Here are the answers to the quiz above.
- You charge 15%, the rate for Nova Scotia. Goods sold and shipped anywhere in Canada bear GST or HST based on the rate of tax in the destination province.
- You still charge 15%, the rate for Nova Scotia. As long as you’re arranging the shipping, even as the customer’s agent, the same rule applies as in #1: the GST or HST applies at the rate in the destination province to which you’ve shipped the goods.
- You charge only 5% GST, the rate for Alberta. You’ve completed delivery at your Calgary warehouse, and the customer has made her own arrangements to pick up the goods.
- You charge only 5% GST. Services are normally taxed based on the customer’s address (subject to some exceptions), and there’s no HST in Manitoba.
- Again you charge only 5% GST. It doesn’t matter where you perform the work. Services are normally taxed based on the customer’s address (subject to some exceptions).
- You charge 13% HST, the rate for Ontario. A service “rendered in connection with litigation” in a province’s courts is taxed at the rate for that province. The litigation is in an Ontario court. This rule is often thought to apply only to lawyers’ services, but is actually much broader!
- Again you charge 13% HST, the rate for Ontario, because this is a service in connection with litigation in an Ontario court. It doesn’t matter where you perform the service.
- You charge only 5% GST, the rate for Alberta. Even though services are normally taxed based on the customer’s address, there is an exception for “personal services” performed in the presence of the individual to whom the services are rendered. Such services are taxed based on where they are performed. Since you perform the service in Alberta, the Alberta rate applies.
- You charge 15% HST, the rate for New Brunswick. The exception for “personal services” in #8 above doesn’t apply to an “advisory, professional or consulting service”. Instead, such a service is subject to the normal rule for services, based on the customer’s address. (A physician’s service is a “professional” service.)
- You charge only 5% GST, the rate for Quebec. There is a special rule for goods that are sent for repair, alteration, cleaning or a similar physical service. The tax applies based on the address to which the goods are returned after being repaired, altered, cleaned, etc. (If you had an office in Quebec, you would have to charge Quebec Sales Tax as well.)
If you didn’t score too well on the quiz, don’t be surprised. The rules are complex and confusing. What’s important is that you ensure that your business applies the rules correctly. Otherwise you could be in for a very costly assessment when a CRA auditor shows up to audit your business for the last several years of GST and HST.