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When to charge PST

Expert: Julie King

Zak asked:

I've recently signed a contract to do social research for the federal government ... do I charge PST on this service?

Julie King answered:

To answer your question I spoke to Michelle at the Provincial Sales Tax office.

In Ontario, while people often refer to the PST, the government uses the term RST or retail sales tax. RST currently applies to taxable goods and services, admission prices and insurance premiums.

What is important to note is that the RST applies to services when the service is related to the sale of something tangible to the end user.

Guide 901*, The Basics of Retail Sales Tax, notes:

"Only certain services are taxable in Ontario. They are:

  • telecommunication services (telephone, cable, pay television)
  • accommodation for less than one month (hotels, motels, bed and breakfasts)
  • labour provided to install, assemble, dismantle, adjust, repair or maintain tangible personal property and labour provided to install, configure, modify or upgrade a computer program
  • contracts for the service, maintenance or warranty of TPP, including a computer program
  • commercial parking."

*Source: on April 15,2008.

Therefore, while not specifically mentioned on the government website, research should not be RST taxable as it is not tangible.

However, if you are concerned that there could be an exception in your case, Michelle recommends that you fax a letter to Tax Advisory office to ask them for an opion about whether or not your service is taxable. Their fax number is 905-433-6747.

I hope this helps.

Julie King

About the author

Julie King is the co-founder and managing editor of CanadaOne, Canada's first small business portal.

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