United States

Canada federal and Saskatchewan provincial 2017 budgets released

TAX ALERT  | 

On March 22, 2017, Canada’s federal 2017 budget and the Saskatchewan provincial 2017 budget were released, proposing various changes to the Goods and Services Tax / Harmonized Sales Tax (GST/HST), and the provincial sales tax (PST), respectively.

2017 federal GST/HST proposals

Ride-sharing services

The federal budget contains measures to amend the definition of a taxi business to ensure that ride-sharing services and taxi services are treated the same for GST/HST purposes. Effective July 1, 2017, a person providing ride-sharing services, such as those arranged through a mobile application (e.g., Uber or Lyft), will be required to become registered for GST/HST purposes and charge tax on their fares in the same manner as a taxi service.

Tour package accommodations rebate

The GST/HST rebate that is available to non-residents for tax payable on the accommodation portion of eligible tour packages will be repealed for supplies of tour packages made after March 22, 2017. As a transitional measure, the rebate will continue to apply to the supply of a tour package up to Jan. 1, 2018, if the entire consideration payable for the supply is paid before that date.  

Opioid overdose treatment – naloxone

Effective March 22, 2016, naloxone (and its salts) will be added to the list of GST/HST-free non-prescription drugs that are used to treat life threatening conditions.

2017 Saskatchewan provincial sales tax proposals

Rate increase for all taxable supplies

Effective March 23, 2017, the PST rate for all supplies currently subject to PST in Saskatchewan is increased from 5 percent to 6 percent.

Expanded provincial sales tax base

The PST base is being expanded to include supplies that were not previously subject to PST. As of the effective dates set out below, the following supplies will become subject to PST at the rate of 6 percent.

Effective April 1, 2017:

  • The PST exemptions for the sale of children’s clothing, restaurant meals and snack foods are eliminated. As a result, these supplies will be subject to PST.
  • The trade-in value of a used car can no longer be deducted from the purchase price of a vehicle before calculating PST on the sale of a new vehicle in Saskatchewan.
  • The remission order is removed and PST will apply to permanently mounted equipment used in the oil and gas and potash industries.
  • PST will apply to the total price for contracts entered into after April 1, 2017, for the repair, renovation or improvement of real property. However, contractors will be eligible to purchase materials exempt from PST.    

Effective July 1, 2017:

  • PST will apply to insurance premiums payable for all life, accident and health insurance, property, vehicle, liability and casualty insurance, and agricultural insurance.

Taxpayers subject to Canadian sales taxes should be aware of these proposed changes, as well as other provincial proposals, as the budget processes continues. Affected taxpayers should speak to their tax advisors with questions.

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