GST and HST in Canada


Before the implementation of Goods and Services Tax (GST), taxes were charged on manufactured goods in Canada. The manufacturing industry dominated the economy of Canada while the service industry was still at a growing stage. These taxes were embedded within the price of the goods. This had to be paid by the manufacturer. However, the final consumer couldn’t see these taxes. Later in the 1980s, when the economy in Canada shifted towards services, GST was brought in to tax a broader range of items at a lower rate. This was followed by the arrival of Harmonized Sales Tax (HST) in the tax system of Canada. This tax was made applicable in provinces where both the federal goods and services tax (GST) and the regional provincial sales tax (PST) were paid. This was a combined tax for GST and PST.

GST/HST Made Applicable to New Items

The GST and HST were charged for new items that came into the economy. Items necessary for a living were not charged GST/HST. This included food items bought from grocery stores. However, food prepared in restaurants were generally charged GST/HST. Other specific items that were exempted from GST/HST were mortgages and insurance.

The Consumer Pays GST/HST

Generally, goods are manufactured in stages. The process usually starts at the extraction stage where the raw materials are extracted. Then these materials are sent to the manufacturer. The product then passes through different processes before it reaches the final consumer. The GST/HST is charged at every transaction, but it is usually refunded back to whoever paid it unless the person paying the GST/HST is the final consumer. This prevents taxation of the same item many times over at every stage of the manufacturing process. A similar scenario might be noticed in case of services. They might undergo multiple stages as well if they are provided to business in stages before being provided to a consumer. Businesses which manufacture something and sell it to another business would pay the GST/HST and then apply to have it refunded. When these businesses file their GST/HST form, they put down the sales tax paid as an “Input Tax Credit” or ITC. This lowers the GST/HST it is paying and the net result is what the company needs to pay to the government.

If you own a business in the HST-influenced provinces of Canada, you must visit this website: www.hstcalculator.net. This website lets you calculate HST returns. It offers you a GST calculator and a reverse GST calculator. You can use www.hstcalculator.net for calculating HST for any Canadian province where Harmonized Sales Tax is used. This can make HST calculation a lot simpler and save you a lot of time.

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