On March 7, 2019 as part of the 2019-20 budget, Manitoba's Progressive Conservative government announced that the provincial sales tax (PST) will be reduced from 8% to 7% effective July 1, 2019. The timing of this reduction came as a surprise–originally promised as part of the Progressive Conservative Party's election platform, the 2018-19 budget indicated that the reduction would only be implemented in 2020. Manitoba will now have the third lowest sales tax rate among all of the provinces.
This change will affect all Manitoba businesses registered for PST, and businesses from outside Manitoba that are selling or renting goods or selling certain services to Manitoba consumers. The change will also be very popular with Manitoba consumers who will benefit from this rate reduction.
Registered businesses, both within and outside of Manitoba, will need to adjust their point of sale or other sales recording software to account for this change in rate.
On March 7, 2019, the Manitoba government also announced transitional rules to help businesses to administer this change in sales tax rate. In general terms, the reduced rate of 7% will apply to goods purchased after June 30, 2019, including goods for which the purchaser has made only a deposit on the purchase. However, goods purchased before July 1, 2019 on credit or by deferred payment arrangement where payment is made after June 30, 2019, and for goods paid for before July 1, 2019 and delivered after that date, the 8% tax rate will apply. The transitional rules for taxable services will vary with the type of service. Real property contracts executed prior to March 7, 2019 are also subject to special transitional rules. The rules for real property contracts will be different for contracts entered into prior to the announcement date and those entered into after the announcement date. The tax rate is not based on contract date but rather when the goods are supplied or services provided. Documentation should be retained to verify the dates of supply.
With this change going into effect in less than four months, affected businesses need to start planning for this change now. Please contact one of our BDO Tax Advisors for guidance on how this change will affect your business and get ready for the July 1, 2019 change in sales tax rate.
The information in this publication is current as of March 8, 2019.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.