GST

Definition of GST – Understanding the Goods and Services Tax

GST or Goods and Services Tax refers to a tax levied on the supply of goods and services across various provinces and territories in Canada. The GST is an indirect tax, which means that it is not a direct tax on an individual’s income, but rather is collected on the consumption of goods and services. This tax is collected by businesses, and subsequently remitted to the government.

The GST is a value-added tax, meaning that the tax is collected at each stage of the supply chain, from the manufacturer to the consumer. This tax is levied based on the value of the good or service supplied, with the rate of tax varying depending on the type of good or service supplied.

The GST is designed to be a simplified tax system that replaces multiple taxes, such as sales tax, that were previously levied at the federal and provincial levels. This streamlined approach helps to reduce the burden of compliance and administrative costs for both businesses and consumers.

In Canada, the GST is set at a rate of 5% for most goods and services, with the exception of certain items that can be taxed at a higher rate, such as alcohol and tobacco products. The GST works in conjunction with the provincial tax system, which means that some provinces also levy a provincial tax on goods and services in addition to the federal GST.

Overall, the GST is an important tax system in Canada, providing a streamlined approach to the collection of taxes on goods and services, and helping to reduce the administrative burden on businesses and consumers alike.