Module A - GST/HST Flashcards
What is GST/HST?
Its a type tax on sales
What are the two types of sales tax in Canada?
Federal and Provincial Tax
GST: Goods and Services Tax → Federal Taxes (5%)
PST (provincial Taxes) → (vary rates)
HST: Harmonized Sales Tax → (Fed + Prov tax rates)
What is a key note about federal and provincial taxes?
Depending on where you live or buy goods and services you can be subjected to both types or one type of federal and provincial taxes
What does the government charge in Ontario (tax rate)?
In Ontario, the government only charges one tax rate which is the HST.
Then divides the income depending on where it should go to provincial or federal.
What is the HST rate charged in Ontario?
We assume all goods in this course are in Ontario and they are subjected to the HST Tax rate of 13%.
How did the government set up the GST/HST?
+ As a value-added tax
What is a value-added tax?
Its purpose is to tax the value added (the profit for making and selling goods).
Who are the ones that pays the sales tax?
The consumer is the one who pays the sales tax and is only applicable to taxable supply.
What are the two type of taxable suppliers?
Fully-taxable
Zero-rated
Exempted (This does not sell taxable supplies)
What does a business do (Taxable suppliers)?
They are the intermediary between the end consumer and the government as such these businesses are the ones who charge the tax and collect it for the government.
What are registrants?
Businesses are those who sell taxable supplies as registrants
Any type of entity can have a business:
Individuals
Corporation
Partnership
Estate/Trust
What is the rule of thumb for the government to call a business for GST/HST purposes?
If a business is carried on with the expectation of profit for income tax purposes there are considered a business for GST/HST purposes.
Who are the exceptions on being a GST/HST registrant?
Small suppliers: If the business makes less than or equal to 30,000 dollars in taxable sales within the previous four consecutive quarters there are not required to register or collect GST/HST at all.
Those who do not sell taxable supplies
They do not need to collect GST/HST on there taxable sales:
Businesses who do not meet these requirements are required to register for GST/HST on their taxable supplies
What are fully-rate taxable suppliers?
+ These are registrants who are ‘required’ to charge the applicable GST/HST rate on their goods and services.
+ Always 13%
+ Fully Taxable supplies include:
Retail (cars, toys)
Service items (haircuts, lawyers)
What are zero-rate taxable suppliers?
They charge a 0% GST/HST rate as they represent basic necessities.
Still have to file for input tax credits:
Example of zero-rated taxable suppliers supplies :
+ Basic groceries (vegetables)
+ Farm Livestock
+ Prescription drugs
