At present, Canada has a mixed Sales Tax System consisting of both Federal and Provincial VAT. A 5% Good and Services Tax (GST), which is the Federal VAT and an 8% Provincial VAT, is currently applicable in Canada. This results in a 13% Harmonized Sales Tax (HST). Provincial Sales Taxes (PST) are provincial or territorial specific and are levied based on value.
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Latest VAT Rates for different Provinces of Canada:
The Provinces and Territories of Canada charge Taxes at different rates. The Provinces in which Sales Tax is charged separately at the Retail Level are Saskatchewan, British Columbia, and Manitoba. While those provinces in which no Provincial Sales Tax (GST) is charged are Nunavut, Yukon, and Northwest Territories. However, most Canadian Provinces impose Harmonized Sales Tax (HST), which constitutes both the Sales Tax and the GST.
HST is charged at a rate of:
- 13% in Ontario, New Brunswick, Labrador, and Newfoundland Provinces.
- 14% in Prince Edward Island
- 15% in Nova Scotia
PST is charged at the rate of:
- 7& in British Columbia and Manitoba
- 6% in Saskatchewan
Canada’s VAT History:
Sales Tax was removed by Manufacturers in Canada and was significantly replaced with an indirect National Value-Added-Tax (VAT). The rate of VAT at that time was 7%. Moreover, it was introduced by the Conservative Party in 1991. Afterward, the rate saw a decline of 1% in 2006. It was in 2008 that it reached its current rate of 5% at last. Canadian VAT, just like United States’ Sale Tax, is in fact completely transparent and listed Separately on invoices and receipts.
A summary of VAT Rates in Canada since its inception is below:
|7%||January 1st, 1991 – March 31st, 1997|
|7%||April 1st, 1997 – June 30th, 2006|
|6%||July 1st, 2006 – December 31st, 2007|
|5%||January 1st, 2008 – June 30th, 2010|
|5%||July 1st, 2010- March 31st, 2013|
|5%||April 1st, 2013 – Onwards|
Goods and Services Exempted from VAT in Canada
Some several products and services are either exempt from VAT or zero-rated in Canada, for instance:
- Farm Livestock
- Basic Groceries
- Prescription Drugs
- Fishery Products (most of them)
- Farm Equipment
- Services for Freight Transportation
- Medical Equipment in addition to Medical Services
- Rental for Residential Accommodation as well as Residential Housing (used)
- Music Lessons
- Dental Services
- Educational Services
- Legal-Aid Services
- Charities provided Goods and Services (most of them)
- Financial Services as well as Issuing of Insurance Policies
- Day-care Services
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Q: What is the VAT rate in Canada?
VAT is charged in Canada at the standard rate of 5%.
Q: How does VAT work in Canada?
It is applied to most of the goods and services by the Canadian Government. VAT is not charged on Business but instead collected by them after being imposed on customers at the price of goods. As a result, making it an indirect tax. It is then the responsibility of the Business to report it to the Canadian Government.
Q: What is Canada GST Refund?
A GST Refund or GST Rebate is a refund of GST that is either paid in error or incurred in other situations. Moreover, you are not required to register to the CRA to get refunds.
Q: Who pays GST Canada?
Everyone pays GST in Canada whenever they buy Taxable Goods, Properties, or use Taxable Services.
Q: What is the personal income tax rate in Canada?
Between 2003 and 2018, Personal Income Tax had an average rate of 29.75 percent in Canada.