As a result of changes announced in the 2012 Budget, Manitoba Finance Taxation Division has recently issued Information Bulletin No. 062, “Personal Services”. Effective July 1, 2012, 7 percent retail sales tax (RST) will apply to designated personal services. The bulletin outlines the personal services that will become taxable and also provides information on registration, reporting requirements and how tax applies on purchases made by vendors providing taxable personal services.
Effective July 1, 2012, RST will apply to the following personal services provided in Manitoba:
- Hair services (except services at a total cost of $50 or less which include haircutting as part of the service);
- Non-medical skin care and aesthetician services (e.g., manicures, facials);
- Body modification services (e.g., ear and body piercing);
- Spa services (e.g., anti-aging treatments, sauna, scalp treatments); and
- All tanning services.
Medical and reconstructive treatments provided by a medical doctor or dentist are exempt from RST, with the exception of hair augmentation and removal services. Massage treatments provided by a Registered Massage Therapist are not taxable. In addition, where taxable goods or services are sold together with exempt goods or services, the service provider must segregate the prices on the invoice to show a separate fair value for each item or service sold, and charge RST on the taxable goods and services only.
In addition, effective July 1, 2012, goods purchased by personal service providers that are applied directly to the customer and used up completely in the performance of a taxable personal service may be purchased exempt of RST, by providing the supplier with the purchaser’s seven-digit RST number. Examples include shampoo, soap, skin care products, nail polish, and body ornaments supplied with piercing services. Businesses will continue to be required to pay RST on all purchases of equipment, supplies and taxable services acquired for their own use in operating their business.
The 2012 budget also made changes to vendor filing requirements for RST.
As outlined in Information Bulletin No. 004, “Information for Vendors”, the RST tax return filing frequency has been changed to the following levels, based on the average RST collectable per month:
- $5,000 or more – monthly;
- $500 to $4,999 – quarterly; and
- Less than $500 – annually.