What Is GST/HST In Canada?
The GST (Goods and Services Tax) or HST (Harmonized Sales Tax) can be a bit confusing in Canada. Don’t worry, we’ll break it down into easy-to-understand chunks for 2024!
Who is affected by GST/HST?
There are two main ways the GST/HST applies in Canada:
- For Businesses: Businesses that meet a certain sales threshold (over $30,000 in most provinces) need to register for GST/HST. This means they collect the tax from customers and then remit it to the Canada Revenue Agency (CRA).
- For Individuals: Everyone in Canada pays GST/HST when they buy most goods and services. However, low- and modest-income individuals and families can receive a credit from the CRA to help offset the cost of the tax.
GST/HST for Businesses (in 2024):
- Registration: If your business makes over $30,000 in sales in a single quarter (or over $40,000 in a year in some provinces), you must register for GST/HST. You can register online with the CRA https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses.html.
- Collecting GST/HST: Once registered, you add the GST/HST rate (either 5% or the combined provincial rate) to your prices. You collect this tax from your customers.
- Filing Returns: You need to file GST/HST returns with the CRA regularly. The frequency depends on your business income. Most businesses file monthly or quarterly.
- Electronic Filing: In 2024, almost all GST/HST registrants must file electronically. There are some exceptions, like charities.
GST/HST for Individuals (in 2024):
- Paying GST/HST: You pay GST/HST when you buy most goods and services in Canada. The rate depends on your province. It’s either 5% (federal GST) or a combined rate that includes provincial HST.
- GST/HST Credit: The CRA offers a GST/HST credit to help low- and modest-income individuals and families offset the cost of the tax. You don’t need to apply separately; the CRA automatically assesses your eligibility when you file your tax return.
- Getting the Credit: The credit amount you receive depends on your income and family situation. The CRA automatically distributes the credit throughout the year in four instalments.
GST/HST Rates by Province (in 2024):
- Provinces with HST: Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, Ontario, Manitoba (all have an HST rate of 15%)
- Province with GST only: Saskatchewan (GST rate of 5%)
- Provinces with GST and Provincial Sales Tax (PST): Quebec (GST rate of 5% + PST rate of 9.975%), British Columbia (GST rate of 5% + PST rate of 7%) Alberta (GST rate of 5% + PST rate of 4%)
This is a simplified overview. There are always exceptions and specific situations. If you’re unsure about how GST/HST applies to you, the CRA website https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses.html has a wealth of information and resources. You can also contact the CRA directly for help or consult a tax consultant in Canada.
