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5 Common Mistakes to Avoid When Calculating and Filing Your Canadian Sales Tax

Mistakes are an integral part of every person’s life in this world. When you take a look at the business landscape, it is difficult to imagine how small mistakes can have a huge impact. If you are a business owner in Canada, then you must take every step of the tax return process carefully. One of the significant taxes that you have to pay as a seller is the sales tax. 


However, maintaining compliance with Canadian Tax regulations can be a challenging task. Should you worry about sales tax? Yes, if you sell taxable goods or services in Canada, then you must learn about the mistakes to avoid when you file sales tax returns. Let us learn more about sales taxes in Canada and the common mistakes you should avoid in filing your sales tax returns.


Unraveling the Different Layers in Canadian Sales Tax


The best way to ensure safety against mistakes while filing sales tax returns in Canada is to learn more about the fundamentals of Canadian sales tax. Sales tax is imposed by the government on final sale of products and services and it helps in improving infrastructure and funding for public services. 


At Duggal Professional Corporation, you can find the best professional tax services in Edmonton with the assurance of complete transparency. Consult with our accountant to understand the complications of different types of sales taxes in Canada. You can come across three distinct types of Canadian sales taxes, such as the GST, HST, and PST. 


The Goods and Services Tax, or GST, is a federal tax and applies to almost all products and services with few exceptions. It is important to remember that customers in Alberta, Yukon, Nunavut and Northwest Territories pay only GST. The other provinces combine GST with other two variants of Canadian sales taxes.


The PST, or Provincial Sales Tax, is another crucial element you would come across during tax filing for sales taxes. Only a few provinces, such as Saskatchewan, British Columbia, Quebec and Manitoba, impose PST/QST along with GST for sales tax. You must also note that the PST rate varies according to the requirements and budgets of each province. As of 2023, the PST rate in Manitoba and British Columbia is 7%, while Saskatchewan has a PST rate of 6%.


HST, or Harmonized Sales Tax, is the next important type of sales tax in Canada. It is a combination of federal GST taxes and provincial PST taxes and differs according to the province. The common range of HST rates varies from 13% to 15%, thereby serving an easier opportunity to collect sales tax.


Prov. rate (%)

Total tax rate (%)Notes


05There is a 4% tax on lodging and 4% tax on hotel room fees.
British ColumbiaGST + PST



Main article: Sales taxes in British Columbia

Reverted to a separate GST/PST on April 1, 2013, with a PST of 7%, after their adoption of a HST in 2010 was rejected in a referendum.[1]



GST + RST712

The RST was increased one point to 8% on July 1, 2013. It reverted to 7% as of July 1, 2019 and although it was planned to drop to 6% as of July 1, 2020[3][4] due to the COVID-19 pandemic the province has deferred the reduction until further notice.[5]

There is a 5% tax on lodging and 5% tax on hotel room fees.

New BrunswickHST1015

The HST was increased two points to 10% with an overall tax of 15% on July 1, 2016.[6]

Newfoundland and LabradorHST1015

The HST was increased two points to 10% with an overall tax of 15% on July 1, 2016.[7]

Northwest TerritiriesGST05 
Nova ScotiaHST1015Rates were meant to be reduced to 14 and 13% on July 1, 2014 and July 1, 2015 respectively. However, the government has stated that the province cannot afford reductions.[9]
Prince Edward IslandHST1015

The HST was increased one point to 15% on October 1, 2016.[1]

QuebecGST + QST9.97514.975

Books are taxed at 5.0% (considered essential goods for QST but not for GST). There is an additional tax on tourist lodgings such as hotels which is usually 3.5%. This tax does not apply in Nunavik.[13][14]

SaskatchewanGST + PST611

The 6% rate is effective for goods and services effective March 23, 2017.[15] Effective April 1, 2017, New Homes, restaurant meals and other prepared food and beverages are subject to PST.[16] There is a separate 10% liquor consumption tax. PST is not applicable for any exempt business in Lloydminster.


Discovering the Missteps You Should Avoid while Filing Sales Tax Returns


The brief overview of different types of sales taxes in Canada shows what you have to pay as a business owner. Basic awareness of Canadian sales taxes can help you avoid some of the trivial mistakes, such as missing important taxes. With trusted experts by your side, you can avoid the following mistakes in calculating and filing sales tax returns in Canada.


Delay in Filing Tax Returns 


Every business owner has to go through many troubles, ranging from issues in manufacturing to creation of new marketing campaigns. It is reasonable for a business owner to miss a tax deadline. However, you can trust professional sales tax return services in Edmonton at Duggal Professional Corporation to avoid such mistakes. The consequences of delay in tax filing are visible in the form of penalties starting from 5%. Filing your sales tax returns on time can help you avoid hefty fines. 


Missing the Valuable Tax Credits


One of the common mistakes business owners make while calculating sales tax returns in Canada is the lack of attention to tax credits. Small business owners in Canada can capitalise on the input tax credit and offset the sale tax payable as per the CRA rules.


Lack of Savings for Taxes


Another prominent mistake by business owners while filing sales tax returns in Canada is the lack of savings. The tax filing season can arrive with surprise bills for business owners who are likely to wonder where they would get the money from to make the payments. If you don’t save up for taxes, you are likely to end up in a stressful cycle. Business owners can solve this problem by saving for taxes in a financial year. You should assume that the sales tax you have to pay to the government is a major expense of your business. 


Confusion between Business and Personal Finances


Tax consultants and experts in Canadian sales tax have also pointed out that business owners commit grave mistakes by mixing their business and personal finances. At the time of filing your tax return, you are likely to face difficulties in differentiating your personal expenses from business expenses. For instance, you can claim personal expenses as business deductions in tax returns and end up with the obligation to prove business expenses. Therefore, business owners should maintain separate accounts for business and personal finance that helps in reducing confusion in calculating and filing sales tax returns.


Not Hiring a Specialist


The biggest mistake business owners make in calculating and filing their sales tax returns in Canada is the failure to hire a specialist. As a business owner, you need to make some smart decisions and choose specialists for tax services in Edmonton or the province in which your business operates. Tax specialists can help you maintain clear and updated documentation of your accounts and tax records. In addition, they are also useful for avoiding penalties while maintaining compliance with latest tax rules and regulations.


Final Words 


The common mistakes in calculating and filing sales tax returns in Canada can serve as guiding lights for business owners. You can think of them as missteps that you must avoid at all costs in your pursuits as a business owner in Canada. We offer professional tax return services in Edmonton with our successful track record in serving businesses of all sizes. With the benefits of comprehensive fluency in Canadian sales tax regulations, we can offer a competitive advantage to your business this tax season. Contact us right now and prepare your tax documents right away.