New tax payers are always perplexed about certain tax norms. Which tax applies where and who is eligible to pay? GST/HST is one such tax which needs to be discussed in detail.
What is GST?
GST stands for Goods and Services Tax.
Provinces where it’s applicable
- Alberta
- Nunavut
- Quebec
- Manitoba
- Saskatchewan
- Northwest Territories
- Yukon
- British Columbia
GST Applies to…
GST applies to each supply of real property in Canada (not applicable in certain exceptions which we’ll discuss later) and to intangible personal property.
“Supply” of real property includes
(1) Sale of real property. Ownership and possession of such property must be transferred
under an agreement,
(2) When a real property is given on lease,
(3) An option to buy real property,
(4) An assignment to lease a real property,
(5) An assignment of purchase and sale of real property under agreement,
(6) A residential complex building and self-supply‖ for leasing
out,
(7) Use of real property in commercial activities depending upon the extent of use.
Intangible personal property refers to trademarks, right to use a patent, copyrighted digital content etc.
What is HST?
HST stands for Harmonized Sales Tax.
Provinces where it’s applicable
- Ontario
- New Brunswick
- Nova Scotia
- Prince Edward Island
- Newfoundland and Labrador
HST Applies To…
HST applies to the same goods and services as GST. It is imposed in “participating provinces” which have harmonized their provincial sales tax with GST.
What is exempted from GST/HST?
Some examples of exempt supplies of goods and services include
- Sale of house last used by individual as residence
- Rental of residential accommodation for more than one month and residential condominium fees
- Health, medical, and dental services provided by licensed physicians or dentists (not applicable for cosmetic reasons)
- Child care services with a sole purpose of giving care and supervision to children who are aged 14 years or under for durations of less than 24 hours per day
- Domestic ferry services
- On legal aid
- Educational services including:
- courses provided by a vocational institution that certifies an individual to practice or perform a trade or a vocation
- home tutoring services provided to an individual in a course that’s according to a school curriculum
- Music lessons
- Money lending or deposit account operating services provided by financial institutions
- Insurance policy issuance and arrangement by an insurer and by insurance agents respectively
- Services and goods provided by charities and public institutions
- Government services and tariffs such as standard water distribution services etc
For any tax related query, contact ZRPC, the tax planning and counseling experts in Mississauga.