Keeping records is an important skill as a business owner and is a requirement for tax calculations. Effective records allow you to calculate the amount of tax collected and amount of tax you paid on supplies for your business. The two primary forms of sales tax you should understand as a business owner are PST: Provincial Sales Tax and GST: Goods & Services Tax.
PST: Provincial Sales Tax
In Saskatchewan, a provincial sales tax rate of 6% applies to the purchase, importation or rental of certain goods and services. When appropriate, a business must apply 6% provincial sales tax to the total retail price (excluding all other taxes). The tax is collected on behalf of the Saskatchewan government, and forwarded (remitted) annually, quarterly or monthly, depending on sales volume.
To find out if your product or service is subject to tax, visit the Ministry of Finance’s (MoF) Tax Bulletins to understand how PST may be applied.
All businesses operating in Saskatchewan must be licensed or registered with the MoF for PST purposes. There are two ways to register for PST:
- Apply when you register your business name or incorporate with Information Services Corporation (ISC). ISC forwards your information to the MoF to start the process of obtaining your PST license.
- Complete the Vendor’s License application form. You can find the form online or request the latest version by emailing SK Startup Institute at info@skstartup.ca
Generally, businesses must pay tax on any goods purchased for any reason, except for when reselling goods to customers. A vendor’s license also enables you to be exempt from paying the tax on taxable inventory and services that you will resell to your customers. By providing your vendor’s license number, your supplier can exempt the tax at the time of your purchase.
If your business does not make retail sales or provide taxable services in Saskatchewan, you must still register as a Consumer for the purposes of paying tax on equipment and supplies used to provide your services. When buying equipment and supplies, for example, from a supplier licensed to collect the tax, the tax is paid to the supplier. Otherwise, businesses are expected to pay the tax directly to the
Revenue Division.
GST: Goods & Services Tax
In Canada, GST is a tax that almost everyone pays on most goods and services. When appropriate, a business must apply 5% GST to the total retail price (excluding all other taxes) of goods or services. The tax is collected on behalf of the Canadian government, and forwarded annually, quarterly or monthly, depending on sales volume. Products and services can be taxable, zero-rated or exempt.
Businesses that sell taxable goods and services are required to charge and remit GST if sales revenues are over $30,000 in one calendar year. If you do not meet this threshold, you may still want to charge and remit GST for the benefit of Input Tax Credits (ITCs).
ITCs allow you to recover GST paid on supplies bought for your business activities. If you do not charge GST because your revenue is under the threshold, then you cannot claim ITCs.
Businesses that sell zero-rated goods and services charge GST at 0%. This means there is no GST to collect, but the business may still qualify to claim ITCs.
Businesses that sell exempt products and services do not charge GST at all and cannot claim ITCs.
Opening your GST program account comes with an obligation to charge GST on your taxable supplies. It also comes with regular mandatory reporting, even if you do not make sales or collect GST.
In order to open your account, you will need your federal Business Number. Account registration can be done over the phone by calling Canada Revenue Agency (CRA) at 1-800-959-5525 or online.
