In Canada the goods and services tax or
GST is a federal tax of five percent on most
goods and services sold in Canada for
domestic consumption. Some goods and
services are exempt from the GST, for
example basic groceries, prescription drugs
and exports.
What is
Taxed?
Generally all
supplies or property or services in Canada
is subject to GST, unless one of the
following exceptions applies:
The supply is
zero-rated (tax applied but at a rate of
0)
The supply is
made to an exempt person
The supply is
exempt
The supply is
made by a non-registrant
Zero-Rated
Supplies
Businesses that are
not required to charge GST on the goods and
services they provide. However they are
still able to claim GST credit for the GST
payable on the expenditures related to
producing the zero-rated supplies or goods.
Zero-Rated
Examples
Basic groceries
Prescription
drugs
Certain medical
devices
Exports of goods
and services
Transportation
into or out of Canada (some exceptions
apply)
Non-Taxable
Persons
Certain provinces and
people are exempt from paying the GST. First
Nations organizations and people are not
subject to GST.
Exempt
Supplies
Businesses do not
charge GST on the exempt goods and services
they provided, similar to zero-rated
supplies.
Sale of most used
residential housing
Most rentals of
residential housing
Most health
services
Day car services
Legal aid
services
Some educational
services
Financial
services, including interest, dividends,
insurance and brokerage services
Some services
supplies by charities, non-profit
organizations, municipalities,
hospitals, schools, colleges and
universities.
Supplies Made
by Non Registrants
A business with less
then $30,000 per year in revenues from
otherwise taxable supplies is not required
to register for GST, though they can
register voluntarily. Such businesses can
not claim any input tax credit for any GST
incurred on its expenditure.
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