The document summarizes the changes to Manitoba's retail sales tax rate from 7% to 8%, effective July 1, 2013. Specific provisions are outlined for real property contracts, mechanical and electrical systems contracts, and purchases for own use. Contractors with fixed-price contracts executed before April 17, 2013 are eligible for a 1% refund on taxes paid on goods and services acquired after June 30, 2013. The new 8% rate applies to goods and services purchased or acquired on or after July 1, 2013.

1. Manitoba Home Builders’
Association
October 1, 2013
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2. Retail Sales Tax Rate Change

3. 2013 Budget Announcement
 The 2013 Budget announced that effective July
1, 2013 the retail sales tax rate will change from
7% to 8% until June 30, 2023.

4. Bill 20
 The Province of Manitoba has introduced Bill 20,
The Manitoba Building and Renewal Funding and
Fiscal Management Act (Various Acts Amended),
which provides for a change in the retail sales tax
rate effective July 1, 2013.
 Similar to other tax changes that came into effect
on Budget day, the rate will be retroactive to July
1, 2013 and vendors will be obligated to remit the
tax at 8% retroactive to that date.
 Vendors are expected to charge and collect tax at
the new rate as of July 1, 2013.

5. Transitional Rules
 An RST Notice on the transitional rules regarding
the retail sales tax rate change has been
prepared and is available on Taxation Division’s
website at
www.gov.mb.ca/manitoba/finance/taxation.
 This information notice outlines the transitional
rules for taxable goods and services, insurance
and real property contracts.

6. Real Property Contracts

7. Real Property Contracts
 The 7% sales tax rate is grandfathered for taxable
goods and services purchased for incorporation
into real property for contracts executed prior to
April 17, 2013 and completed by June 30, 2014.

8. Real Property Contracts
 Machinery, equipment, tools and other taxable
goods and services purchased by contractors for
their own use to perform a real property contract
are not grandfathered. This includes equipment
rentals that may or may not be re-billed to the
customer.

9. Real Property Contracts
 Contractors with fixed price real property
contracts that are grandfathered will be required
to pay tax at 8% for taxable goods and services
acquired after June 30, 2013 but can apply for a
refund (or an internal credit) of the 1% tax
difference.
 Refund claims should be made upon completion
of an eligible contract using form RT6 –
Application for Refund – Real Property Contracts
(Residential Properties).

10. Real Property Contracts
 For contracts executed after April 16, 2013, the
tax rate applies on taxable goods and services
based on when they are acquired by the
contractor for incorporation into real property and
not on the sale of the real property.
 The same applies for taxable goods acquired
RST exempt and the tax is self assessed when
they are used in performance of a contract.

11. Real Property Contracts
 Goods and services acquired to fulfill change
order requests after April 16, 2013 are
taxable at 7% if acquired prior to July 1, 2013
or 8% if the acquired after June 30, 2013.
 Change order requests made to contracts
that are executed prior to April 17, 2013 will
have the 8% rate apply and not be eligible for
a refund if the change order requests were
not completed prior to June 30, 2013.

12. Mechanical and Electrical Systems

13. Mechanical and Electrical Systems
 Contracts for the installation, maintenance or
other services to M & E systems executed
prior to April 17, 2013 are taxable at the 7%
rate for services provided to June 30, 2014.
 Contracts executed after April 16, 2013 that
straddle July 1, 2013 must be segregated so
that the tax apply at 7% for services
performed prior to July 1, 2013 and tax
applies at 8% for services performed after
June 30, 2013.

14. Mechanical and Electrical Systems
 The applicable tax rate on supply and install
contracts for M & E systems is the same as
outlined previously for services to M & E
systems.
 For these contracts, the tax rate applies based
on the installation date, not when title passes
(which is typically at the end of the work).

15. Mechanical and Electrical Systems
 Holdbacks for contracts executed after April 16,
2013 should be segregated on the invoice into
amounts before July 1st
and after June 30th
with
the appropriate tax rate applied on each amount.
 Billing for any holdback amounts for contracts
executed prior to April 17, 2013 are at 7% if
completed by June 30, 2014. If not completed by
this date, RST applies on the holdbacks as
described above.

16. Mechanical and Electrical Systems
 M & E contracts executed prior to April 17, 2013
are grandfathered at the 7% tax rate for
installations completed by June 30, 2014. If the
work extends past this date, the portion of the
work done after June 30, 2014 is taxable at 8%.

17. Mechanical and Electrical Systems
 Contractors with fixed price real property
contracts that are grandfathered will be
required to pay tax at 8% for taxable goods
and services acquired after June 30, 2013 but
can apply for a refund (or an internal credit) of
the 1% tax difference.
 Refund claims should be made upon
completion of an eligible contract using form
RT6 – Application for Refund – Real Property
Contracts (Residential Properties).

18. Mechanical and Electrical Systems
 Change order requests made after April 16,
2013 are taxable at 7% for all work performed
prior to July 1, 2013 and 8% for all work
performed after June 30, 2013.
 Change order requests made to contracts
that are executed prior to April 17, 2013 will
have the 8% rate apply and not be eligible for
a refund if the change order requests were
not completed prior to June 30, 2013.

19. Application for Refund –
Residential Properties

21. Application for Refund
 Refunds request must be made by June 30, 2015
and include the following:
 a copy of the contract with the home owner
executed prior to April 17, 2013,
 a copy of the possession certificate provided to
the home buyer,
 a job cost summary for the contract,
 a summary of tax paid at 8% on direct materials
and M & E work up to June 30, 2014, along with
supporting invoices,

22.  invoices for real property supply and install
sub contract work (done after July 31, 2013
and up to June 30, 2014) along with
corresponding sub-contract/purchase order
documents showing an effective date after
April 16, 2013.
 a summary of the job cost components for
which a calm is being made for multiple
contracts.
Application for Refund

23. Application for Refund
 refund applicants requesting refund claims for
more than 5 contracts can opt not to provide
documentation for the tax paid at 8% on direct
materials and M & E work. They may also not
to provide invoices for real property supply and
install sub-contract work performed after July
31, 2013 and up to June 30, 2014.
 however, applicants will have to summarize the
purchase invoices and retain the supporting
documents. Taxation Division will contact
these applicants to review these documents.

24. Purchases For Own Use

25. Purchases - Goods
 Taxable goods purchased prior to July 1, 2013
are taxable at the 7% tax rate, including taxable
goods purchased on credit or that are fully paid
but delivery occurs after June 30, 2013.
 The 8% tax rate applies on taxable goods
purchased after June 30, 2013, including taxable
goods in which only a deposit has been paid on
the purchase.

26. Purchases - Goods
 Lease payments made or billed prior to July 1,
2013 are taxable at the 7% tax rate and those
payable after June 30, 2013 are taxable at 8%.

27.  Taxable services are taxable at 7% if completed
prior to June 30, 2013 regardless of the billing and
payment date.
 Taxable service contracts entered into prior to April
17, 2013 are taxable at 7% for services provided up
to June 30, 2014 (this includes accommodations
booked with a deposit).
 Prepaid taxable services bought and paid for prior
to April 17, 2013 are taxable at 7% regardless of
when the service is performed.
Purchases – Services (Other Than
Telecommunication Services)

28. Purchases – Telecommunication
Services
 Telecommunication service packages invoices
dated prior to July 1, 2013 are taxable at 7%
(even if the billing period straddles that date).
Invoices dated after June 30, 2013 are taxable
at 8%.
 The tax rate on optional services (such as long
distance) is based on the date the service is
provided.

29. Purchases - Insurance
 The tax rate on definite term insurance
contracts is based on the effective date of the
contract (including multi-year contracts).
 Premiums payable on indefinite term or group
insurance contracts prior to July 1, 2013 are
taxable at 7% regardless of the coverage
period. Premiums payable after June 30, 2013
are taxable at 8%.

30. Contact Us:
Tax Inquiries and Interpretations: (204) 945-5603
General Inquiries: (204) 945-6444
Manitoba Toll-Free 1-800-782-0318
E-mail: MBTax@gov.mb.ca
Web Site: www.gov.mb.ca/finance/taxation
TAXcess: manitoba.ca/TAXcess

31. Questions and Answers