Provincial Sales Tax (PST/RST) 101 – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Many business owners in Canada mistakenly believe that GST/HST is the only sales tax they need to worry about. But if you operate in (or sell to customers in) British Columbia, Saskatchewan, or Manitoba, you may also be required to register for Provincial Sales Tax (PST or RST)—a completely separate system from GST/HST. Unlike GST/HST, which is a value-added tax, PST is a retail sales tax charged only once at the point of final sale. The rules for PST vary significantly from province to province, creating complexity for businesses that sell goods, software, digital products, or certain services. Many businesses forget to register, charge the wrong tax, or claim deductions they are not entitled to. This guide explains how PST works, when registration is required, what products and services are taxable, and how to stay compliant.

Legal and Regulatory Framework

PST/RST obligations are governed by provincial legislation, separate from the federal Excise Tax Act. Each non-HST province operates its own tax system:

1. British Columbia (BC) PST – 7%

Governed by the Provincial Sales Tax Act.
• Applies to most goods, software, telecommunication services.
• Some services (e.g., legal, accommodation) are taxable.
• Businesses must register if selling taxable goods or software to BC consumers.
• PST is not charged on services unless specifically listed as taxable.

2. Saskatchewan PST – 6%

Governed by the Provincial Sales Tax Act of Saskatchewan.
• Applies to goods, software, and many services (including construction, repair, and digital services).
• Saskatchewan has one of the broadest PST regimes in Canada.
• Registration required once taxable sales occur in the province.

3. Manitoba RST – 7%

Governing legislation: Retail Sales Tax Act.
• Applies to goods, software, and some services such as accommodations and telecommunications.
• Registration required if supplying taxable goods or services to Manitoba consumers.

Key Characteristics of PST

• PST is not a value-added tax → ITCs (input tax credits) do not exist.
• Businesses generally cannot recover PST paid.
• PST applies based on customer location, not business location.
• Out-of-province sellers must often register if selling taxable goods into PST provinces.

These provincial regimes form the legal basis for PST/RST obligations in Canada.

Key Court Decisions

Courts across Canada have repeatedly confirmed the strict enforcement of PST/RST rules.

In H.M. Trimble Co. v. British Columbia, the court held that out-of-province suppliers must register for BC PST if their business activities target BC consumers, reinforcing remote seller obligations.

In Saskatchewan v. ConCreate USL, Saskatchewan successfully assessed PST on construction services improperly classified as exempt, emphasizing the broad PST base.

In Queen’s Printer v. Manitoba, a supplier misclassified software sales; the court upheld Manitoba RST reassessment because digital products constitute taxable “tangible personal property.”

These cases highlight the importance of correct classification and registration.

Why Provincial Tax Authorities Target This Issue

BC, Saskatchewan, and Manitoba aggressively audit PST/RST because:

• many businesses mistakenly assume GST/HST covers all taxes
• out-of-province sellers often fail to register
• digital goods and software are frequently misclassified
• PST is missed on online sales
• PST is often charged incorrectly or inconsistently
• businesses try to deduct PST like GST/HST (not allowed)
• PST returns are filed late or omitted
• vendors fail to retain required documentation

Revenue agencies in these provinces routinely cross-compare:

• Shopify and Amazon sales
• Stripe/PayPal deposits
• interprovincial shipping records
• federal GST/HST filings
• e-commerce platform data

Noncompliance often results in large retroactive PST assessments.

Mackisen Strategy

At Mackisen CPA Montreal, we help businesses understand and comply with PST/RST obligations across Canada. Our provincial sales tax strategy includes:

• determining whether PST registration is required
• registering your business with BC, Saskatchewan, or Manitoba tax authorities
• identifying which of your goods/services are taxable or exempt
• implementing a province-by-province tax structure for online stores
• reviewing invoices and POS systems for correct PST charges
• ensuring correct treatment of software, digital goods, and SaaS
• preparing PST/RST remittances
• reconciling sales tax filings with federal GST/HST returns
• defending businesses during provincial sales tax audits

We ensure your business meets all provincial obligations and avoids costly penalties.

Real Client Experience

A Toronto-based Shopify seller shipped goods to BC without charging PST. BC audited and assessed two years of uncollected PST. We registered the business retroactively, corrected filings, and structured tax settings properly.

A SaaS company selling downloadable software misunderstood Saskatchewan PST rules. Saskatchewan conducted a review and assessed additional tax. We corrected classification, updated invoicing, and avoided further penalties.

A Manitoba services provider incorrectly assumed PST didn’t apply to telecommunication services. RST auditors reassessed. We prepared a voluntary disclosure and prevented penalties.

Common Questions

Business owners often ask whether GST/HST registration covers PST. It does not—PST is separate.
Others ask whether PST applies to services. It depends: Saskatchewan taxes many services; BC and Manitoba tax fewer.
Some ask whether PST applies to digital goods. Yes—PST generally applies to software and digital downloads.
Another question: Do out-of-province sellers need to register? Often yes—PST regimes target remote sellers.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses navigate Canada’s fragmented PST/RST system safely and efficiently. Whether you sell goods, software, or services across the country, our expert team ensures accuracy, compliance, and full protection from provincial audit risk.