CHAPTER 08 Tax Considerations
Collection and Reporting Although the GST is payable by the recipient, a supplier that is (or is required to be) a registrant for GST purposes is liable, in most cases, to collect and remit the GST payable by the recipient to the federal government on a periodic basis. The supplier may net its ITCs against the GST collected and thus remit only the balance (if any) to the federal government. If the supplier’s ITCs exceed the GST collected in any reporting period, the federal government will refund the excess to the supplier. GST and ITCs are calculated, reported and paid or refunded on a regular periodic basis. The reporting period of a registrant may be monthly, quarterly or annually, depending upon the registrant’s revenues and whether the registrant elects to report on a more frequent basis than is otherwise required. Other Commodity Taxes Businesses involved in bringing goods into Canada or manufacturing and selling goods in Canada may also be affected, either directly or indirectly, by certain other taxes and duties imposed in Canada. Most products imported into Canada are subject to two types of commodity taxes in addition to the GST – namely, customs duties and provincial sales tax. Products such as alcohol and tobacco are subject to additional excise duties. PROVINCIAL SALES TAX Every province except Alberta imposes a retail sales tax, which is commonly referred to as provincial sales tax (PST), or charges a harmonized sales tax (HST) that is imposed on the same basis as, and includes, the GST described above or, in Québec, Québec sales tax (QST),
discussed below. Currently, British Columbia, Manitoba and Saskatchewan impose PST at 7%, 7% and 6%, respectively. HST is charged at a rate of 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. A vendor in the business of selling taxable goods or providing taxable services in any one or more of these provinces is generally required to obtain a vendor’s permit from each relevant provincial government and to collect and remit sales tax on taxable sales within that province. The Québec QST is a value-added tax system, which closely parallels the concepts and provisions of the GST (including the requirement to register and collect tax). The Québec tax authority is responsible for the collection and administration of the QST, and for both GST and QST for Québec residents. QST applies at the rate of 9.975% for a combined rate with GST of 14.975%. As with the GST, PST and QST registration requirements have been broadened in recent years to capture more taxable sales into these provinces by non-resident vendors. Each PST province has also introduced rules to impose additional tax collection and reporting requirements on operators of online sales platforms (also known as marketplace facilitators). Other Taxes: Property Taxes and Fees LAND TRANSFER TAXES Many provinces impose tax on the transfer of real property (including with respect to certain leasehold interests). Ontario transferees of real property are generally liable for land transfer tax at a rate of up to 2.5% of the consideration paid. Québec also levies a land transfer tax at a similar rate. Certain deferrals and
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