Check out this article for information on the GST Increase 2024-2025 in Canada. It provides various details about the upcoming GST increase and other essential information.
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GST Increase 2024-2025
The Goods and Services Tax (GST) in Canada applies to a wide range of Canadian goods and services. It not only covers retail items but also extends to real property, including buildings and land. Additionally, some provinces in Canada have adopted a Harmonized Sales Tax (HST), which combines the GST with their provincial sales taxes.
GST is collected at the time of purchasing goods and services by GST registrants. The current GST rate in Canada is 5%, which applies to taxable supplies. Any information regarding a potential GST increase in 2024-2025 will be announced by the Canadian government.
How does the GST Work?
If someone is a GST registrant, they typically charge and collect GST on taxable supplies. In addition, they must file GST reports to record the collected tax. However, some goods and services are zero-rated, and others are exempt from GST.
For customers, there is no difference between zero-rated supplies and exempt supplies because no tax is charged on either. However, registrants can claim Input Tax Credits (ITCs) for the GST paid on purchases made to provide zero-rated supplies.
Therefore, for taxable supplies, GST is charged and Input Tax Credits (ITCs) can be claimed. For exempt supplies, GST is not charged and ITCs cannot be claimed. When registrants file their tax returns, they must deduct the ITCs from the GST charged.
What are the Current GST Rates in Canada?
Some provinces combine their provincial sales tax with the GST, resulting in different GST/HST rates. In contrast, other provinces maintain a standalone GST rate of 5%, without combining it with their provincial sales tax.
| Province | On or after October 1, 2016 |
|---|---|
| Yukon | 5% |
| Quebec | 5% |
| Manitoba | 5% |
| New Brunswick | 15% |
| Northwest Territories | 5% |
| Nova Scotia | 15% |
| Nunavut | 5% |
| British Columbia | 5% |
| Saskatchewan | 5% |
| Ontario | 13% |
| Alberta | 5% |
| Prince Edward Island | 15% |
| Newfoundland and Labrador | 15% |
To learn more about the current and previous GST rates in different provinces and territories, visit the CRA website.
Who should register for GST?
If individuals supply taxable goods or services in Canada and do not qualify as small suppliers, they must register for GST. Once registered for GST, they are also automatically enrolled for HST where applicable.
You are not need to register if:
- Qualify as a small supplier.
- Are a non-resident who does not conduct business in Canada.
- Engage in the sale of property as your sole commercial activity.
Taxable supplies
Goods and services supplied or imported into Canada are subject to GST/HST. Taxable supplies may include items such as clothing, footwear, car repairs, franchises, sales of new housing, hotel accommodations, and sales and leases of automobiles.
Zero-rated supplies
Certain supplies are taxed at a GST rate of 0%. While registrants cannot levy GST on these supplies, they are eligible to claim Input Tax Credits (ITCs) for GST/HST paid on services related to providing these supplies. Examples include feminine hygiene products, most farm livestock, exports, and basic groceries.
Exempt supplies
Examples of such supplies include legal aid services, music lessons, most domestic ferry services, and residential condominium fees. GST is not applicable to these supplies. For a comprehensive list of exempt, zero-rated, and taxable supplies, please refer to the official website of the Canadian Government.
When is the GST Increase Coming Out in Canada?
Currently, there is limited information available regarding any planned changes to the GST rates in Canada for the upcoming years. The current GST rate stands at 5% and is expected to remain unchanged in the next calendar year. Any future adjustments to the GST rate, whether an increase or decrease, will be communicated to the public by the Government of Canada.
The announcement of a GST rise in Canada will be made around the start of the next tax year. GST was first announced at 7%. Since then, the rate of GST levied in Canada has been reduced twice and is now at 5%. Unless there are any changes, the GST rate will stay at 5%.