Tax Insights: Indirect tax hot topics ─ Do they impact your business?

November 02, 2020

Issue 2020-34

In brief

Businesses and other organizations should ensure that they are aware of, and comply with, recent and upcoming changes to indirect tax regimes in Canada and globally. Of particular interest are new sales tax registration requirements in British Columbia and Saskatchewan.

This Tax Insights highlights the following significant indirect tax developments that may impact your organization or business:

  • broadening provincial sales tax (PST) registration requirements in:
    • British Columbia, to vendors located outside the province
    • Saskatchewan, to in-province and out-of-province operators of electronic distribution platforms and online accommodation platforms, and online marketplace facilitators
  • ensuring the conditions of zero-rating are met
  • extending enacted time limits under the Time Limits and Other Periods Act (COVID-19)
  • expanding Manitoba retail sales tax (RST) exemptions to personal tax return preparation and filings
  • expanding value-added tax (VAT) registration in the United Kingdom to overseas retailers that sell directly to UK consumers

In detail

New PST registration requirements in British Columbia and Saskatchewan

British Columbia PST

New rules – effective April 1, 2021

British Columbia will extend the province’s PST registration requirements to out-of-province vendors1 effective April 1, 2021. The new requirements, which were introduced in the province’s February 18, 2020 budget were originally intended to become effective on July 1, 2020; however, the implementation date was postponed until April 1, 2021, due to the COVID-19 pandemic.

Effective April 1, 2021, non-residents of British Columbia located:

  • in Canada that sell taxable goods
  • in or outside Canada that sell software and telecommunication services,

to customers for consumption or use in British Columbia will generally be required to register for BC PST if their annual revenue from sales in the province exceeds $10,000 (either actual sales in the past 12 months or estimated sales in the next 12 months).

Once registered, these businesses will be required to collect BC PST from their customers in British Columbia. 

Current rules – pre-April 1, 2021

Currently, non-residents of British Columbia that do not carry on business, and do not maintain an inventory of goods, in the province are only required to register for PST if the non-resident:

  • is located in Canada (this means that a foreign company that has no presence in Canada is not required to register under this provision)
  • solicits business in British Columbia by advertising or any other means
  • accepts purchase orders that originate from locations in British Columbia
  • sells or provides tangible personal property, software or telecommunications to a person in British Columbia for use or consumption, and
  • where the non-resident sells goods, causes the tangible personal property in question to be delivered in British Columbia

In addition, non-residents of British Columbia that make sales of goods to persons in the province are currently required to register if they maintain an inventory of goods for sale in the province.

PwC observes – British Columbia PST

British Columbia’s low registration threshold of $10,000 of annual sales in the province (as compared to the $30,000 threshold used by Quebec’s simplified sales tax regime) and the fact that it applies to both business to business (B2B) and business to consumer (B2C) sales will impose an administrative burden on many small Canadian and foreign businesses wishing to comply with the new registration rules. It is expected that larger international businesses selling into British Columbia will register under the new PST requirements to avoid any negative public relations consequences of non-compliance.

Saskatchewan PST

New rules – effective January 1, 2020

Saskatchewan has recently expanded its already-broad registration requirements for out-of-province sellers to various online platforms and marketplace facilitators.2

Effective January 1, 2020, businesses that operate online selling platforms are required to register for and collect Saskatchewan PST if they:

  • create or facilitate the marketplace in which retail sales of tangible personal property, taxable services or contracts of insurance for consumption or use in, or relating to, Saskatchewan take place, and
  • collect payment from a consumer or user of the tangible personal property, taxable services or contract of insurance and remit the payment to a marketplace seller  

As noted above, the new registration obligations for online platforms are effective January 1, 2020; however, based on our discussions with the Saskatchewan government, the new registration requirements will not be enforced retroactively to January 1, 2020, if the platforms started complying with the rules by July 2020.

PwC observes – Saskatchewan PST

It is important to note that the new Saskatchewan rules do not require out-of-province sellers to register for PST if they only make sales to customers in Saskatchewan through online accommodation platforms or marketplace facilitators that are registered for Saskatchewan PST.

Online platforms that are currently facilitating sales into Saskatchewan and have not yet registered for Saskatchewan PST should consider registering for, and enabling their billing system to collect, Saskatchewan PST on sales to customers in the province. Businesses that only sell through online platforms should evaluate whether they are still required to be registered for Saskatchewan PST and may deregister if registration is no longer required.

PwC observes - British Columbia and Saskatchewan PST

British Columbia and Saskatchewan are following in the footsteps of Quebec and many Organisation for Economic Co‑operation and Development (OECD) countries by extending their sales tax registration requirements to out-of-province businesses that sell into the province, to generate more revenue and create a level playing field for all vendors selling to customers in the province.

It is expected that the federal government will introduce similar measures for non-resident registration under the GST/HST regime in the future. This is because of concerns over revenue leakage and an unlevel playing field for Canadian businesses that compete with foreign vendors that are not required to charge and collect GST/HST on sales to Canadians, particularly those that sell to consumers. However, it is unclear if the federal government’s approach will capture foreign e‑commerce suppliers and platforms in both B2B and B2C spheres; in Quebec, registration obligations are limited to B2C suppliers.

Another concern is whether the provinces have constitutional authority to impose an expanded registration and collection requirement on out-of-province vendors. Even if British Columbia and Saskatchewan have legal authority to impose such obligations, it may be difficult for them to enforce the rules on out-of-province vendors that do not have any assets or property in the province. With respect to Saskatchewan’s registration requirement, an additional factor to consider is that the online platforms are not selling their own goods and services in Saskatchewan.

The importance of meeting the conditions for zero-rating

While most taxable supplies made in Canada are subject to GST/HST, there are relieving provisions under the Excise Tax Act (ETA) that zero-rate certain supplies so that the GST/HST applies at a rate of 0%. It is important for suppliers to ensure that their supplies meet the statutory conditions for zero-rating.

A recent Tax Court of Canada (TCC) case, Contact Lens King Inc. v. The Queen, 2020 TCC 71, provides an example of a supplier that failed to demonstrate that it satisfied the conditions for zero-rating. Contact Lens King Inc. (the Registrant) was an American online seller of replacement contact lenses, with customers in the United States and Canada. During the period that was audited by the Canada Revenue Agency (CRA), the Registrant did not charge GST/HST on its sales of contact lenses to customers in Canada, on the basis that the sales were zero-rated. While there was a prescription verification and confirmation process for US customers, the Registrant did not require its Canadian customers to provide a written prescription, nor did the Registrant confirm the accuracy of the online information completed by the customer or the validity of the prescription. The CRA assessed the Registrant on the basis that the supplies did not meet the conditions for zero-rating.

The TCC upheld the CRA’s assessment on the basis that the Registrant did not meet the conditions for zero-rating supplies of eyeglasses and contact lenses (under section 9 of Part II of Schedule VI to the ETA), because the Registrant did not have documentation to support that there was a written prescription order or assessment record “for the treatment or correction of the defect of vision of the consumer.” The TCC noted that it is not sufficient, for the purposes of the ETA, for the Registrant’s website to only inform the consumer of the need for a valid prescription. Instead, the Registrant must obtain a copy of the prescription to confirm that the consumer actually has a prescription for the corrective lenses, and without this documentation, the supply will be subject to GST/HST. The Registrant has appealed the TCC’s decision to the Federal Court of Appeal.

PwC observes

The zero-rating provisions under the ETA are conditional, in that supplies will only qualify for zero-rating if the conditions under the particular zero-rating provision are satisfied. In Contact Lens King Inc., the supplier failed to maintain documentation to show that the contact lenses were supplied under the authority of a valid prescription or assessment record. These types of considerations are equally valid for the following zero-rating provisions:

  • the export of goods where the supplier must maintain satisfactory evidence to the Minister that the goods have been exported, or
  • certain supplies of property or services to non-residents of Canada that are not registered for GST/HST, where the supplier must maintain documentation of its customer’s non-resident and non-registrant status  

Time Limits and Other Periods Act (COVID-19) (TLOPA) extends certain enacted time limits

To address the COVID-19 pandemic’s disruption to the tax system, the Time Limits and Other Periods Act (Covid-19) (TLOPA) was enacted to extend certain time limits relating to tax assessments and court proceedings.3 Under the TLOPA, the Minister of National Revenue made an order in respect of the ETA to extend the following deadlines to the earlier of (i) six months after the standard deadline or expiry date, and (ii) December 31, 2020:

  • the time limits for Minister assessments and reassessments of a registrant’s GST/HST return or of certain amounts of GST/HST payable, penalties, rebates or interest that would ordinarily expire May 20, 2020 to December 30, 2020
  • the time limit for a registrant to apply for an extension of time to file a notice of objection to an assessment that would ordinarily expire March 13, 2020 to December 30, 2020
  • the time limit for a registrant to apply to the Tax Court of Canada for an extension of time to object to an assessment that would ordinarily expire March 13, 2020 to December 30, 2020

For example, the CRA may assess a monthly filer’s April 2016 GST/HST return, which would normally have become statute-barred on May 31, 2020, up to the end of November 2020. Under the GST/HST legislation, a registrant normally has one year from the expiry of the 90-day period to file a notice of objection to file an application for an extension of time to allow the registrant to late-file the objection; if the one-year period would have expired on April 15, 2020, the time limit to file the application is now extended to October 15, 2020.

To keep current on the federal, provincial and territorial governments’ continuing response to the constantly changing COVID-19 economic landscape, read our Government economic response to COVID-19 updates at

Manitoba expands RST exemptions to include personal income tax return preparation and filing

Effective October 13, 2020, Manitoba RST will no longer apply to personal income tax return preparation and filing services. The exemption also applies to estate planning advice, tax planning advice or a secretarial or other administrative service provided in conjunction with the preparing or filing of a personal tax return.4

United Kingdom expands VAT registration and collection obligations to overseas retailers that sell directly to UK consumers

The United Kingdom government recently announced a major VAT change that will affect overseas retailers selling directly to UK customers.

Starting January 1, 2021, overseas businesses selling directly to UK consumers will be required to register and account for VAT in the UK when the value of any consignment is £135 or less. To ensure compliance, a VAT invoice will need to be issued and accompany the goods in transit. This will impact any non-UK business that is not registered for VAT in the UK and sells directly to UK consumers, when the value of any order/consignment is £135 or less.

For more information:

  • contact your PwC Canada adviser who will connect you with a PwC UK VAT expert
  • see PwC’s Global VAT Online Indirect Tax Hub (ITH) at

How can PwC help

We can help you determine whether these new developments and tax rules apply to your business or organization. If they do, we can help your business:

  • become and remain compliant
  • consider the potential consequences of, and remedies for, any non-compliance
  • evaluate potential saving opportunities


1. Implemented by British Columbia Bill 4, Budget Measures Implementation Act, 2020 (royal assent: August 14, 2020).
2. Saskatchewan Information Notice IN 2020-08, Electronic Distribution Platforms, Online Accommodation Platforms and Marketplace Facilitators (Issued: June 2020).
3. CRA “COVID-19 Ministerial Orders.”
4. Manitoba Finance Information Bulletin No. 057, Accounting Services (Issued April 2004; Revised October 2020).


Contact us

Randall Ian Schwartz

Randall Ian Schwartz

Partner, PwC Law LLP

Tel: +1 416 815 5117

Andrew Azmudeh

Andrew Azmudeh

Partner, PwC Law LLP, Canada

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Mario Seyer

Mario Seyer

Partner, PwC Canada

Tel: +1 514 205 5285

James Capobianco

James Capobianco

Partner, PwC Canada

Tel: +1 604 806 7788

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