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RTG:159 General Instructions for Vendors

For Historical Reference Only

Effective April 1, 2013, the Province of Prince Edward Island adopted the harmonized sales tax (HST).  HST replaces the former provincial revenue sales tax (PST).  The information provided on the provincial revenue sales tax (PST) is presented for historical reference only. Please refer to the Canada Revenue Agency for assistance with the application of the HST.

 

January 2004
(Revised June 2012)

INTRODUCTION

This guide is prepared to assist vendors registered under the Revenue Tax Act of Prince Edward Island in the collection and remittance of provincial revenue tax (PST).

PDF Version:
RTG:159 General Instructions for Vendors

It is hoped the information contained in this booklet will assist you in carrying out your responsibilities as a vendor under the Prince Edward Island Revenue Tax Act and we welcome your comments and suggestions at any time.

 

WHAT IS PROVINCIAL REVENUE TAX (PST)?

The provincial revenue tax (PST) is a 10% tax which applies to the purchase, importation, lease or rental of most goods and certain services. The tax is applied to the retail selling price of taxable goods including the federal goods and services tax (GST).

The legislative authority for the levying and collection of provincial revenue tax (PST) is the Revenue Tax Act and Regulations.

Revenue tax (PST) is a consumption tax and is paid only once by the end user or consumer at the time of purchase or the taking of delivery for use in Prince Edward Island.

 

RETAIL SALES

A retail sale is a sale to a consumer for the purpose of use or consumption by that consumer and not for resale. When retail sales involve taxable goods, the tax is due and payable by the consumer at the time the sale takes place.

 

VENDOR

A vendor is a person, business or organization who sells or rents goods to consumers. All vendors making retail sales are considered to be agents of the Minister of Finance, Energy and Municipal Affairs, and as such, shall levy, collect and remit the taxes imposed by the Revenue Tax Act on the purchaser or consumer of taxable goods. The tax is always due at the time the sale is made regardless of the method of payment (cash, charge, lay-away, installment etc.). The terms of payment have no bearing on the collection and remittance of tax.

 

REGISTRATION

A vendor must obtain a registration certificate under the Revenue Tax Act before selling goods to a consumer or another vendor. “Application for Registration as a Vendor” forms are available by visiting or contacting the Taxation and Property Records Division of Finance, Energy and Municipal Affairs, Shaw Building, 95 Rochford Street, P. O. Box 1150, Charlottetown PE C1A 7M8 or any Access P.E.I. location throughout the province. Application forms are also available on the internet at www.taxandland.pe.ca.

Once the “Application for Registration as a Vendor” is approved, a vendor kit will be issued which will include a “Certificate of Registration” which must be displayed prominently in the place of business for which it is issued; a letter providing the vendor’s Account Number, Primary Class Code and Reporting Period for remitting revenue tax (PST); a number of “Vendor Returns” and a list containing the “Business Class Codes.”

 

SEASONAL VENDORS

Seasonal Vendors when completing the “Application for Registration as a Vendor” must make sure the blocks on the back page of the form are filled in. By providing this information, the vendor’s account will automatically be activated in the starting month of the season and inactivated at the end of the season. “Vendor Return Forms” will be required only for the months the seasonal business is operating.

 

RETURN OF REGISTRATION CERTIFICATE

The registration certificate becomes invalid and must be returned to the Taxation and Property Records Division for correction or destruction when:

  (a) the name of the business changes
  (b) the address of the business changes
  (c) the business is sold
  (d) the nature of the business changes
  (e) the form of business (partnership, corporation or proprietorship) changes
  (f) the business closes permanently

 

REPORTING

Vendors must complete a copy of the “Vendor Return” form, a number of which were mailed out with the vendor registration kit. If a vendor would like to receive additional return forms, these will be supplied on request by contacting the Taxation and Property Records Division or any Access P.E.I. location. The “Vendor Return” form is used to report the two separate taxes, revenue tax (PST) and environment tax. Every vendor or retailer of taxable goods must complete the revenue tax (PST) portion of the return while only retailers or vendors of tires are required to complete the environment tax portion.

Vendors required to report on a monthly basis, must report the tax collected for the previous month and both the return and the remittance must be received in the Taxation and Property Records Division office or at any Access P.E.I. location on or before the 20th day of the month. For example, the vendor return reporting the tax collected for the 31 days in March must be filed no later than the 20th day of April.

Some vendors are only required to file returns on a quarterly, semi-annual or annual basis, depending on the amount of tax collected. A quarterly (March, June, September and December) return must be received on or before the 20th day of the month following the end of the quarter. Semi-annual (March and September) returns are to be received by April 20th and October 20th and annual returns are due at the end of the vendor’s season each year.

Should a vendor not have any sales during a reporting period, the vendor is required to file a return marked “nil” for that period.

 

COLLECTING AND REMITTING TAX

Vendors who sell taxable goods act as agents of the Minister of Finance, Energy and Municipal Affairswww.gov.pe.ca/law/regulations/pdf/R&13-2G.pdf and must register and collect the tax on their sales. For collecting and remitting the tax, vendors who reported $10,000 or less revenue tax on sales for the prior fiscal year of the government (from April 1 to March 31) are eligible for a monthly commission of 3% of the tax collected during the current fiscal year of the government, to an annual maximum of $300.

Revenue tax (PST) is due and payable by the purchaser at the time of sale regardless of whether the sale is a cash, charge or installment sale.

Where a sale is made and the purchaser refuses to pay the tax, the vendor shall immediately contact the Taxation and Property Records Division office and provide full details of the sale.

 

FAILURE TO REMIT TAX

Where a vendor fails

  (a) to file a return
  (b) to collect tax as required under the Revenue Tax Act
  (c) to substantiate his return with records.

this office may make an estimate of

  (a) the amount of tax collected,
  (b) the tax which should have been collected,
  (c) the deposits made with such vendor which were not remitted

and the estimated amount shall be due and payable to the Taxation and Property Records Division office.

Every person who fails to file a return as and when required is guilty of an offence and on summary conviction is liable to a fine of not less than $100 in respect of each unfiled return.

 

PENALTY, INTEREST AND LOSS OF COMMISSION

A penalty at the rate of 5% of the tax collected will be assessed against any vendor whose tax return and remittance of tax is overdue. Any overdue tax will bear interest at a rate established in the regulations under the Revenue Administration Act.

Any otherwise eligible commission will be disallowed where the vendor return form is not filed by the due date.

 

RECORDS

All vendors will be visited periodically by a Tax Inspector or Tax Auditor. The purpose of such a visit is to ensure that the tax is being collected and remitted properly. The records required for examination are:

  (a) Original records, e.g. sales invoices, purchase invoices and cash register tapes. Invoices should show the date, type of merchandise and tax charged.
  (b) Details of exempt sales - e.g. details of sales made to Farmers, Fishermen, Aquaculturists, Status Indians, and the sale of goods to vendors for resale. Account numbers, primary class codes and/or permit numbers must be recorded and retained by the vendor on all tax exempt sales.
  (c) Tax collected - tax records, vendor's copy of vendor return forms, records of payments, disposal of tax and commission taken.
  (d) Records of goods taken from stock for the vendor's own use.

 

DESTRUCTION OF RECORDS

Vendors must obtain the written permission of the Provincial Tax Commissioner before any records can be destroyed.

 

TAX APPLICATIONS 

The following are some examples of revenue tax (PST) applications for your information.

  1. Goods Taken From Stock
    Where a vendor takes taxable goods from his own stock or inventory for his own use, he must account for the tax. Tax must be declared and remitted under the Tax On Purchases portion of the vendor return for the month in which the goods are removed from stock for use.
  2. Trade-Ins
    Trade allowances are not allowed on out-of-province purchases.
  3. Cancelled Sales
    Where a sale is cancelled, and all money paid by the purchaser is returned, the vendor must also refund the tax. If only a portion of the purchaser's money is returned, tax will be refunded on that portion returned to the purchaser.
  4. Discounts
    Where the cash discount is deducted from the purchase price at the time of the sale, the taxable amount is reduced by the discount amount.
  5. Rental of Goods
    Rentals and leases are deemed to be sales, and as such are subject to tax. Where a vendor rents or leases goods, (machinery, equipment, etc.) together with the services of an operator, the transaction is deemed to be a service rather than a sale, and tax need not be collected. However, tax is applicable on the initial purchase of the machinery etc.
  6. Finance Charges
    Finance charges are not taxable, provided they are shown separately on the invoice.
  7. Sales to P.E.I. Status Indians
    Status Indians who reside on a Prince Edward Island reserve are exempt from tax on the purchase of goods that are to be consumed on the reserve. To purchase goods exempt of tax, the native person MUST produce a valid identification card issued by Indian Affairs and Northern Development Canada containing the name of the Status Indian, photo and band number. When selling goods tax exempt to a Status Indian a vendor must record the name and band number of the person and the Prince Edward Island reserve address in his or her sales records. 

There is no exemption for meals, alcoholic beverages and accommodation for Status Indians.
  8. Guaranteed Replacement Parts
    If the replacement parts are supplied free of charge, no tax is due.
  9. Delivery of Goods
    Where a vendor sells taxable goods and ships the goods for delivery outside the province, the tax does not apply to such sales. However, proof of delivery outside the province must be retained by the seller to justify non-collection of tax.  

Where a delivery of taxable goods is taken in the province, the tax must be collected regardless of whether or not the purchaser claims to be a non-resident.
  10. Fair Value
    Vendors, in addition to being registered to collect the tax, also obtain goods for their own use or consumption. Tax is due on the "fair value" of such goods. "Fair value" is the total consideration given and includes: 
  (a) the purchase price of the goods in Canadian dollars,
  (b) federal sales and excise taxes,
  (c) customs duties,
  (d) installation where the cost is included in the consideration given for the acquisition of the goods,
  (e) cost of material, transportation, labour, overhead, engineering, administration overhead, royalties (manufacturing).
  11. Transportation
    Where taxable goods are purchased from a supplier located in the province, transportation costs are not taxable if shown separately on the invoice. 

Where taxable goods are purchased from a supplier located outside the province, transportation costs are always taxable.
  12. Purchase of Business Assets
    Vendors are reminded that if they purchase business assets, they are responsible to remit tax on the purchase of any taxable supplies or equipment which are included in the sale. Examples would be office equipment, store equipment, stationery, and similar items which are for the vendors own use rather than for resale.
  13. Sales to Federal Government Departments
    Federal government departments and their agencies may purchase goods exempt of revenue tax (PST) if the following procedure is followed. The goods must be purchased on a federal government purchase order or with a federal government credit card. Purchases by cash or by the use of a personal credit card by federal employees are not tax exempt and the vendor must charge revenue tax (PST) to the purchaser.

 

VENDOR REGISTRATION NUMBER

Every registered vendor is assigned his own individual account number. This number is important, since it grants him the authority to purchase goods of a class which he re-sells in the ordinary course of his business.

The vendor account number consists of six digits, and the primary class code has four digits.

The vendor account number and class code must be quoted when purchasing goods for resale. If a vendor is purchasing goods for own use or consumption, the account number and class code must not be used and the vendor must pay the tax to the supplier at the time of the purchase. If the supplier is not registered to collect the tax, then the vendor purchasing the goods, must remit the tax under the Tax on Purchases portion of the vendor return form for the month of purchase.

 

USE OF REGISTRATION CERTIFICATE

Holders of Registration Certificates shall use their Vendor Account Number and Business Class Code to purchase exempt of tax:

  1. Goods which he normally resells in the ordinary course of his business;
  2. Materials which will become part of goods for resale;

Such persons shall, at the time of each purchase, quote their Vendor Account Number and Business Class Code Number.

Vendors selling such goods tax free to holders of Registration Certificates, to justify the non-collection of tax and to protect themselves from being assessed tax, must show on their invoices the Account number and Class Code number of the purchaser to whom the goods were sold tax free.

 

OFFENCES AND PENALTIES 

Holders of Registration Certificates who utilize their Account Numbers and Class Codes to purchase, free of tax, goods on which tax should be paid, commit an offence and are liable to penalties as provided under the Revenue Administration Act.

 

GOODS FOR RESALE

No vendor shall purchase goods for resale in the province unless he or she is a holder of a Registration Certificate. No vendor shall sell goods in the province at a retail sale unless he or she is the holder of a Registration Certificate. A vendor is permitted to sell, sales tax exempt, goods to another vendor who is the holder of a Registration Certificate provided the goods being sold are of a type which are normally sold in the ordinary course of the purchaser's business. This is indicated by the Class Code number provided by the purchasing vendor.

EXAMPLE: Class Code number 2010 is the class code for a drugstore and that vendor would not be permitted to purchase building materials tax exempt by quoting his number. Class Code number 5030 is the class code for a service station business and the holder of the class code number would not be permitted to purchase furniture and appliances tax exempt.

During the course of business, a vendor may be involved in making sales, which are tax exempt under Section 12 of the Revenue Tax Act to farmers, fishermen and aquaculturists. For instructions pertaining to such sales, please refer to the Revenue Tax Act Regulations, Sections 25, 28 and 28.1.

 

BUSINESS CLASS CODES

A complete list of Business Class Codes is included in the Vendor Information Package.

 

Further Information

For copies of the Revenue Tax Act, Revenue Administration Act and Regulations and any inquiries regarding this Revenue Tax Guide, please contact:


Taxation and Property Records Division
Finance, Energy and Municipal Affairs
P. O. Box 1330
Charlottetown, PE
C1A 7N1
Telephone:
Fax:
Email:
Website:
(902) 368-4070
(902) 368-6164
taxandland@gov.pe.ca
www.taxandland.pe.ca

 

This guide is prepared for information purposes only, and should not be considered a substitute for the applicable statutes. Should there be any conflict between the contents of this guide and the statutes, the statutes shall prevail.

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