Happy Birthday Canada! 

Canada’s birthday coincides with a new rate for retail sales tax in Manitoba.  Manitoba RST rate changes July, 2019, the retail sales tax rate will decrease from 8% to 7%, as announced in the 2019 Budget. 

In brief, taxable goods and services purchased after July 1, 2019 will pay a reduced rate of 7% for sales tax.  The table below provides detailed information based on the Information Notice, Rate Reduction Transition Rules, provided by the Manitoba Taxation Division. 

If you have any questions as to how the change in the retail sales tax will affect your business:

Taxable Goods 7% Tax Rate Applicable 8% Tax Rate Applicable
Good purchased after June 30, 2019 7% tax
Goods purchased on credit or by deferred payment made after June 30, 2019 8% tax
Goods that are fully paid prior to July 1, 2019 but delivery is on or after 8% tax
Taxable Services 7% Tax Rate Applicable 8% Tax Rate Applicable
Services completed prior to July 1, 2019 8% tax regardless of billing and payment dates
Contracts for services entered into prior to March 7, 2019

8% tax for services (including accommodation services booked with a  deposit) provided up to June 30, 2019

8% tax is also applicable for prepaid services bought and paid for prior to March 7, 2019, regardless of the date when the services are performed

Contracts for services entered into after March 7, 2019 7% tax for services that commence after June 30, 2019
Prepaid service agreements covering a specific period (e.g. annual maintenance agreements) 7% tax when the service period is completely after June 30, 2019 8% tax for any service period prior to July 1, 2019
Prepaid service arrangements bought and paid prior to June 30, 2019 7% tax when redemption can only be after June 30, 2019 8% tax when redemption occurs over a period of time including prior to July 1, 2019
Contracts for Specified Services to Tangible Personal Property (not based on Service Coverage Period) 7% Tax Rate Applicable 8% Tax Rate Applicable
Installation, maintenance or other service contracts to tangible personal property executed prior to March 7, 2019 8% tax for services provided up to June 30, 2019
Contracts executed after March 7, 2019 when services will be performed before and after July 1, 2019 7% tax for services after June 30, 2019 (services must be segregated into time before and after the transition date of July 1) 8% tax for services prior to June 30, 2019 (services must be segregated into time before and after the transition date of July 1)

Contracts to supply and install tangible personal property involve a sale of both goods and services

(tax is not based on the title of goods but rather installation date for these contracts)

7% tax for services or goods installed after June 30, 2019 (services must be segregated into time before and after the transition date of July 1) 8% tax for services or goods installed prior to June 30, 2019 (services must be segregated into time before and after the transition date of July 1)

Holdbacks on contracts executed after March 7, 2019

(tax based on the progress billings)

7% tax for services or goods installed after June 30, 2019 (services must be segregated into time before and after the transition date of July 1) 8% tax for services or goods installed prior to June 30, 2019 (services must be segregated into time before and after the transition date of July 1)

Holdbacks on contracts executed prior to March 7, 2019

(tax based on the progress billings)

7% tax for services or goods installed after June 30, 2019 (services must be segregated into time before and after the transition date of July 1) 8% tax for services or goods installed prior to June 30, 2019 (services must be segregated into time before and after the transition date of July 1)
Contracts executed prior to March 7, 2019 8% tax is applicable for all work performed before June 30, 2019
Change orders made after March 7, 2019 7% tax is applicable for all work performed after June 30, 2019 8% tax is applicable for all work performed before June 30, 2019
Services Provided by Billable Hour (e.g. legal and accounting) 7% Tax Rate Applicable 8% Tax Rate Applicable
Service invoices that are provided by a billable measure (e.g. by hour, by day) 7% tax for services that are completed after June 30, 2019 (services must be segregated into time before and after the transition date of July 1) 8% tax for services that are completed before June 30, 2019 (services must be segregated into time before and after the transition date of July 1)
Utilities 7% Tax Rate Applicable 8% Tax Rate Applicable

Telecommunication Services – Telephone, Cable TV, Internet Services

Standard monthly service

7% tax for bills for service dated after June 30, 2019 (bills that straddle the transition date are not segregated) 8% tax for bills for service dated prior to July 1, 2019 (bills that straddle the transition date are not segregated)

Telecommunication Services – Telephone, Cable TV, Internet Services

Optional or extra-billed services

7% tax for optional or extra-billed services that were purchased or provided after June 30, 2019 8% tax for optional or extra-billed services that were purchased or provided prior to July 1, 2019

Electricity and Natural Gas

(note: the rate of 1.4% for home heating remains unchanged)

7% tax for billing periods that are completely after June 30, 2019

(For eligible mining, manufacturing and oil companies read 1.4% for 7%)

8% tax for any billing periods that include any day prior to July 1, 2019

(For eligible mining, manufacturing and oil companies read 1.6% for 8%)

Leased Goods 7% Tax Rate Applicable 8% Tax Rate Applicable
Lease periods that end prior to July 1, 2019 8% tax for lease periods that end prior to July 1, 2019
Lease periods that straddle the transition date or commence completely after June 30, 2019 7% tax is applicable to the full lease period
Insurance 7% Tax Rate Applicable 8% Tax Rate Applicable
Definite Term Insurance Contracts (excluding group contracts) 7% tax for contracts effective after June 30, 2019 8% tax for contracts effective before July 1, 2019

Definite Term Insurance Contracts (excluding group contracts)

Multi year contracts paid by instalments

7% tax for contracts effective prior to July 1, 2019 for annual instalments collected after that date
Indefinite Term and Group Contracts 7% tax for premiums that become payable after June 30, 2019 8% tax for premiums payable prior to July 1, 2019, regardless of the period covered
Real Property Contracts 7% Tax Rate Applicable 8% Tax Rate Applicable

Contracts executed prior to March 7, 2019

Includes direct materials used to construct real property and related mechanical and electrical systems

Machinery, equipment, tools and other goods purchased, as well, as equipment rentals

7% tax for work completed after July 1, 2019 8% tax for all work completed by June 30, 2019 that is related to the original contract
Contracts executed after March 7, 2019 See taxable goods and services section See taxable goods and services section
Contractors that acquire goods on a tax-out basis and self- asses as they are used in jobs for use in a real property contract 7% tax if taken from inventory after July 1, 2019 8% tax when taken from inventory prior to July 1, 2019
Refunds and Credits 7% Tax Rate Applicable 8% Tax Rate Applicable
Returned goods or cancelled sales, sales tax must be refunded at the same rate at which the tax was originally collected 7% tax refunded if 7% tax was originally collected 8% tax refunded if 8% tax was originally collected