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Canadian Tax Question

Discussion in 'Business Operations' started by cutntrim, Jun 27, 2001.

  1. cutntrim

    cutntrim LawnSite Senior Member
    Messages: 474

    Hey fellow Canadians, got a question for ya. We've been a maintenance company exclusively since we began our business...hence the name C&C Lawn MAINTENANCE. But we're slowly inching our way into landscaping and in fact "Maintenance" will soon change to "& Landscape" in our company name.

    My question is do landscapers in Canada require a PST #? Of course we've already got a GST# but I didn't think I'd ever need a PST# being in the service industry. However, someone mentioned to me that if we're selling product (e.g. plants bought at a nursery for wholesale, then sold to the customer as part of a landscape install at retail) we may need a PST#.

    Do you guys have/need one?
  2. dan deutekom

    dan deutekom LawnSite Senior Member
    Messages: 424

    when I do a landscape install I only charge gst on labour but I charge both pst and gst on the material. Therefore you need the right pst paper work. Just more crap the small business guy has to deal with
  3. ianc

    ianc LawnSite Member
    Messages: 49

    When I quote a landscape job - I include the pst in the calculations
    and then quote the amount + GST
    DO NOT GET A PST # - it's just one more headache and more paperwork - pay the PST at source (when you buy materials) and factor it into your quote - and everything is + GST

    No double-dipping
  4. cutntrim

    cutntrim LawnSite Senior Member
    Messages: 474

    Ian - I'm thinking the problem would be when a landscaper buys plant material at wholesale price (pays PST on that) then sells it at a marked-up, or retail price to the customer. In effect the government would be shortchanged on the PST amount due for the difference of the wholesale and retail prices. Know what I mean?

    So if I bought a $75 tree for $50 (wholesale) and paid PST at the nursery...then charged the customer $75 plus labor time and GST only...then there'd be PST on $25 the gov't didn't get.

    I don't know. I'm gonna check Revenue Canada's website see if I can get an answer.
  5. ianc

    ianc LawnSite Member
    Messages: 49

    We are a service business - the client only needs to know the bottom line - and RevCan does'nt need to know the markup - In 22 years in the landscrapping I don't have a PST# and have always paid the tax at source

    Call Landscape Ontario and ask them

    hope this helps
  6. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Messages: 7,547

    Im not from Canada, but had to stick my nose in anyway. It sounds like your pst is like our sales tax. I would just do what Ianc does, no sence making more work for yourself and no one will ever know what you charge for that tree. Im sure you wont tell the customer that your charging for your labor, and charging more than you paid for materials too. We all do that, but dont tell them.
  7. dan deutekom

    dan deutekom LawnSite Senior Member
    Messages: 424

    When I buy landscape material wholesale, my suppliers have my pst number and exemption form on file so that I don't have to pay the pst on my purchases. Then I charge the clients pst on the retail price. Although the taxes (gst and pst) are a pain and you don't have to register for gst if you bill less than 30,000 a year, there are advantages to getting registered and sooner or later they will catch up to you. (been there, done that) Any gst or pst that I pay to my suppliers is deducted from my remmittance to the tax guys. Best thing to do is talk to a good accountant. Not to bash landscape ontario but they are not experts in the tax department.
  8. ianc

    ianc LawnSite Member
    Messages: 49

    and sooner or later they will catch up to you

    What do you mean!!! - this is legal - why not pay the PST on those purchases - the PST exemption REAL advantage is for the Farmers - not the landscapers
  9. cutntrim

    cutntrim LawnSite Senior Member
    Messages: 474

    O.K. I checked out the Ontario Government Website and downloaded their publication detailing RST (Retail Sales Tax) aka "PST". In the publication, they list exempt services and one of those is labour to install or repair "real property". Real property is "land and any items permanently attached to land". Examples of real property are buildings, driveways, roads, fences, inground swimming pools, and patios. Real property is NOT taxable. "Fixtures" are NOT taxable. Fixtures are "items of tangible personal property that have been attached to real property in a permanent way, so that they are considered part of the real property." Permanently attached means attached by screws, nails, bolts, or embedded in concrete.
    Landscapers are examples of real property contractors, and pay RST on the materials and items (including tools) they use to perform the job. They are considered the "end users" and must pay the RST and not charge or collect it from their customers. The RST paid by the landscaper should be included in the price of materials used to complete the contract. "The real property contractor must not bill or quote RST as a separate charge to the customer."

    This info is from SBP901 THE BASICS OF RETAIL SALES TAX.

    Plants are not specifically mentioned. However, using their guidelines it certainly appears that plants would not be taxable since they may be considered fixtures. They are definately "tangible items". I.E. they can be seen, felt, touched, etc...

    Having read this publication in its entirety I'm convinced that we as landscapers do not require PST #'s, nor are we allowed to charge our customers for it.
  10. dan deutekom

    dan deutekom LawnSite Senior Member
    Messages: 424

    Talk to an tax accountant. The tax laws are screwy. In the interior landscape service part of my buisness, maintenance of built in planters (real property)is not taxable.....maintenance of potted plants is taxable. If you mark up material for resale (plants) the government wants it's share. Ontario never refuses my tax remittance. It may be different if you don't mark up the cost of your material

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