Goods and Services Tax
Taxable Sales (5 or 0 percent)
Exempt Sales
Businesses selling exempt goods and services charge no GST and get no Input Tax Credit for the GST on their purchases. Examples: Medical and dental services.
Opting Out
Businesses with less than $30,000 of annual taxable sales have the option to not register for the GST. If they choose to not register, they charge no GST, pay the GST on their purchases, and receive no Input Tax Credits. On the other hand, a small business may choose to register and charge the GST to prevent its customers from learning that it has less than $30,000 of annual sales.
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The Federal government offered the Provinces an arrangement to end their sales taxes and participate in the GST at a combined rate of 13% (originally it was 15%).
It promised to collect the combined tax and to refund the extra 8% to participating Provinces. The Harmonized Sales Tax (HST) would follow the same rules as the GST, except that the rate in their Province would be 13%. Prior to July 1, 2010, only three Provinces had adopted the HST:
Recently, Nova Scotia raised its HST back up to the original 15%.
On July 1, 2010, British Columbia and Ontario scrapped their Retail Sales Tax and adopted the Harmonized Sales Tax, which includes both the 5% Federal rate and their previous sales tax rate. The combined rate for British Columbia is 12% and for Ontario 13%.
However, the two provinces did carry forward some, but not all, of their previous sales tax exemptions. The HST deals with the exemptions through a "Point-of-Sale Rebate" where a vendor provides an immediate rebate of the provincial component at the time of sale. So a purchaser would pay only 5% HST for goods and services eligible for the "Point-of-Sale Rebate." While the rebates for some goods and services are the same for British Columbia and Ontario, others are not. For more information about the rebates, you can visit the provincial websites.