The harmonized sales tax (IRR)

What is the Harmonized sales tax (GST)’

The harmonized sales tax (hst) is the combination of canadian Tax on goods and services tax (GST) and provincial sales tax (PST) that applies to taxable goods and services. By fusing sales tax at the Federal level, sales tax at the provincial level, the provinces involved agreed both taxes into a single Federal-provincial sales tax.

Penetration, the Harmonized sales tax (GST)’

Hst is a consumption tax paid by the consumer at the point of sale (POS). The provider or seller collects tax revenue from consumers by adding the speed of the hst on the value of goods and services. Then raised the total collected tax to the budget at the end of the year.

The harmonized sales tax (VSD) has been implemented in several provinces in Canada, to build a more efficient tax system, which will enhance the competitiveness of enterprises in the participating areas.

In the province of new Brunswick, Nova Scotia and Newfoundland and Labrador apply to the hst in 1997. On July 1, 2010, in the provinces of Ontario and British Columbia (BC) have joined the program. However, three years later, BK came out of the hst program and reinstated the provincial sales tax (PST) in the system after approximately 55 percent of the population voted to finish the school itself. In 2013 Prince Edward Island joined the regions participating in the project and replace its provincial sales tax (PST file)with the Harmonized sales tax (VSD).

Administration and Assembly of VSD from Canada (cra), which is the tax Department of the Federal government. The sellers and providers generally, is responsible for receiving taxes from consumers and transfer it to the CRA once a year or every six months. The CRA allocates the provincial part of the hst at the appropriate provincial government. CRA does not collect provincial sales taxes.

Provincial Differences

Not all regions are ready for the application of VSM in their tax systems, and these States still use the Tax on goods and services tax (GST) or provincial sales tax (PST) separately. From 2017, British Columbia (BC) and Saskatchewan to use PST system in addition to the individual GTS. Quebec and Manitoba also use the same system as British Columbia and Saskatchewan, only that the provincial sales tax in both provinces is called sales tax in Quebec (under the arm) and the tax on retail sales (PCT), respectively.

Residents living in these four provinces will be governed by the Federal GST and provincial tax on their purchases. For example, the Saskatchewan provincial tax rate of 6%. A consumer who buys, say, a computer for $1000 in BC will have a total expense of $ 1,000 + (PST 6% x 1 000$) + (GST 5% x 1000$) = $1,110.

Several of the provinces to apply Federal tax on taxable goods and services. In the provinces of Alberta, Northwest territories (NWT), Nunavut and Yukon have no provincial sales tax, this means that the consumer only tax is 5% GST on his or her purchase.

The table below shows the sales tax will be applied in each of the canadian provinces:

Registration and collection of the Harmonized sales tax (IRR)

It is the responsibility of the owners of the canadian business to collect and remit of VSD. To start raising the sales tax, the operator of the business must register for taxes through CRA or revenu québec (if a resident of Quebec), provided that the business is about $30,000 or more per year in total revenue. Business owners with firms earning less than $30,000 can still voluntarily register as they may want to claim input tax exemptions on goods and services which they acquire in the process of doing business.

While many of the retail goods and services are subject to IRR, some of them are zero-rated or exempt. Zero-rating of the product or service is one that has a tax rate IRR of 0%. This includes products such as basic foodstuffs, medications, and many agricultural and fishery products. Tax-exempt goods or services is exempt from sales tax. Examples of non-taxable services, child care, dental services, medical and health care. The consumer can claim input tax credits on zero-rated products but not for non-taxable services.

Customers outside of Canada the purchase of goods from Canada will not have to pay sales tax, provided that the purchased goods or services will be used exclusively outside the country. However, non-residents in Canada, such as tourists, are required to pay a VSD, and in some cases, may qualify for a discount of VSD.

Inter-provincial business operations will administer the sales tax, which is in the buyer’s province. Delivery of taxable goods in the region, the part exposed to the VSD, while the offer for non-members, will be subject to GST. This rule is known as the place of supply rules. For example, a business owner in British Columbia that sells the goods delivered in Ontario must collect 13% hst tax. On the other hand, if the roles were reversed, Ontario’s provider should only charge 5% GST (no PST), if he sells and delivers the product BC.

Impact on taxpayers

There is still ongoing debate about how the school itself impact on consumers and taxpayers. Critics argue that the VSD leads to a shift of the tax burden from businesses to consumers, which will lead to an increase in the cost of consumer goods. This higher cost, in turn, will reduce the real income of consumers. Supporters of the VVD continued to oppose these views that VSM will create tax savings for the participation of provinces and local residents. They argue that the introduction of a system of VSD will reduce the cost of doing business, which, in essence, will translate into lower prices for consumer goods and services.

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