Provincial

Three provinces – Saskatchewan, 
Manitoba, and British Columbia – 
currently levy a PST under provincial 
statutes that operate independently 
from the federal GST/HST legislation. 
These provincial sales taxes are similar 
to the sales and use taxes levied in 
many US states (see 

Overview of 

the US Mining Tax Environment

). PST 

typically applies to sales and leases 
of goods and to certain services at 
the retail level (subject to various 
exemptions). Unlike GST/HST, 
PST incurred by businesses is not 
recoverable.

Québec levies its own form of value-
added tax, the Québec sales tax (QST). 
Like the GST/HST, the QST applies to 
a broad range of goods and services 
at each stage of production and 
distribution, and it is recoverable by the 
supplier as an input tax refund in the 
same manner as the GST/HST input 
tax credit. The QST applies in the same 
manner as the GST.

Alberta, Yukon, the Northwest Territories, 
and Nunavut do not currently impose 

separate retail sales taxes. Supplies of 
goods and services in these jurisdictions 
are subject to GST.

Table 13 shows the federal and 
provincial rates for value-added and 
sales taxes in effect as at June 30, 2013.

Application to the Mining 

Industry

GST/HST and QST

The mining industry is subject to the 
same GST/HST and QST rules as other 
businesses. GST/HST and QST apply 
to inputs (acquisitions of materials/
products and services) and outputs 
(supplies of products and services 
made to others) in the course of 
mining exploration, development, 
and operation. As discussed above, 
the rate of tax that applies depends 
on the province in which the mining 
operations take place. For example, 
in 2013, expenditures incurred by a 
mining business will attract 13% HST in 
Ontario, 14.975% combined GST and 
QST in Québec, and 5% GST in Alberta 
and the three territories.

While GST/HST incurred is recoverable 
through input tax credit claims, large 
businesses (those with annual revenues 
over $10 million) are not entitled to 
recover the provincial portion of the HST 
incurred in Ontario on expenditures in 
the following categories:

• energy (excluding energy used in 

production);

• telecommunications (other than 

internet access and toll-free number 
charges);

• vehicles under 3,000 kg and (in 

Ontario only) fuel used in such 
vehicles (excluding diesel); and 

• meals and entertainment, to the 

extent that these expenses are 
restricted for income tax purposes.

These restrictions are transitional rules, 
introduced when Ontario’s HST came 
into effect on July 1, 2010; they will be 
phased out over three years, beginning 
in 2015. 

In Québec, large businesses (those with 
annual revenues in excess of $10 million) 
are not entitled to claim an input tax 
refund for the QST incurred on the same 
categories of expenditures listed for 
Ontario above. Québec will phase out 
these restrictions on the same basis as 
Ontario as part of its plan to make the 
QST operate in the same manner as the 
GST in virtually all respects.

The rate of GST/HST that applies to the 
sale of mining products depends on 
the shipping destination of the product. 
Where the shipping destination is in 
Canada, the GST/HST rate that applies 
is the rate applicable in the province/
territory to which the product is shipped. 
Mining product shipped to a destination 
outside Canada is zero-rated (taxable 
at 0%). Precious metals are zero-rated 
whether delivered in Canada or exported. 
The term “precious metal” is defined 
to mean a bar, ingot, coin, or wafer that 
is composed of gold, silver, or platinum 

Table 13: Value-Added and Sales Tax Rates, Canada, as at June 30, 2013

British Columbia

5% GST + 7% PST

Alberta

5% GST

Saskatchewan

5% GST + 5% PST

Manitoba*

5% GST + 7% PST

Ontario 

13% HST

Québec 

5% GST + 9.975% QST

New Brunswick 

13% HST

Nova Scotia

15% HST

Prince Edward Island

14% HST 

Newfoundland and Labrador

13% HST

Yukon

5% GST

Northwest Territories

5% GST

Nunavut

5% GST

* Manitoba’s PST rate was increased to 8% effective July 1, 2013

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms 
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

 

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