The GST is a tax that applies to the supply of most property and services in Canada. The provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador, referred to as the participating provinces, harmonized their provincial sales tax with the GST to create the HST. Generally, the HST applies to the same base of property and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on designated items.

As of July 1, 2010, Ontario harmonized its retail sales tax with the GST to implement the HST at the rate of 13% and British Columbia harmonized its provincial sales tax with the GST to implement the HST at the rate of 12% although, the HST in BC has now been repealed. Also, as of July 1, 2010, Nova Scotia increased its HST rate from 13% to 15%.

Almost everyone has to pay the GST/HST on purchases of taxable supplies of property and services (other than zero-rated supplies). A limited number of sales or supplies are exempt from GST/HST.

Although the consumer pays the tax, businesses are generally responsible for collecting and remitting it to the government. Businesses that are required to have a GST/HST registration number are called registrants.

Registrants collect the GST/HST on most of their sales and pay the GST/HST on most purchases they make to operate their business. They can claim an input tax credit, to recover the GST/HST paid or payable on the purchases they use in their commercial activities.

GST/HST registrants must meet certain responsibilities. Generally, they must file returns on a regular basis, collect the tax on taxable supplies they make in Canada, and remit any resulting net tax owing.

Taxable, zero-rated, and exempt supplies?

It is important to know which property and services are taxable and at what rate. You also need to know which property and services are exempt from the GST/HST.

Taxable supplies

Most supplies of property and services supplied in or imported into Canada are subject to the GST/HST.

The GST is a tax that applies to the supply of most property and services in Alberta, Manitoba, North West Territories, Nunavut, Prince Edward Island, Quebec, Saskatchewan and the Yukon. The GST rate for these provinces and territories is 5%.

The HST is a tax that applies to the supply of most property and services in participating provinces of Nova Scotia, New Brunswick, Newfoundland and Labrador and Ontario. The HST is composed of the GST and their respective provincial tax. Generally, the HST applies to the same base of property and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on designated items.

Zero-rated supplies

Some supplies of property and services are taxable at the rate of 0% (zero-rated). This means that you do not charge GST/HST on these supplies. Some common examples of zero-rated supplies of property and services are:

•basic groceries such as milk, bread, and vegetables;

•agricultural products such as grain, raw wool;

•prescription drugs and drug-dispensing fees; and

•medical devices such as hearing aids and artificial teeth.

Exempt supplies

A small number of supplies of property and services are exempt from the GST/HST. This means the GST/HST is not charged. Some common examples of exempt supplies of property and services are:

•used residential housing;

•most health care and dental services;

•certain childcare services; and

•many educational services.

 

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