g., legal, accounting)

Exemptions and Zero-Rated Items

While most goods and services in New Brunswick are subject to HST, certain categories are either exempt or zero-rated. Zero-rated items are taxed at a 0% rate, meaning businesses can claim input tax credits for any HST paid on expenses related to these goods and services. Exempt items, on the other hand, are not subject to HST, and no input tax credits can be claimed.

Examples of Zero-Rated Items:

• Basic groceries (e.g., bread, milk, fruits, and vegetables)
• Prescription medications
• Medical devices (e.g., hearing aids)

Examples of Exempt Items:

• Residential rental accommodation
• Most health care services
• Educational services (e.g., tuition for primary and secondary education)

HST Registration for Businesses

Businesses operating in New Brunswick must register for HST if they earn more than $30,000 in annual taxable revenue. Businesses below this threshold may voluntarily register to claim input tax credits on HST paid for business-related purchases.

Steps to Register for HST:

1. Obtain a Business Number (BN): Businesses must first acquire a BN from the Canada Revenue Agency (CRA).
2. Register for HST: This can be done through the CRA’s online services, by mail, or by phone.
3. Start Collecting HST: Once registered, businesses are required to charge HST on all taxable goods and services.

HST Filing and Payment for Businesses

After registration, businesses are required to file HST returns and remit the collected tax to the CRA. The frequency of filing and payment depends on the size of the business:

• Annual Filers: For businesses with less than $1.5 million in taxable sales.
• Quarterly Filers: For businesses with taxable sales between $1.5 million and $6 million.
• Monthly Filers: For businesses with taxable sales over $6 million.

Filing Deadlines:

• Annual returns are due three months after the end of the fiscal year.
• Quarterly and monthly returns are due one month after the end of the reporting period.

Input Tax Credits (ITCs)

Businesses can recover the HST they pay on purchases and expenses related to their commercial activities through Input Tax Credits (ITCs). ITCs are essential for reducing the overall cost of doing business.

Eligible Expenses for ITCs:

• Office supplies and equipment
• Rent or lease payments for commercial property
• Professional services (e.g., legal and accounting fees)
• Utilities (electricity, water)

Ineligible Expenses for ITCs:

• Expenses related to exempt goods and services
• Meals and entertainment (subject to certain limitations)

Penalties and Interest

Businesses that fail to file their HST returns or remit payment on time are subject to penalties and interest. Penalties can accumulate quickly, making it critical to comply with all filing and payment deadlines.

Common Penalties:

• Late Filing Penalty: A percentage of the unpaid amount if returns are filed after the deadline.
• Interest Charges: Applied to any unpaid HST balance from the day after the due date.

Changes to HST Rates or Regulations

While New Brunswick’s HST rate has remained stable in recent years, it’s important to stay informed about potential changes to tax rates or regulations. Provincial and federal governments periodically update tax laws that could impact the rates or the scope of what is considered taxable.

Changes may also affect specific industries, such as the digital economy, where new rules might be introduced to accommodate modern business models. Businesses are encouraged to consult tax professionals and regularly review updates from the Canada Revenue Agency (CRA).

Special Rules for Certain Businesses

Some industries and sectors in New Brunswick are subject to unique rules regarding HST. These special cases often apply to businesses in financial services, educational institutions, and health care, where full or partial exemptions may apply.

Examples of Special Rules:

• Financial Services: Many financial services are exempt from HST, including lending and investment management.
• Education: Educational services, such as primary and secondary school tuition, are generally exempt from HST.
• Health Care: Most health care services, including medical and dental care, are exempt.