Auditor’s report outlines challenges within Saskatchewan PST compliance

Tara Clemett said the Revenue Division in the ministry has limited resources and needs to be looking at areas where its enforcement activities should be focused.

Saskatchewan’s provincial auditor Tara Clemett made six recommendations with regard to the Ministry of Finance’s processes for enforcing compliance with the Provincial Sales Tax (PST).

Audits found that $10 million in PST was collected by vendors and not reported and paid to the ministry in 2021-22, compared with $3 million in 2020-21.

The ministry doesn’t look at why this amount changed, and Clemett recommended that key trends be analyzed in non-compliance with PST legislation to prioritize enforcement activities.

Over $2 billion is collected annually for PST, which is about 30 per cent of the total provincial tax revenue.

The auditor’s report says the ministry uses enforcement, like audits, education and outreach, and collection activities to promote PST legislation and to collect taxes, but adds that unpaid taxes get more difficult and expensive to collect the longer amounts are left outstanding.

The report outlined that $77 million in PST was collected in 2021-22 through collection activities, and more than 1,200 audits in the same time span generated $47 million in PST revenue.

Clemett said the other recommendations included enhancing reporting to senior management to better analyze PST enforcement results, documenting the key judgements when selecting taxpayers for PST audits, setting out timeframes for reviewing audits and enforcement activities, communicating the results to taxpayers, and assigning the appropriate amount of risk to collection cases.

“Understanding where and how tax is potentially lost is key to making sure the government collects the PST it is owed,” said Clemett. “Also, timely communication of tax enforcement results can help promote improved compliance by taxpayers and earlier payment of amounts owing.”