Dear Valued Customers,
As many of you may know, effective April 1, 2017 there will be some changes with how Provincial Sales Tax (PST) applies to the construction industry here in Saskatchewan, and there seems to be a lot of confusion and misunderstanding surrounding this change.
Personally I’ve read about/listened to several news-media reporters as well as a few fellow contractors discussing this change; however, it seems that many of them have a significant misunderstanding of exactly what is changing on April 1st, and the overall impact these changes will have on our clients seems to be getting blown a little out of proportion.
We want to set the record straight and make it very clear that effective April 1, 2017, there will not be a 6% total increase in overall contract pricing. The only additional PST that will be charged to our customers is on the Labour & Administrative/Overhead costs that we incur on your project.
To be clear, PST has always been charged on all construction materials to build or renovate your home. Whether it was lumber, drywall, paint, hardwood flooring, or kitchen cabinets, PST was charged. This does not change on April 1, 2017.
Although any construction contract & invoices which you may have received previously did not include PST on a separate line, this PST amount (for construction materials) was essentially included in your total construction contract, as it was a cost that we as contractors incurred on your project. Prior to April 1, 2017, any labour & administrative/overhead costs that we incurred were exempt to PST, and so only federal GST was charged on these items.
In order to help explain this, we encourage you to take a look at the attached picture which is an example budget for a new detached garage build. You will see the impact that PST had on your total contract price both before and after April 1, 2017. As you will see, in this example, the new PST charges effective April 1, 2017 work out to much less than a 6% total price increase. In this example, the additional PST effective April 1, 2017 works out to slightly less than a 2.2% increase in the total contact.
Don’t get me wrong, building a new home or undertaking a large renovation is and always will be a very significant investment for all of our clients. Any mandatory increase in costs incurred by our customers is something to be taken very seriously. As well, these mandatory tax increases make it much more tempting for future customers to be lured in by unlicensed & uninsured contractors in the “underground economy” who do jobs for cash only. These upcoming changes will no doubt place even more pressure on the rest of us contractors & companies who continue to play by the rules.
Transparency is and always will be one of our core values as a company. If you have any questions at all about any of these PST changes please do not hesitate to get in touch with us.
Halcyon Homes Ltd.