Commodity Tax Advice
This page is provided to assist department staff or consultants in answering commonly asked questions pertaining to various types of taxation related to bid opportunities and subsequent contracts. Please click on the appropriate question below to display the answer.
If you have a question that is not included in those listed, or you need further clarification, please contact Trevor De Ryck 204-986-2190.
Goods & Services Tax - (GST)
While this list is not comprehensive, the following services are GST exempt:
- installing, replacing, repairing or removing street or road signs or barriers, street or traffic lights or property similar to any of the foregoing
- removing snow, ice or water
- removing, cutting, pruning, treating or planting vegetation
- repairing or maintaining roads, streets, sidewalks on City or adjacent property
- installing accesses or egresses e.g. driveways & parking lots
- installation, repair, maintenance or interruption of the operation of a water distribution, sewage or drainage system
- garbage collection services
Provincial Sales Tax - (PST or MRST)
Although the Province has admitted they will be reviewing this for more consistent application of PST, the following should apply:
- General contractors should split their contract price between real property and production equipment. The real property portion has PST charged included and the production equipment should have PST charged extra.
- Mechanical and electrical contractors should split their invoices between real property and mechanical and electrical work. The real property portion would have PST included and mechanical and electrical extra.
- General contractors who build a building should charge PST included on both the real property and mechanical and electrical portions of the contract.
Any good or service purchased outside Manitoba, for which you would normally pay PST if purchased within Manitoba, you are required to self assess tax at 8%. Self assessment also applies on the freight and customs brokerage charges applicable to the good. For services that apply to real property, for instance land and buildings, the PST is paid only on the materials and not on the labour portion of the contract.
On your invoice, you would code 8% to whatever expense account you are using for the purchase and then code the same 8% amount as a credit against the 225010 PST account. There are two forms available for self assessment on the City's Intranet. The completed forms should be forwarded to Trevor De Ryck.
There are a great number of goods that are exempt from PST. The following is a sampling of those items:
- Ambulances and related equipment carried in ambulances
- Bags designed and purchased for use as sandbags for flood control
- Books printed and bound with permanent bindings (or punched loose leaf pages) that are produced for use by the general public, published solely for educational, technical, cultural or literary purposes and that contain no advertising
- Fire trucks and related firefighting equipment carried on fire trucks, including ladders, aerial equipment, hoses, air breathing and life-saving devices
- Gravel or sand purchased directly by a municipality or local government district for its own use
Non-Resident Withholding Tax
The regulation requires a deduction of 15% on all services provided in Canada by US firms, which is remitted to Revenue Canada.
Since the level of proof required by Revenue Canada is quite substantial, the City has taken the position that we shall withhold the tax on the full amount of the payments to the contractor. If the contractor does not agree with this approach, they are encouraged to apply for a waiver of the withholding tax from Revenue Canada. Upon receipt of the waiver, the City would then not withhold the tax.
At the end of the year, the contractor will be provided with an NR4B Supplement which can be used to reduce their US tax liability.
Trevor De Ryck
PST Bulletin # 031
PST Bulletin # 056
PST Bulletin # 057
PST Bulletin # 058
PST Bulletin # 059
PST Bulletin # 060
Last update: 12/19/2016
* Top of Page Last update: 12/19/2016