Manitoba’s New RST Rate (And Why It Might Matter to You)

Effective July 1, 2013 and for a ten-year period ending June 30, 2023, the Retail Sales Tax in Manitoba increases from 7% to 8%.

The change was announced in the 2013 Provincial Budget and requires amendment to The Retail Sales Tax Act. Those amendments were introduced April 17, 2013 as part of Bill 20, The Manitoba Building and Renewal Funding and Fiscal Management Act. The Bill, which has proven controversial for the majority government, has passed Second Reading and is now in Committee stage.

The Transitional Rules relating to services provided by billable hour, such as legal and accounting services, provide that:

Where services (such as legal and accounting) are provided by billable hour, day or other periodic measure and billed after the services are delivered, tax applies at 7% on all pre-July 1, 2013 time and at 8% for time after June 30, 2013. Billings for periods that straddle July 1, 2013 must be segregated with the appropriate rate applied to each portion.

And if those rules are not clear enough, a further explanation is provided by The Law Society of Manitoba:

This means that when you are billing out a file, work in process up to and including June 30, 2013 is to be taxed at 7% RST. Any work you do after June 30, 2013 is subject to RST at 8%. If your accounting software package cannot keep track of two RST rates, you will have to track these changes manually when issuing accounts.

Got it?