Goods and Services Tax - GST

What is a 'Goods and Services Tax - GST'

The goods and services tax (GST) is a Canadian value-added tax levied on most goods and services sold for domestic consumption. The tax is levied to provide revenue for the federal government. The GST is paid by consumers, but it is levied and remitted to the government by businesses selling the goods and services.

BREAKING DOWN 'Goods and Services Tax - GST'

The GST is often expressed as "GST/HST" because the GST is combined with a provincial sales tax known as the Harmonized Sales Tax in the "participating" provinces of New Brunswick, Nova Scotia, Newfoundland and Labrador, Ontario and Prince Edward Island. Certain essential goods and services, such as groceries, prescriptions and medical services, are GST exempt. Tax-exempt items are taxed at 0% and are referred to as "zero-rated" supplies.

Most Canadians pay GST/HST on the major goods and services they buy. Members of Canada’s First Nations and some territorial and provincial government entities, however, are exempt from GST/HST on taxable goods. Businesses, known to Canada’s Revenue Authority as registrants, charge consumers GST/HST. To ensure payment of the tax in a timely manner, CRA requires most registrants to pay GST/HST on a quarterly basis. New businesses, known as new registrants, can pay the tax on Canada’s tax filing deadline, April 30.

Examples of Zero-Rated Goods

While Canadians pay GST/HST on most goods and services, some goods are exempt. Zero-rated goods include groceries such as bread, milk and produce; products from the country’s agricultural sector, such as grain, wool and tobacco leaves; and prescription medications. Necessary medical devices, such as hearing aids and dental prostheses, are tax exempt. Livestock, fish for consumption, and some transportation services are also tax exempt. Canadians typically do not pay GST/HST for their residences, unless they are brand new, and for health services, child care and legal services. The country also does not levy the tax on tolls inside of Canada and on educational services such as tutoring.

GST/HST Tax Credit and Rebates

Canada sends eligible tax filers ages 19 and older a GST/HST tax credit on a quarterly basis. In 2014, the government began sending eligible tax filers the credit automatically. For this reason, accountants often advise Canadians to file tax returns even when they have no income to report, so that they can receive the credit. Canadians can register on CRA’s website to receive their GST/HST tax credit by direct deposit and to view their benefit via a mobile app provided by the tax agency. Individuals and businesses can also apply for GST/HST rebates on certain goods and services, such as purchasing or building brand new structures.

RELATED TERMS
  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. Harmonized Sales Tax (HST)

    A Canadian tariff scheduled to be implemented on July 1, 201 ...
  3. Direct Tax

    A tax that is paid directly by an individual or organization ...
  4. Income Tax

    A tax that governments impose on financial income generated by ...
  5. Consumption Tax

    A tax on the purchase of a good or service. Consumption taxes ...
  6. Hidden Taxes

    Taxes that are indirectly assessed upon consumer goods without ...
Related Articles
  1. Personal Finance

    Use Tax Vs. Internet Sales Tax: How Are They Different?

    Learn about the differences between a use tax and an Internet sales tax. Find out about transactions in which the taxes apply, and to whom they apply.
  2. Personal Finance

    Do Tax Cuts Stimulate The Economy?

    Learn the logic behind the belief that reducing government income benefits everyone.
  3. Personal Finance

    What is a Direct Tax?

    Governments and taxing entities impose direct taxes directly on individuals and businesses.
  4. Personal Finance

    A Look At The Generation-Skipping Transfer Tax

    For those who encounter this tax, it can be costly. Find out how to navigate this complicated tax arrangement.
  5. Personal Finance

    5 States Without Sales Tax

    Learn about the five states that do not charge sales taxes and about other taxes the states levy instead in order to generate revenue.
  6. Personal Finance

    Explaining Corporate Tax

    A corporate tax is a tax levied on the profits a corporation generates.
  7. Personal Finance

    3 Federal Income Tax Facts You Didn't Know

    Learn about three federal income tax facts that most Americans may not know from one of the most trusted financial resources on the Web.
  8. Personal Finance

    What's an Indirect Tax?

    An indirect tax is levied on goods or services rather than on an individual or a company.
  9. Personal Finance

    Understanding Income Tax

    Income tax is a levy many governments place on revenue of entities within their jurisdiction.
  10. Personal Finance

    How Are Capital Gains And Dividends Taxed Differently?

    Individuals in the 25% or higher tax bracket pay a 20% tax on long-term capital gains.
RELATED FAQS
  1. What is the difference between income tax and capital gains tax?

  2. Who first came up with the idea of a progressive tax?

    Learn how the progressive income tax system developed in the United States and became the federal government's primary revenue ... Read Answer >>
  3. What is the difference between a state income tax and a federal income tax?

    Learn the difference between state income tax and federal income tax based on tax rates, deductions, tax credits and taxable ... Read Answer >>
  4. What is the difference between a regressive tax versus a progressive tax?

    Determine how progressive and regressive taxes impact your personal finances, and learn more about how you pay both types ... Read Answer >>
  5. Does location matter for taxes when calculating gross sales?

    Learn more about gross sales taxes and how merchants are impacted by them. Find out if different business locations are impacted ... Read Answer >>
  6. What are the differences between regressive, proportional and progressive taxes?

    Understand the differences between the most common tax systems including regressive taxes, proportional taxes and progressive ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center