COVID-19 sales tax relief in Canada

The new coronavirus, COVID-19, is wreaking havoc on businesses in Canada, much like everywhere else in the world. And as in other countries, federal and local governments are providing a variety of tax relief measures.

This post focuses on sales tax relief but begins with an explanation of the three types of sales tax in Canada.

Goods and Services Tax (GST): A national sales tax that applies to most supplies of goods and services in Canada, as well as many supplies of real property (e.g., buildings and land) and intangible property (e.g., digital products). It’s administered by the Canada Revenue Agency (CRA). The rate is 5%.

GST is collected in the following provinces:

• Alberta
  GST only; no local sales tax
• British Columbia
  plus Provincial Sales Tax (PST)
• Manitoba
  plus PST
• Northwest Territories
  GST only; no local sales tax
• Nunavut
  GST only; no local sales tax
• Québec
  plus Québec Sales Tax (QST)
• Saskatchewan
  plus PST
• Yukon
  GST only; no local sales tax

Harmonized Sales Tax (HST): A tax that combines GST with a local sales tax. Like GST, it’s administered by the CRA and generally applies to the same goods and services as GST (thus, it’s harmonized). Rates vary and can be as high as 15%.

 HST is collected in the following provinces:

• New Brunswick
• Newfoundland and Labrador
• Nova Scotia
• Ontario
• Prince Edward Island

Provincial Sales Tax (PST) (QST in Québec): A tax some provinces and territories add on top of GST. Unlike GST and HST, it’s administered by the province or territory rather than the CRA. Rates range from 6% to 10%.

PST is collected on top of GST in the following provinces:

• British Columbia
• Manitoba
• Québec (QST)
• Saskatchewan

Find more details in Canadian sales tax for U.S. sellers.

Businesses, including self-employed individuals, may defer payments of GST, HST, and customs duties on imports until June 30, 2020. Yet those who can should file and remit tax on time.

The extension applies to:

• The February, March, and April 2020 reporting periods for monthly filers
• The January 1, 2020, through March 31, 2020, reporting period for quarterly filers
• Amounts collected and owed for the previous fiscal year, and GST/HST installments for the current fiscal year

While the filing deadline remains unchanged, the CRA won’t impose penalties on late returns provided they’re filed by June 30. Likewise, no interest will apply if payments or remittances are made by that date. See Deferral of GST/HST Tax Remittances (COVID-19 Measures) for more information.

The CRA won’t contact any small or mid-sized businesses to initiate any GST/HST or income tax audits for the next four weeks. It’s suspending audits temporarily for the majority of businesses.

Finally, the Canadian government is also doubling the Goods and Services Tax credit for the 2019–20 benefit year.

Additional details are available here and here.

Just as American sales tax relief for COVID-19 varies by state, PST COVID-19 relief varies by province.

British Columbia

Tax returns and payments with due dates after March 23 and before September 30, 2020, are now due September 30, 2020. The deferral is automatic: Businesses may continue to file returns as normal and defer payments until September 30 or wait to file returns along with payments on or before September 30.

Come September, separate returns must be submitted for each reporting period. However, taxpayers may make a lump-sum payment.

In addition to PST, this relief applies to the municipal and regional district tax on accommodation, carbon tax, motor fuel tax, and tobacco tax.

See the Government of British Columbia website for more information.

Manitoba

The April and May PST filing deadlines are extended for two months for small and mid-sized businesses with monthly remittances of no more than $10,000. The Manitoba Taxation Division will work with businesses regarding flexible repayment options above the $10,000 cap. See the Manitoba Tax Publications page on the Taxation Division website for more details.

Québec (QST)

For QST due between March 27 and June 1, 2020, the deadline to file returns and make payments is extended to June 30, 2020. Interest and penalties will be waived. Additional details are available in Information Bulletin 2020-5 and at Finances Québec. 

Saskatchewan

According to the Government of Saskatchewan, businesses unable to remit PST “due to cashflow concerns will have three-month relief from penalty and interest charges.” The extension is until June 30, 2020. Businesses may submit a request for relief from penalty and interest charges on the return(s) affected. Furthermore, audit program and compliance activities have been suspended temporarily. Additional details.

To learn more about tax relief related to COVID-19 in the United States, see our COVID-19 tax relief roundup.