Having to self-assess provincial sales tax is a major source of reassessments for PST auditors.
Some common situations and cautions:
- Buying goods or services from an out-of-province supplier: Where the supplier does not charge you PST, you are required to self-assess on the value of the purchase unless the goods or services are purchased for resale. Some out-of-province suppliers are registered for PST in Manitoba and include PST on your invoices. Be sure to give these suppliers your PST number. Always look carefully at your invoices.
- Taking material out of inventory for a purpose other than selling it: When you purchase inventory for resale it is tax exempt – as long as you provide the vendor with your PST number. However, if you take an item from inventory to use in the business (e.g. advertising or sales promotions), the business is now the consumer and is required to self-assess the PST payable.
- Manufacturing capital assets that will be retained in the business: If you manufacture equipment such as machinery, welding fixtures, sheds and shelving, you must self-assess on the total cost of the labour, materials and overhead, plus 15% of the total.
PST is complicated enough. The rules for self-assessing can be even more so, and the cost of failing to self-assess can be prohibitive. The Lazer Grant Tax Team is happy to help.