When you buy a new TV, laptop or smartphone, there’s a good chance the price tag will have Canada’s Goods and Services Tax GST included. You’ll also see it on some real estate transactions, and even when you download music or videos from the internet. It’s one of the nation’s key taxes and helps pay for things like healthcare and education.
As a small business owner, you may be required to register for GST and collect it from your customers if your annual taxable supplies exceed $30,000. You must then remit the GST collected to the Canada Revenue Agency CRA. Some products and services are exempt from GST, including food and drink sold in restaurants and grocery stores. If you offer digital sales, rules around what counts as a “taxable supply” are evolving.
You’ll find that in addition to how much is gst in BC, the province of British Columbia has its own Provincial Sales Tax, or PST. Like GST, the PST applies to most goods and services – and some of them aren’t exactly enticing to start with. It’s important to keep up with changes in the rules and regulations that apply to both GST and PST, so you can ensure your small business is compliant and provides your customers with the best experience possible.
In five of the Canadian provinces, the GST is blended with the provincial sales tax to form a harmonized sales tax, or HST. Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, and Prince Edward Island had this tax in place from 1997 to 2013. It was replaced with a new tax on 1 July 2010 in British Columbia, Alberta, Yukon and Northwest Territories.
The federal government introduced the GST in January 1991 to replace a 13.5% manufacturer’s sales tax that had previously been tucked into the cost of most goods and services. The intention was to add a little transparency to the way consumers were taxed, and it has been successful at doing so.
New home buyers are eligible for a partial rebate of the GST if the purchase price is $350,000 or less. This rebate makes buying a new home virtually tax free in BC.
When the HST was in effect, it was imposed on all PST-taxable purchases except the purchase of a used vehicle and the sale or lease of certain land and buildings. This was a controversial move, as it put businesses in BC at a disadvantage to their competitors in other provinces that didn’t have a similar system, and the HST was ultimately repealed by the province in 2013 after a referendum. Despite the fact that the HST was repealed, the BC provincial government continues to levy a PST on most private sales of goods and services. This is another factor to consider when choosing a location to base your company.