As announced in the 2013 Manitoba budget presented on April 16, 2013, a 1% increase in the retail sales tax (“RST”) rate will take effect on July 1, 2013. Transitional rules were provided in Notice RST 13-05, a summary of which is available at:
Ryan Tax Development – Manitoba Budget 2013
Further to the rules first released, the province has updated Notice RST 13-05 to address the transitional rules applicable to existing contracts for services. Those contracts entered into prior to April 17, 2013 are taxable at a rate of 7% for services provided up to November 30, 2013. This includes accommodation services for which a deposit has been provided upon booking, and contracts for installation, maintenance or other services to tangible personal property, as well as real property contracts.
There is a significant difference between supply and install or real property contracts grandfathered, and those that have been signed after April 16, 2013. Installations and services to real property performed for grandfathered contracts that are completed prior to November 30, 2013, will be taxable at a rate of 7%. Billings for contracts not grandfathered must be separated, based on goods installed prior to July 1, 2013 (taxed at a rate of 7%) and goods installed on or after July 1, 2013 (taxed at a rate of 8%). Holdback billings related to these contracts are all taxable at a rate of 8%.
For goods purchased by contractors after June 30, 2013, a rate of 8% will be applicable. However, contractors may apply for a refund (or take an internal credit if applicable) on the 1% difference, provided they have job cost sheets or other documentation linking the purchase of the materials to the grandfathered contract. Refund claims must be made within 2 years of the purchase using form RT6 – Application for Refund General Use.