On April 10, 2018, Minister of Finance Donna Harpauer presented the 2018 Saskatchewan budget, titled “On Track”. Today the Minister announced that the 2018 Budget deficit of $365 million is consistent with the provincial plans to deliver a modest surplus budget in 2019 while anticipating surpluses in 2020 and 2021. To meet these challenges the province will control spending, invest in healthcare, education, and social services while reducing the economy’s dependence on resource revenue.
Amidst rumours of tax rate increases, the Minister affirmed this budget contains no commodity tax rate increases, forgoes a carbon tax, introduces a number of corporate income tax incentives to encourage growth in Saskatchewan, and outlines several personal income tax initiatives.
This year’s budget contains a number of commodity tax changes, which are explained below.
Commodity Tax Measures
ENERGY STAR® Appliance Exemption
Effective April 11, 2018, the Saskatchewan Provincial Sales Tax (“PST”) exemption for certified ENERGY STAR® appliances will be eliminated. This PST exemption was introduced to encourage consumers to acquire energy-efficient household appliances and residential heating systems. Currently, the energy cost savings associated with these items is motivating Saskatchewan consumers to purchase these energy-efficient appliances. As a result, the PST exemption is no longer necessary to encourage these purchases.
Taxation of Used Vehicles
Last year’s budget expanded the Provincial Sales Tax base to include PST on the full purchase price of new vehicles (or vehicles not previously taxed in the province) prior to any trade-in allowance for eligible light vehicles, including cars, sport utility vehicles, light vans, and trucks. The province will restore the trade-in allowance method, effective April 11, 2018. Therefore, PST will now apply to the net difference between the total selling price and any trade-in value applied to the purchase of a vehicle.
In addition, effective April 11, 2018, the PST exemption for used light vehicles has been eliminated resulting in the same tax treatment for all used vehicles, regardless of the type of used vehicle purchased.
The province has replaced the $3,000 deduction on the private purchase of a used vehicle with a $5,000 exemption. Therefore, the sale of a used vehicle with a purchase price of no more than $5,000 will not be subject to PST upon registration. Used vehicles with a purchase price that exceeds $5,000 will be subject to PST in full. A private or dealer sale, of used vehicles registered for commercial use will be fully taxable, regardless of the purchase price.
Provincial sales tax will not apply to used vehicles gifted to qualifying family members, including a spouse, parent or legal guardian, child, grandparent, grandchild or sibling.
Saskatchewan had agreed, in principle, to a coordinated cannabis tax framework with the federal government in December 2017. The province plans on ratifying its participation by entering into an initial two-year agreement whereby they will receive 75% of the federal cannabis excise duty revenue generated within the province. In addition, Saskatchewan will get a proportionate share of revenue generated in Canada that exceeds the $100 million cap on federal revenue from the federal cannabis excise duty.
The province also announced that retail sales of cannabis products in Saskatchewan will be subject to PST. Additionally, the federal cannabis excise duty tax rate applied to sales in Saskatchewan will be increased to account for interprovincial sales tax differences. The resulting extra revenue will be given to the province.
Additional information on the 2018 Saskatchewan budget is available on the province’s website at:
If you have any questions about how these proposed or impending PST changes might impact your organization, please do not hesitate to call the Ryan TaxDirectTM line at 1.800.667.1600.