Various legislative changes have been enacted across Canada impacting the Goods and Services Tax/Harmonized Sales Tax (GST/HST) and certain provincial sales taxes. Below is a detailed overview of these updates.
Federal GST/HST updates
Expanded GST/HST rental rebate:
On Sep. 14, 2023, the Prime Minister announced temporary measures aimed at boosting rental housing development. A full (100 per cent) rebate of the GST or federal portion of the HST is now available for newly constructed purpose‑built rental housing (PBRH).
The provinces of Ontario, Nova Scotia and Newfoundland and Labrador have stated they will align with the federal initiative, offering a full rebate of the provincial share of the HST. Prince Edward Island has also committed to aligning with the federal rebate, though it will cap the maximum amount per unit and apply a lower rebate for projects finalized post‑2028.
The following conditions must be met to be eligible for the PBRH rebate:
- The units qualify under the existing GST/HST new residential rental property rebate framework.
- The building includes multiple residential units, consisting of either:
- A minimum of four units, each with a private kitchen, bathroom and living space, or
- At least 10 separate private rooms or suites.
- At least 90 per cent of the units are intended for long‑term residential rental or similar arrangements where tenants use the unit as their primary home.
- Construction began after Sep. 13, 2023, but before 2031, and must be substantially completed before 2036.
As per the Excise Tax Act (ETA), a multiple‑unit residential complex refers to a property with more than one residential unit, excluding condominium complexes.
The rebate does not apply to single residential units, condominiums, duplexes, triplexes, owned homes on leased land, residential trailer park sites or substantially renovated residential properties.
Elimination of GST for first‑time homebuyers
On March 20, Prime Minister Carney announced the Government of Canada will eliminate the GST for first‑time homebuyers on homes at or less than $1 million. The proposed tax cut will save homebuyers up to $50,000.
Supporting businesses affected by tariffs
On March 21, the Government of Canada announced it will defer GST/HST remittances from April 2 to June 30, 2025. Additionally, it will waive interest on GST/HST instalments and arrears payments required to be paid between April 2 and June 30, 2025, as well as provide interest relief on existing GST/HST balances between April 2 and June 30, 2025. Returns must still be filed by their due dates and interest will resume July 1, 2025.
Nova Scotia HST rate change
On Oct. 23, 2024, Nova Scotia's government announced a reduction in the provincial share of the HST to nine per cent, effective April 1, 2025. This change results in a new combined HST rate of 14 per cent, inclusive of the five per cent federal GST. To aid with the transition, specific rules have been released for businesses and consumers.
In general, the HST rate is determined by when the tax becomes payable:
- A 15 per cent rate will apply if the tax becomes due before April 1, 2025.
- A 14 per cent rate will apply if the tax becomes due on or after April 1, 2025.
Additional transition guidelines apply for specific cases, such as real estate, imports and services. For example, real estate transactions where both title and possession transfer on or after April 1, 2025 will attract the new 14 per cent HST. If either title or possession transfers prior to that date, the 15 per cent rate remains applicable.
British Columbia Provincial Sales Tax (PST) updates
Software definition expansion (retroactive to April 1, 2013):
As part of its 2024‑25 budget, British Columbia has retroactively revised the Provincial Sales Tax Act to broaden the definition of software and to clarify taxable use within the province.
Definition of “software” before budget changes:
- Software delivered or accessed by any means
- Rights to use software (regardless of actual use), delivered or accessed by any means
- Contractual rights to receive updates or new versions of such software, provided section 15(2)(h)4 does not apply
The updated definition now also includes:
- Coded instructions or associated rights that cause electronic devices to perform specific tasks
- Infrastructure as a service (IaaS)
- Software as a service (SaaS) that is delivered or accessed by any means
- Application programming interfaces (APIs)
PST refund restrictions (effective July 1, 2024):
As of July 1, 2024, changes were made to refund eligibility for PST on goods purchased in B.C. for resale outside the province. Previously, businesses could claim a refund after export. Under the new rules, such refunds are not available if the buyer paid PST at the time of purchase without presenting proper exemption documentation.
To avoid non‑recoverable PST, buyers must provide a valid PST registration number or an exemption certificate at purchase to avoid being charged PST initially. Without proper documentation, the buyer is considered the final user and cannot later recover PST on resale.
Manitoba Retail Sales Tax (RST) updates
Cloud computing services tax (effective Jan. 1, 2026):
Manitoba will apply its seven per cent RST to cloud computing services beginning Jan. 1, 2026. This includes services such as remote computing, data storage and subscription‑based software.
Taxable cloud services include:
- SaaS: Internet‑based access to software applications
- Platform as a service (PaaS): Online platforms providing tools for application development
- IaaS: Virtual computing infrastructure like servers and storage
If these services are used both in and outside Manitoba, the tax may be applied proportionally based on use within the province.
Both in‑province and out‑of‑province service providers will be required to charge and remit RST on services consumed in Manitoba.
Saskatchewan Provincial Sales Tax (PST) updates
Vapor products taxation (effective June 1, 2025):
Starting June 1, 2025, Saskatchewan will impose a six per cent PST on vapor products, in addition to the existing 20 per cent Vapor Products Tax (VPT), creating a total tax burden of 26 per cent.
Definition of vapor products includes:
- E‑cigarettes and similar vaporizing devices
- E‑substances (liquids, gases or solids used in vaporizers, with or without nicotine)
- Cartridges and components intended for use with e‑cigarettes
Exclusions:
- Cannabis as defined under The Cannabis Control (Saskatchewan) Act
- Heated tobacco products per The Tobacco Tax Act, 1998
- Dry herb vaporizers for dried cannabis use
Retailers will be responsible for collecting and remitting both taxes.
New PST penalties (effective Oct. 1, 2024):
As of Oct. 1, 2024, Saskatchewan has introduced updated penalties to improve PST compliance.
- Late filing penalty: $50 for each return not filed on time, including nilreturns
- Late payment penalty: Continues at 10 per cent of unpaid tax, with the removal of the prior $500 cap per period
- Failure to produce records: $500 penalty per instance where a business does not furnish required documentation
- Incorrect or incomplete return filing: $100 fine per return where:
- The return is submitted improperly (e.g., paper filing when electronic is required), or
- Required fields are left incomplete
Audit penalties may range from 10 per cent to 100 per cent of the assessed amount depending on the violation’s seriousness. For example, failure to remit collected tax could result in a 100 per cent penalty. Interest will accrue on most tax assessments from the original due date until full payment is made. The interest rate is calculated as the prime rate plus 3 per cent, adjusted semi‑annually.
To avoid penalties, ensure all PST filings and payments are submitted on time, forms are accurately completed and required filing methods are followed. Maintain detailed records to meet the Ministry of Finance’s requests.
Next steps
Contact your Baker Tilly advisor to learn more about how we can help you navigate the complexities of the Canadian tax system.
Information is current to April 3, 2025. The information contained in this release is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.
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