Farm PST exemption evidence: match the item to its actual use

Identify the purchase before choosing a tax code

Start with the product description, equipment details and intended use. Saskatchewan distinguishes readily identifiable qualifying farm goods from other purchases that require farmer certification. Some products used by an agricultural business remain taxable, and processing activities do not automatically qualify as primary farming.

A useful purchase register includes the supplier item number and a plain-language description. Keep the supporting certificate or explanation with the invoice when required. Staff should be able to find the evidence without relying on the person who originally placed the order.

Worked example: the same material, different uses

Consider a hypothetical supplier selling $1,500 of hay for qualifying livestock feed and $600 of hay for kennel bedding in a non-farm operation. Under the bulletin’s described uses, the livestock-feed sale is PST exempt while the kennel-bedding sale attracts $36 of PST at 6%.

This example addresses PST only; GST must be assessed separately. The important bookkeeping detail is the intended use attached to each sale. Applying a single exempt code to every hay sale would hide the distinction, while taxing both automatically would also fail to reflect the documented facts.

Review changes and mixed purchases

When a customer changes a use or a purchase is transferred into a different activity, retain the new information and obtain advice on any tax consequence. Do not edit the original evidence to make it appear that the later facts existed at the time of purchase.

For an invoice containing several items, review the lines individually. A qualifying feeding component, a general-purpose tool and a service charge need not share one result. Link supplier corrections and credit notes to the original invoice so the final record explains how the balance changed.

Use a short evidence checklist

Before closing the purchase record, confirm the item, buyer, intended use, any required certification and the supplier’s treatment. Place uncertain items in a review queue with a named owner and a target resolution date. This is more workable than delaying the entire month-end close for one question.

At year end, provide the accountant with unresolved purchases, material equipment additions and any use changes. The purpose is an understandable evidence trail, not a blanket promise of exemption. A consistent routine also helps suppliers answer customer questions when an older purchase needs to be reviewed.

Put this into practice

• Sales tax records →
• Agricultural input suppliers →
• Bookkeeping tools →