Goods and services tax (GST 5%) is a tax that applies on most supplies of goods and services made in Canada. Examples of goods and services for which GST is not charged and collected include:
• Used residential housing
• Long-term residential accommodation
• Most health, medical, and dental services
• Child-care services
• Most domestic ferry services
• Legal aid services
• Many educational services or tutoring services
• Music lessons
• Most services provided by financial institutions
• Insurance policies
• Most goods and services provided by charities
Certain goods and services provided by non-profit organizations, governments, and other public service bodies.
Companies which provide taxable supplies in Canada, and have total revenues from taxable supplies of $30,000 or more in the last four consecutive calendar quarters must register for GST. When registering for GST, the reporting period should be the same as your fiscal year for income tax purposes. Input Tax Credits (ITC’s) can be claimed on the GST return to recover GST paid or owed on purchases and expenses for the business. When completing the GST return, deduct the total Input tax credits (ITC’s) for the reporting period from the GST collected and the result would be the net GST Refund (or payable ).
For companies with $500,000 or less in annual taxable revenues, there is an option to either have a quarterly reporting period or an annual reporting period. If your reporting period is monthly or quarterly, the filing and remittance deadline is one month after the end of the reporting period. If your reporting period is annual, the filing and remittance deadline is usually three months after the end of the reporting period.
For annual filers, if your net tax for the current or previous quarter is less than $3000, then paying quarterly installments is not necessary. For those who need to make installment payments, the deadline is one month after your fiscal quarter end date.
Effective July 1, 2010, GST 5% is replaced by Harmonized Sales Tax (HST) 12% in the province of British Columbia and HST 13% in the province of Ontario.