Are you a Winnipeg business owner of a hair salon, spa, cosmetic clinic or the like? If so, there are some major changes to the way RST (also known as PST) is to be charged to your clients for specific services. If you think you may be affected, then read on!
Effective July 1, 2012, sales tax will apply on the following personal services: spa treatments, non-medical skin and nail services (such as manicures, pedicures and facials), tattooing, piercing, and hair services (including hair removal and augmentation, hairstyling, haircuts and barber services).
Haircuts costing no more than $50 will continue to be exempt from sales tax. Note that there are very specific rules for when you should and should not charge RST on haircuts when combined with other services. Please contact the staff at Five Star Accounting if you have any questions!
Also, if you use certain supplies for services to your clients then read on to learn about changes which could save your company from paying unnecessary RST on supplies soon to be exempt.
The following is taken from the Province of Manitoba website. Be sure to check out the website for more details.
Exempt goods purchased for use in providing a taxable service
• Effective July 1, 2012, goods applied directly to a customer and consumed completely in the performance of a taxable personal service can be purchased RST exempt by the service provider. Examples include shampoo, soap, skin care products, nail polish, make-up, tattoo ink, body ornaments supplied with piercing services etc. Businesses can buy these goods exempt by providing their supplier with their seven-digit Manitoba RST number.
Taxable goods for own use
• Businesses are required to pay RST on all purchases of equipment, supplies and taxable services acquired for their own use in operating their business. Examples are service equipment (e.g. salon beds and furniture, styling stations, wash units, hair dryers, carts, trolleys, laser equipment, tanning beds), accessories (towels, basins, scissors, razors, brushes, makeup applicators) office equipment, signs, brochures, forms and other stationery, computer software, promotional items, uniforms, building cleaning supplies, accounting services and equipment repair services.
Lastly, have you sold any prepaid services? No worries. These are exempt from RST. This would then be an ideal time to push those spa packages!
If you need any help or assistance interpreting the new RST rules, the team at Five Star Accounting is here to help!