Understanding Manitoba business tax obligations

The Government of Manitoba administers several taxes to companies operating in the province. If you are starting or expanding a business in Manitoba, it's important to understand your tax obligations.

The most common taxes are listed below. There may be others to learn about, depending on your business activities.

Retail Sales Tax:
Often called the PST, Manitoba's 7% Retail Sales Tax is applied to the retail sale or rental of most goods and services. The tax is calculated on the selling price, before the GST is applied. Small firms with annual taxable tales under $30,000 are not required to register and collect PST. Out-of-province businesses selling taxable goods and services to Manitoba customers are required to register with Manitoba Finance under certain circumstances. 

The 2024 Manitoba Budget announced the following changes:

Retail Sales Tax Registration Threshold Increased: Effective January 1, 2024, the sales tax registration threshold has increased from $10,000 to $30,000. Small businesses with gross annual sales of $30,000 or less are no longer required to register to collect and remit sales tax. Businesses that de-register must pay sales tax on their taxable purchases of goods and services. The province predicts the threshold increase will reduce red tape and administration for 3,300 small businesses with taxable sales between $10,000 and $30,000.

Retail Sales Tax Commissions Eliminated: Businesses reporting less than $3,000 in sales tax in a filing period were eligible for a commission to help with administrative costs in filing paper-based sales tax returns. With the increase in the sales tax registration threshold to $30,000 as of January 1, 2024, and electronic filing, the administrative costs to file and report sales tax collected have significantly decreased. Sales tax commissions will be eliminated for any filing period ending after April 2024.

Retail Sales Tax clarifications: The following technical clarifications will be implemented: 

• Interior window coverings remain tangible goods and do not become part of real property.
• Businesses that sell electricity through electric vehicle chargers do not have to collect sales tax if the business has paid the sales tax on the electricity.
• Eliminating the restriction for sales tax refunds on vehicles bought in Manitoba and subsequently sold out-of-province within six months.
• Specifying that the purchase price is to be used when vehicle appraisal values are lower than the purchase price. 

Provincially Administered Tax Audit Periods: For all provincially administered taxes, the tax audit periods will be codified to a maximum of six-years from date of notification, but the six-year statutory limitation period will not apply when taxes have been collected but not remitted or where a person made a misrepresentation attributable to neglect, carelessness, or willful default. A Notice of Assessment will also be required to be issued at the completion of all tax audits. 

Tobacco Tax:
The Tobacco Tax is applied to the sale of cigarettes and other tobacco products, such as cigars and raw leaf tobacco.

Fuel Tax:
Fuel tax is charged to consumers when purchasing diesel, gasoline, propane, commercial heating fuel, etc.

The Health and Post Secondary Education Tax Levy (HE Levy):
The  HE Levy, or "Payroll Tax", is paid by employers with a permanent establishment in Manitoba. Employers with a yearly employee payroll of $2.25 million or less are exempt from this levy. For payroll between $2.25 million and $4.5 million, the tax is 4.3% on the amount in excess of $2.25 million. All employers with more than $4.5 million in yearly payroll pay 2.15% of their total payroll. Associated groups (i.e., corporations and certain corporate partnerships) must share the $2.25 million exemption based on the total of their combined yearly payroll.

Resources: 

The Taxation Division Manitoba is where you can learn more, including:

• Do I need to register? brochure
• Online account access TAXcess
• Information bulletins and notices
• Tax forms

The World Trade Centre Winnipeg hosts seminars about taxes and other business topics. The sessions are held in Winnipeg and are often also available for remote participants via webinar (computer, tablet, smartphone). Check their calendar for upcoming opportunities.

CFIB Business Advisors are available to help our members learn more about provincial taxes. Contact us at 1-833-568-2342 or cfib@cfib.ca.