On March 18, 2020, Minister of Finance, Donna Harpauer presented the 2020-21 Saskatchewan Estimates, noting that the estimates have been released at a difficult time for the province, country, and the world at large. The estimates were provided without any revenue forecasts as a result of the ongoing COVID-19 pandemic. The expenditure estimates target the province’s planned spending at $14.15 billion, a 3.1% increase from the prior year. The focus of the spending is on priority areas, such as healthcare, education, social services, and infrastructure to provide stimulus to the economy and help create jobs.
While this year’s estimates contain only one commodity tax change, the province issued and updated several publications indicating PST changes following its announcement, as described below.
Commodity Tax Measures
New Home Rebate
A Provincial Sales Tax (PST) rebate will be introduced for the purchase of a newly constructed home where the purchaser takes possession after March 31, 2020 and on or before March 31, 2023, provided the value is under $450,000. This rebate is equal to 42% of the PST paid on a new home purchase where the value does not exceed $350,000, excluding taxes and the cost of the land. Where the new home purchase price is between $350,000 and $450,000, the rebate will be reduced. Saskatchewan Information Bulletin PST-75, “PST Rebate for New Construction,” provides further details on this rebate.
Mining and Oil and Gas Exemptions
Saskatchewan has issued two information notices and updated two information bulletins to outline retroactive PST exemptions for qualifying drilling services consumed by the mining industry, effective December 1, 2019, and certain permanently mounted equipment used in the oil and gas industry, effective April 1, 2017. Further details concerning these exemptions can be found in the following publications:
- Information Bulletin PST-13, “Petroleum Drilling and Well Servicing Contractors”;
- Information Bulletin PST-59, “Information for the Mining Industry”;
- Information Notice IN 2020-04, “New PST Exemption for Drilling Services and Downhole Servicing and Repairs”; and
- Information Notice IN 2020-05, “Drilling Rigs, Service Rigs, and Related Equipment.”
Real Property Materials and Land Development Services
The province has reaffirmed how PST applies to materials consumed in a real property contract and the tax status of supplies of land development services.
By providing its vendor license number to a supplier, a contractor or subcontractor may purchase materials to be incorporated into real property or resold exempt from PST. In addition, a contractor may be eligible to claim a credit for any PST paid on materials sold or incorporated into real property when PST is collected on a completed real property contract. These rules apply to the following purchases:
- Materials resold as part of the contract;
- Nails, screws, and fasteners; and
- Dimensional lumber, plywood, and similar building materials used on site for supporting or building forms used in a particular contract.
However, PST must be self-assessed on the cost of materials taken from exempt resale inventory for use by a contractor personally or in their own business. PST also applies to new and used equipment, supplies, consumables, and taxable services acquired by a contractor to complete a real property contract.
Land development services are generally subject to PST, including services such as: adding roads; landscaping; constructing bridges, sewer, and water supply systems; and establishing electrical grids and telecommunication systems. In addition, Saskatchewan reminds taxpayers that:
- A land developer is generally considered to be the consumer of land development services, since the sale of both residential and commercial land is exempt from PST;
- PST is required to be collected on the total charge for land development services; and
- A land developer should quote their vendor license number to contractors when acquiring land development services that will be rebilled to a municipality exempt from PST.
Saskatchewan has updated Information Bulletin PST-12, “Information for Businesses Providing Services to Real Property,” and Information Bulletin PST-38, “Information for Non-Resident Real Property and Service Contractors,” to outline how PST applies in these situations.
Farm Production Equipment Exemption
The province revealed that real property services provided in relation to exempt farm production equipment are exempt from PST, effective April 1, 2020. However, services that fall under services to real property, such as building a barn, pouring a concrete pad, or digging a dugout, remain subject to PST. Information Bulletin PST-16, “Information for Farm Implement and Farm Supply Dealers,” has been updated to reflect this clarification.
New Electronic Filing Due Dates and Frequency Thresholds
Saskatchewan has announced that electronic filing of remittances and returns for PST, the beverage container program, and Liquor Consumption Tax (LCT) will be due on the last day of the month following the end of a reporting period. The province also released new annual tax thresholds for determining filing and remittance frequency. Both of these changes have an effective date of April 1, 2020, and are reflected in updates to the following:
- Information Bulletin LCT-1, “The Liquor Consumption Tax”;
- Information Bulletin BC-5, “Information on the Distribution of Ready-to-Serve Beverages in Approved Containers”; and
- Information Bulletin PST-5, “General Information.”
Additional information on the 2020-21 Saskatchewan Estimates is available on the province’s website at:
Saskatchewan Estimates 2020-21
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 TaxDirect® line at 1.800.667.1600.