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What to Know About the Canadian GST/HST?

Two types of sales taxes are levied in Canada – provincial sales taxes and the goods and services tax (GST)/harmonized sales tax (HST). Provincial sales taxes are collected in the provinces of British Columbia, Manitoba, Quebec and Saskatchewan, where the tax bases and rates vary. The GST applies nationally, and the following provinces harmonized their provincial sales taxes with the GST to implement the HST: New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island. Generally, the HST operates the same and has the same tax base as the GST. The GST rate in provinces without a HST is 5%, and the GST/HST combined rates are 15%, except in Ontario where the rate is 13%.

The GST/HST is a value-added tax, which operates on an input/output system. When a taxpayer buys goods or services, it pays GST/HST – this is the input tax. When the same taxpayer sells its product, it collects GST/HST from buyers – this is the output tax. The taxpayer deducts the input tax from the output tax and remits the difference to the tax authority.

Source: withum.com

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