An Overview Of PST, GST, And HST
If you are a resident doing business in Canada, it might be difficult to understand the tax acronyms. This is because the system of HST, PST, and GST is unique to Canada. For example, the hst rebate ontario is different from American sales tax and European sales tax. Review here the list of tax credits and tax deductions for any scenario. It is important to understand Canadian sales taxes to make a huge difference in the business’s success.
What Are GST, HST, And PST?
- Goods And Services Tax (GST)
The federal government levies GST, which is a 5% value-added tax. This tax applies to all goods and services. However, even though this GST applies to the entire country, certain provinces take GST as their only sales tax. For example, Alberta, Nunavut, Yukon, and Northwest Territories only charge this GST as their sales tax on goods and services.
2. Harmonized Sales Tax (HST)
This sales tax is a blend of PST and GST, and it exists in some Canadian provinces. The HST aims to collect the sales tax in one payment. Such tax is charged by provinces such as Nova Scotia, New Brunswick, Newfoundland, and Labrador, Ontario. An HST of 15% is charged by these provinces except Ontario, as their HST rate is 13%.
3. Provincial Sales Tax (PST)
In addition to GST, certain provinces charge another tax known as provincial sales tax. The tax rate varies by province. For example, provinces such as Saskatchewan, Quebec, Manitoba, and British Columbia have 7% PST.
How To Register For HST, PST, And GST?
If you make around $30000 a year and a non-resident, you should register for HST/GST. The rates will be different according to your business province. For example, if your business is in Saskatchewan, you will have to register for HST/GST with the CRA (Canada Revenue Agency) and PST with the respective governments. When you register for GST, you should understand that you will get registered for HST as well.
How Is Import Affected By GST?
You should know that GST is also applied to Imports. A GST of 5% is charged on the total value of the shipment you are importing to Canada. However, if you are importing it to a province that follows HST, you should only pay the 5% GST. In addition to the GST payment, you have to pay 5% extra on the customs clearance fee based on the good’s total value.
Getting GST Reimbursed
If you are registered for GST/HST, you might get the GST reimbursed that was paid on imports. For getting the reimbursement, you should claim ITC or Input tax credit.
The Canadian tax system can be confusing if you do not understand the entire process. If you are a business owner and in doubt, get the help of tax experts who provide and calculate the tax rate for you. With the help of tax experts, you will be able to run your business smoothly.