Anything you buy in Canada is subject to a certain amount of sales tax. However, depending on where you live in Canada, the amount of sales tax you pay will vary. If you live in Prince Edward Island, you should have a basic understanding of how sales taxes work in PEI and in other provinces and territories across Canada.
Keep reading to learn about the PEI sales tax and how it is applied in various scenarios.
Prince Edward Island (PEI) Sales Tax
In Prince Edward Island, a 15% Harmonized Sales Tax (HST) is applied to most purchases, this includes a 5% federal portion and a 10% provincial portion. That means eligible purchases are charged 15% of the retail price.
PEI Sales Tax Formula
To help you understand how PEI sales tax is calculated, let’s assume you’re purchasing a product for $100. Based on PEI’s sales tax rate of 15%, the total cost of the $100 product would be $115. Here’s how to calculate it:
| Purchase Item Cost | $100 |
| Provincial Sales Tax (10%) | $10 |
| Federal Sales Tax (5%) | $5 |
| Total Cost of Item With Tax | $115 |
In the above example, the total sales tax would be $15, and the total price would be $115.
Sales Tax Exemptions In Prince Edward Island
Not all goods and services are charged the 15% HST sales tax in PEI. Some items are exempt from the federal portion while others are exempt from the provincial portion. The following categories of goods and services are exempt from the provincial sales tax (PST) in PEI:
- Heating oil
- Books, both paper and audiobooks
- Children’s clothing and footwear
This means that the retailer will only charge the federal 5% sales tax on these items.
Prince Edward Island First Nations and HST
Registered First Nations are exempt from the federal and provincial portions of the HST on products and services purchases and used on reserves. For example, transportation services. For a full list of items exempt from HST, please visit the Government of Canada website.
What Happens If You Make A Purchase Online From A Store In Another Province?
The sales tax you pay on an item from another province will vary depending on whether you buy the item online or in person.
PEI Sales Tax For An In-Person Purchase
Understanding the sales tax requirements when you purchase something in-person in PEI is relatively straightforward: you’ll pay 15% HST. However, if you purchase an item in-person in another province, you’ll be required to pay the sales tax of that province.
For example, if you visit Ontario and make a purchase, you’ll pay a sales tax amount of 13% instead of PEI’s 15% sales tax.
PEI Sales Tax For An Online Purchase
When it comes to online purchases, the tax requirements are a little more complicated, since each province has its own sales tax. However, the responsibility falls on the vendor when it comes to the appropriate sales tax to charge, not the consumer.
If you live in PEI, you’ll pay the 15% HST that applies to goods and services in the province, regardless of where the vendor is located. When it comes to sales tax on online sales, the destination of the goods and services is what matters.
For example, let’s say you live in PEI and are purchasing a book online from a merchant located in Ontario. While the book is being sent from another province, it will inevitably wind up in PEI. As such, you’ll pay the 15% HST sales tax applicable in PEI, not the sales tax in Ontario.
Do You Qualify For the GST/HST Tax Credit In Prince Edward Island?
The GST/HST credit is available to all Canadians, including PEI residents, who have a low-to-moderate income level. This credit is designed to help ease the financial burden of sales tax payments for eligible consumers. Those who qualify will receive tax-free payments from the Canada Revenue Agency (CRA) each quarter.
These payments may also include contributions from provincial and territorial programs. You can receive up to $467 if you’re a single individual and up to $612 if you have a spouse or common-law partner. If you have children, you can get an additional $161 per child under the age of 19.
GST/HST Tax Credit Payment Dates in Prince Edward Island
You do not have to apply for the GST/HST tax credit. You are automatically considered for the GST/HST credit annually when you file your taxes. If you qualify, you’ll receive quarterly payments on:
- January 5th
- April 5th
- July 5th
- October 5th
Your GST/HST payments may be combined with other government benefits you qualify for. You may receive these payments under the term “Canada FPT” or “Canada FED“.
Other Prince Edward Island Tax Credits
The following refundable tax credits are also available in PEI:
Children’s wellness tax credit. This credit provides a non-refundable credit of $500 to families with children involved in organized activities.
Low-income tax reduction. As of December 31st of the tax year in question, you must have been a resident of PEI, were at least 19 years old, had a spouse/common-law partner, or were a parent in order to qualify for the low-income tax reduction.
Volunteer firefighter tax credit. Residents of PEI who volunteer as firefighters can claim a refundable $500 credit.
Teacher school supply amount. Teachers in early learning and daycare facilities may qualify for a $500 credit to cover the cost of school supplies.
Sales Taxes And Businesses In Prince Edward Island
If you run a business in PEI, you must determine whether or not you need to register for GST/HST.
Sales Tax Registration
Most businesses in PEI are required to register for GST/HST. However, small businesses that do not exceed $30,000 over four straight calendar quarters are classified as small suppliers and may not be required to register.
How Do You Tax Out-Of-Province Sales?
If your business serves out-of-province customers, the sales tax you charge depends on where the product or service is supplied.
For instance, if a customer physically purchases a product or service from your business in person, you would apply the taxes applicable in PEI. But if you deliver your product or service to a customer from outside PEI, you would apply the sales tax applicable in their specific province or territory.
Final Thoughts On PEI Sales Tax
It’s important to understand the type of sales tax applicable both in PEI and outside the province, whether you’re a consumer in PEI or a business owner operating in the province. Sales taxes charged on goods and services are easy to understand when it comes to making in-person purchases in PEI. But, the subject becomes a little more complex when it comes to applying sales tax for out-of-province purchases.
