As a consumer, it’s helpful to be familiar with how much you’ll pay in sales tax when purchasing goods and services. And if you run a business, whether in Alberta or elsewhere in Canada, it’s important that you understand how to charge sales tax to your customers.
Across Canada, each province and territory applies its own sales tax. Let’s go into more detail about the type of sales tax that applies in Alberta.
Sales Tax In Alberta
In Alberta, only a 5% Goods and Services Tax (GST) is applied to most purchases. Unlike in other provinces, no Provincial Sales Tax (PST) or Harmonized Sales Tax (HST) applies in Alberta.
Sales Tax Formula For Alberta
Let’s look at an example of how sales tax in Alberta is calculated.
If you’re purchasing a product at a pre-sale price of $50, the total sales tax and price would be calculated as follows:
| $50 + 5% ($50 x 5% = $2.5) GST = $52.50 |
In this example, the sales tax would come to $2.50, and the total price paid would be $52.50.
Sale Tax Exemptions in Alberta
Not all products and services in Alberta are charged GST. The following exemptions apply:
Zero-Rated Items
Goods and services under the following categories are exempt from GST in Alberta:
- Basic groceries (some snack foods, carbonated drinks, and liquor are charged HST)
- Prescription medications (excluding over-the-counter medications)
- Medical aids
- Feminine hygiene products
Direct Exemptions
The following goods and services are directly exempt from GST:
- Resale of previously-owned residential real estate
- Rental accommodations of 1 month+
- Education leading to a diploma or certificate
- Education required for a specific practice
- Medical and dental services
- Financial services
- Legal aid services
- Daycare services
What Happens If You Make A Purchase Online From A Store In Another Province?
As mentioned, when you buy a product or service in Alberta, you’re only charged 5% GST. But what happens if you purchase something from outside of Alberta?
The issue of taxing goods and services becomes a little more complex in this situation, though it’s the merchant who is tasked with figuring it out, not the consumer.
What Tax Rate Will You Pay If You Make A Purchase Online Outside Of Alberta?
No matter where you buy a product or service from, you will pay the tax rate in Alberta. That means that regardless of whether the merchant is located in Alberta or another province or territory, the Alberta tax rate will apply.
For example, let’s say you live in Alberta, and you’re purchasing a sweater online from a vendor in BC. Despite the fact that the sweater is coming from another province, it will still end up in Alberta where you live. As such, you’ll need to pay the 5% GST sales tax as applied in Alberta, not the sales tax in BC.
What Tax Rate Will You Pay If You Make A Purchase In-Store Outside Of Alberta?
If you’re purchasing a product or service in-person, you’ll pay the sales tax applicable in the province or territory in which the product or service is being sold to you.
For instance, if you’re visiting BC and you buy a sweater at a physical store, you will pay 7% PST and 5% GST (the sales tax applicable in BC), rather than just the 5% GST applied in Alberta.
Want to buy a house in Alberta? This is the average cost of a house.
Do You Qualify For The GST/HST Tax Credit In Alberta?
All provincial governments, including in Alberta, have their own tax laws and regulations. However, it’s the Canada Revenue Agency (CRA) that collects individual income taxes for provincial governments (with the exception of Quebec).
In Alberta, a GST/HST credit may apply. This is a quarterly payment made to low-income individuals and families to help offset the amount they pay in GST/HST.
These tax-free payments may also include payouts from provincial and territorial programs. When you file your income taxes, you’re automatically considered for the GST/HST credit.
Eligibility Criteria For GST/HST Credit
You must meet the following requirements in order to be eligible for the GST/HST tax credit:
- Be a resident of Canada at the beginning of the month when the CRA makes a payment
- Be at least 19 years old in the month prior to a quarterly payment being made
- Have/had a spouse or common-law partner in the month prior to a quarterly payment being made
- Are/were a parent and live/lived with your child in the month prior to a quarterly payment being made
GST/HST Tax Credit Payment Dates in Alberta
The 2024 payment dates for the GST/HST tax credit are as follows:
- January 5, 2024
- April 5, 2024
- July 5, 2024
- October 4, 2024
The GST/HST payments may be combined with other government benefits you qualify for.
Other Alberta Tax Credits
You may also be eligible for other tax credits in Alberta:
Alberta Child and Family Benefit (ACFB)
The ACFB is a tax-free payment made to families with children under the age of 18. If you’re eligible for this benefit, you may be entitled to $722 to $3,525 for the period of July 2024 to June 2025. Once your net income exceeds a certain threshold, the benefit is reduced.
Alberta Indian Tax Exemption (AITE)
The AITE allows eligible Canadians to be exempt from paying taxes on fuel and tobacco when purchased as personal property on a reserve in Alberta.
You are considered an eligible consumer for the AITE if any of the following apply:
- You’re an Indian as defined in the Indian Act who is at least 16 years of age
- You’re a band as defined in the Indian Act whose reserve is located in Alberta
- You’re a band whose office is located in Alberta
Sales Taxes and Businesses in Alberta
If you run a business in Alberta, consider the following when it comes to charging, registering, and filing your taxes.
Sales Tax Registration
Most businesses in Alberta must register for GST. However, small businesses that generate less than $30,000 over four calendar quarters in a row are considered small suppliers and may not have to register for GST/HST.
FIND OUT HOW TO GET A:
Do I Have to Collect Provincial Sales Taxes?
In Alberta, there is no provincial sales tax, so there are no provincial sales taxes to collect if your business operates in Alberta. You only have to register with the federal government to collect and remit GST (unless your business is considered small and qualifies for exemption).
How Do You Tax Out-Of-Province Sales?
As mentioned, the sales tax your business charges to customers in provinces outside of Alberta depends on where you supply the product or service.
For instance, if a customer purchases a product or service from your company in person, the provincial sales tax where you’re located applies. That means if you’re located in Alberta and a customer buys a product or service from you while physically present, the 5% GST applies.
On the other hand, if you’re located in Alberta and you deliver your product to a customer in another province or territory, or your services are supplied to a client who is outside of Alberta, you would charge the applicable sales tax in their province or territory.
Sales Tax In Alberta FAQs
How is sales tax calculated on alcohol?
How much is the GST in Alberta?
What’s the difference between HST and GST?
Final Thoughts
Whether you’re a consumer who lives in Alberta or a business that operates in the province, you should be familiar with the applicable sales tax. For consumers, sales tax is relatively straightforward, but for businesses, figuring out how to tax your customers might take a little more knowledge of how sales tax works, particularly for out-of-province consumers.
