Sales Tax - Canada

In Canada, tax is remitted to the government based on your purchases and expenses. A company generally receives credit toward their taxes when goods are resold and sales tax is charged. In Canada, there is a federal tax known as the GST (Goods & Services Tax). Depending upon the province or territory, this tax is either reported separately or combined with any provincial or territorial sales tax. When combined, the tax is typically referred to as "harmonized" or HST. In areas where the GST is reported separately, the province portion is referred to as PST.

The form is a bit simpler for Canadian sales tax use. Enter the tax code, description, name or abbreviation to be used on documents, and the total percent of the tax rate (as a whole number, not the decimal equivalent of a percentage. For example, enter 5 for 5%, not .05 which would be treated as 5/100 of 1%). The total percent may or may not include the GST (goods & services tax) collected by the federal government. If your province has an HST (Harmonized Sales Tax), the percentage should include the GST rate. If not, meaning your province has separate PST from GST, the PST locations should not include the GST percentage. A separate GST tax code must also be set up (in either case) and designated in Parameters under the Point of Sale tab.

Main Menu > Point of Sale > Database > Sales Tax Maintenance

Sales Tax Maintenance (Canada)

Tax Code

The tax code is a 6-character code used for selection in transactions and utility forms requiring or allowing assignment of a tax location. Each tax location would have its own unique code.

Description

This text-area provides a more detailed description for the tax location up to 30-characters.

Name on Invoice

This field allows you to enter a longer or shorter name for printing on documents that display a tax location. The maximum size of the "name" is 12-characters.

Total Percent

This is the percentage to be charged. This may or may not include the GST rate. Please read the following to determine the percentage to use as well as other important information:

Tax Setup for Canada

ALL Canadian customers should begin with the following:

1. Define one location to use as the default GST location in Sales Tax Maintenance. This should be assigned the federal tax rate (currently 5%, but please rely on your Provincial tax authorities for the latest rate information).

2. Assign the GST tax code as the "GST Tax Code" parameter located on the Point of Sale, Settings tab of the Parameters form (Maintenance, Database).

3. Define at least one other sales tax location that is either PST (Provincial Sales Tax) or HST (Harmonized Sales Tax) in Sales Tax Maintenance. Do not check the "GST Taxable" check box.

4. Branches, customers, and jobs should never be assigned to the GST location.

A separate GST tax location must always be setup and assigned to the federal tax rate. A Point of Sale parameter is used to indicate which tax location is used for GST sales tax.

The following tax table is for reference only and should not be relied upon as tax rates are subject to change. These are the tax rates as of January 2018. Please refer to your Provincial tax department as well as the Canadian Revenue Agency for details and verification.

https://www.canada.ca/en/revenue-agency.html

Canada's Province	Rate type (HST, GST, PST)	Provincial rate	Canada rate	Total
Alberta	GST	0%	5%	5%
British Columbia (BC)	GST+PST	7%	5%	12%
Manitoba	GST+PST	8%	5%	13%
New-Brunswick	HST	10%	5%	15%
Newfoundland and Labrador	HST	10%	5%	15%
Northwest Territories	GST	0%	5%	5%
Nova Scotia	HST	10%	5%	15%
Nunavut	GST	0%	5%	5%
Ontario	HST	8%	5%	13%
Prince Edward Island (PEI)	HST	10%	5%	15%
Québec	GST + QST	9.975%	5%	14.975%
Saskatchewan	GST + PST	6%	5%	11%
Yukon	GST	0%	5%	5%

Harmonized (HST) vs. Province Tax Codes (PST)

Provinces and territories with one consolidated (combined) tax rate are identified as "harmonized" or HST. Other provinces that separate their taxes from the federal tax are considered "provincial" or PST.

If your province has HST, the tax is collected and submitted as one amount. Your tax location should be set-up with the "Maritime (HST)" check box checked (Do not check the "GST Taxable" check box in this case). The "total percent" should be the overall rate being charged (it should include the GST tax rate, in other words). Items should be set with a taxable status of either "yes," "no," or "always." Adjustments that are taxable should have both the PST and GST check boxes selected. Customer who are exempt for HST should have their tax ID specified for both the PST and GST Tax Exempt ID fields.

If your province has PST and GST, the tax is collected and submitted separately. The "Maritime (HST)" check box should not be checked in these cases. The tax rate should not include the GST portion of the tax, only specify the PST (Provincial) percentage.

Exemptions

Items can be taxable or not taxable for either or both the GST and PST. Use the "GST Taxable" option for items that are taxable for GST only but not PST. Use the "PST Taxable" option for items that are taxable for PST only but not GST. Use "yes," "no," or "always" in all other cases.

Adjustments that are taxable should have neither, either, or both the PST and GST Taxable check boxes selected depending upon the type of adjustment and rules in your Province.

Customers who are exempt for PST should have their PST exempt ID entered and customers who are exempt for GST should have their federal exempt ID entered.

Purchase Exemption

Some areas may not be required to pay PST amounts on purchases but do charge PST with Point of Sale transactions. In these cases, only the GST portion would be paid on purchases. This can be designated using the "Exclude Purchases" check box on the Sale Tax Maintenance form for the tax location.

Maritime or Harmonized Sales Tax (HST)

The check box labeled Maritime (HST), or Harmonized Sales Tax, is used to designate the tax location as being a combination of the standard GST (aka. Goods & Services tax) that is collected federal level as well as the provincial tax portion. The two (2) parts of the HST are combined together on documents and remitted together. Enter the TOTAL percentage of the rate and check this field so that the current GST rate is not added at time of sale.* This tax applies to certain provinces, particularly the maritime provinces (Nova Scotia, New Brunswick, and Newfoundland and Labrador). For example, an HST tax rate of 13% would include the 5% federal GST tax as well as the 8% province tax.

On other (non-HST) transactions, the GST and province tax codes are normally both printed as separate amounts. When a tax location is designated as a Maritime (HST) location, only one tax rate will be displayed or printed.

*Users must have previously created a tax location for GST use with the current federal tax rate and also have specified the GST tax code from the Parameters database (Point of Sale tab) located under the Maintenance area.

GST (Goods & Services) Taxable

The "GST Taxable" check box indicates whether the current tax location is calculated on an amount that includes the GST tax amount. This means that the GST is calculated and any other tax (represented by this code) is then calculated including that amount. At one point, Quebec did this (charge QST tax on the GST amount as well); however, they no longer do.

$100.00 + 5% GST = $105.00 + 8% (TAX) = $113.40 (Tax on Tax)

This check box is generally not selected (checked) for any situation including GST, PST, and HST.

Use for Delivered Sale

In some areas, the seller's tax location is used even in the case of delivered sales. In others, the tax location where the goods are exchanged (delivered) is used instead. If this tax location should override the seller's (store's) default tax location in cases when goods are being delivered, check the box. If the store's location should be used for any deliveries to this tax location, do not check the box. In cases when no delivery is designated, the store's (seller) location is used.

Exclude Purchases

In some cases, a particular province or territory may not charge PST for purchases, just GST, but must collect PST for Point of Sale (along with the GST portion). If this applies to the tax area, check the "Exclude Purchases" so that only the GST amount is set for purchases.

Sales Always Use

This setting can be used if you want the sales tax location to always be used when assigned to a customer or job as the default tax location. This would be used in cases, where regardless of the delivery status of the transaction, the customer's tax rate is used. This might be the case for economic development zones or special population zones, for example.

Use Tax (% of Cost)

This setting is used primarily for installed sales. If assigned to an Installed Sale contract this type of tax code indicates that the sales tax is to be calculated based upon the cost of the materials. Orders and Tickets can sometimes be assigned a "use" tax code, but only when the user processing the transaction has permission to access the installed sale area. When a "use" tax code is assigned to an installed sale contract, it is automatically assumed that any sales tax is already being included in the contract total (not added).*

*The "Tax Included" check box on the Installed Sale contract's Billing tab will be automatically checked and disabled (not allowing changes).