Sales tax on construction, province by province

Five provinces charge HST, which combines the federal and provincial parts into one tax. Alberta and the territories charge GST alone. British Columbia, Saskatchewan, Manitoba and Quebec charge GST plus a separate provincial tax, each administered by the province, each with its own rules.

You do not have to register for GST/HST until your taxable sales pass $30,000. The CRA applies two tests. If you go over $30,000 in a single calendar quarter, you stop being a small supplier with the sale that took you over, and you charge GST/HST on that sale. If you go over $30,000 across the previous four consecutive calendar quarters, but not in any one quarter, you stop being a small supplier at the end of the month after the quarter in which you went over.

For a builder this threshold arrives with one decent kitchen. Many register voluntarily from the start so they can claim input tax credits on what they buy. Talk to your accountant about which suits you.

Section 168(7) of the Excise Tax Act deals with holdback directly. Where the payer keeps back part of the price under a provincial act or a written construction agreement pending full and satisfactory performance, the tax on that part is payable on the earlier of the day it is paid and the day it becomes payable.

Two practical results. First, you do not charge or remit tax on the holdback portion of each progress claim; you charge it when you bill the holdback release. Second, the tax can become due when the holdback becomes payable even if the client has not actually paid it yet. If a client sits on a holdback after the release date, talk to your accountant about the tax.

Saskatchewan applies the same rule to its PST: tax on a holdback is collectible on the earlier of the day the purchaser pays it and the day the holdback period expires (Bulletin PST-12).

BC’s guidance for real property contractors says you pay PST on the taxable goods you buy to fulfil a real property contract. On a supply-and-install contract that becomes part of the building, the contractor is the one who pays PST on materials, and does not charge PST to the client on the contract.

You charge PST when you sell taxable goods directly to customers, such as a supply-only sale, and on a mixed contract only on the part that is not real property. You only need a PST number if you charge PST.

Some items are on the line. BC treats built-in dishwashers, ovens and cooktops as becoming real property, while freestanding ranges, refrigerators, washers and dryers do not. Affixed machinery becomes real property, but some services to it can be taxable. Check the province’s page for your item.

Manitoba’s Bulletin 008 is clear on the common case. When goods become real property, "the contractor is the consumer of the materials used. The contractor does not collect RST on the amount charged under the contract, but the contractor is required to pay RST on the purchase price of the materials." It also says "RST does not apply on labour to install materials into real property."

Supply-only sales are different: the contractor collects RST from the customer on the total selling price.

The bulletin lists goods that stay tangible personal property after installation, including machinery and equipment, and plumbing, heating, cooling, electrical and telecommunication systems (M&E systems), and appliances whether portable or built-in. On those, RST applies to the total charge for materials and installation labour. Bulletin 005 explains that on a building contract that includes M&E work, the general contractor pays RST on the M&E system and includes it in the contract price. Read both bulletins, then confirm your contract with your accountant or Manitoba Finance.

Saskatchewan works the other way round. Bulletin PST-12, Services to Real Property, says taxable services include construction, alteration, repair, remodelling and improvement of real property, and the contractor must collect PST on the total charge to the customer, including labour and materials, but not the GST. Contract materials are bought exempt for resale by quoting the contractor’s vendor licence number.

We did not find a general residential exemption in PST-12. A separate bulletin, PST-75, covers a PST rebate for new home construction. The rules for specific work, farm work included, are detailed, so check with the Saskatchewan Ministry of Finance for your contract.

QST is 9.975 percent, charged on the selling price before GST. Revenu Québec administers both GST and QST in Quebec, so a Quebec builder generally registers for and files both with Revenu Québec. Ask your accountant about QST input tax refunds on your purchases.

Registered builders recover the GST/HST they pay on business purchases as input tax credits. The credit is only as good as the supplier invoice behind it. The Input Tax Credit Information Regulations set what the invoice must show, by amount.

• Under $100: the supplier’s name or business name, the invoice date and the total amount.
• $100 to under $500: all of that, plus the supplier’s GST/HST registration number and the tax charged.
• $500 or more: all of that, plus your name, the payment terms and a description of each item sufficient to identify it.
• PST and RST paid on materials in BC and Manitoba are not recoverable as input tax credits. On a supply-and-install job they are part of your material cost and belong in your estimate.

The GST/HST new housing rebate refunds part of the federal tax on a new or substantially renovated home that is the buyer’s primary residence. Under section 254(2) of the Excise Tax Act, where the total consideration is not more than $350,000, it is the lesser of $6,300 and 36 percent of the tax paid, and it phases out to nothing at $450,000. Some HST provinces have their own rebates on the provincial part.

There is also a First-Time Home Buyers’ GST rebate, now in section 254(2.1) of the act: up to $50,000 for a first-time buyer of a new home, in full up to $1,000,000 and phasing out to nothing at $1,500,000. In the statute it applies to agreements of purchase and sale entered into after 19 March 2025 and before 2031, with construction starting before 2031 and substantially completed before 2036.

Quebec has a QST new housing rebate alongside the GST one. Revenu Québec states it as 50 percent of the QST paid up to $9,975, reducing above $200,000 and ending at $300,000.

Who claims, whether the builder credits the rebate on the sale price, and how a custom build or substantial renovation qualifies are detailed rules. Your accountant needs to see the contract.