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Saskatchewan PST Surprise!

It’s Been Almost a Month Since:

Saskatchewan changed its Provincial Retail Sales Tax (PST) rate from 5% to 6% effective March 23, 2017.
Have you and your Company’s systems caught up to this?

The rate of PST in Saskatchewan on all taxable sales is now 6%.   That means that goods purchased on or after midnight on March 23, 2017, that were not delivered or paid are subject to PST at a rate of 6% in Saskatchewan.

After we got over the initial indignation of Saskatchewan giving businesses ZERO notice on a tax rate change, it became clear that the province did, in fact, put a little thought into the matter. As part of the transitional rules Saskatchewan indicated that the PST rate would be 5% on the following:

  1. Goods that have been fully or partially paid for before March 23, 2017, but may be delivered after March 23, 2017.
  2. Goods delivered before March 23, 2017.
  3. Goods purchased on credit or on deferred payment arrangements where possession/title of the goods passed before March 23, 2017.
  4. Taxable services that were made or became payable BEFORE March 23, 2017, even if they are provided after that date.
  5. Taxable services completed BEFORE March 23, 2017, regardless of billing or payment date.
  6. Prepaid service arrangements bought and fully paid for before March 23, 2017.
  7. Lease Payments made or payable on or After March 23, 2017, are taxable at a rate of 6% even if the lease agreement is entered into before that date.

These rules should make the implementation of the increase somewhat easier to administer particularly in this month following the announcement. In addition to these changes, Saskatchewan also provided that services that are provided AFTER March 23, 2017, are taxable at the rate of 6% even if the contract was entered into before that date.

One question that comes up consistently is how to treat refunds of Saskatchewan PST in those situations where a business is allowed to provide them. Refunds of Saskatchewan PST on returned goods or cancelled sales are to be provided at the same rate at which tax was collected on the original sale.

Additional changes will be the subject of an upcoming post.