- Municipalities in Canada face challenges when it comes to navigating taxes, particularly the goods and services tax/harmonized sales tax (GST/HST).
- Understanding the rules and exemptions for municipalities is crucial to avoid penalties.
- A Canadian tax attorney can provide guidance on the basics of GST/HST, including what it is, how it applies, and what exemptions and rebates are available.
- A municipality is defined by the Canada Revenue Agency as an incorporated city, village, town, township, district, metropolitan authority, county, rural municipality, or other incorporated municipal body.
- The CRA may also grant partial or total municipality status to local authorities or individuals providing certain municipal services.
- GST/HST operates on an input-output system for businesses involved in commercial activities.
- GST is a federal tax that applies across Canada, while HST is the combined tax of GST and provincial sales tax in participating provinces.
- Municipalities have their own tax rates and are required to pay GST/HST.
- A rebate may be available to recover a portion of the GST/HST paid by municipalities on supplies that are exempt from input tax credits.
Source Jeremy Scott
