Sales taxes in Canada
Encyclopedia
In Canada
, three types of sales tax
es are levied. These are as follows:
Every province except Alberta
has implemented either a provincial sales tax or the Harmonized Sales Tax. The federal GST rate is 5 percent, effective January 1, 2008.
The territories
of Yukon
, Northwest Territories
, and Nunavut
do not have either the HST or territorial sales taxes. Only the GST is collected. The three northern jurisdictions are heavily subsidized by the federal government, and its residents receive some additional tax concessions due to the high cost of living in the north.
, Prince Edward Island
, Quebec
(Quebec Sales Tax or QST, French: Taxe de Vente du Québec or TVQ), and Saskatchewan
. Goods to which the tax is applied vary by province, as does the rate. Moreover, for those provinces whose provincial sales tax is applied to the combined cost and GST, provincial revenues decline or increase with respective changes in the GST. Of the provincial sales taxes, only the QST (and the HST) are value-added
; the rest are cascading
taxes.
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, three types of sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
es are levied. These are as follows:
- Provincial sales taxes (PST), levied by the provincesProvinces and territories of CanadaThe provinces and territories of Canada combine to make up the world's second-largest country by area. There are ten provinces and three territories...
- Goods and Services TaxGoods and Services Tax (Canada)The Goods and Services Tax is a multi-level value added tax introduced in Canada on January 1, 1991, by then Prime Minister Brian Mulroney and his finance minister Michael Wilson. The GST replaced a hidden 13.5% Manufacturers' Sales Tax ; Mulroney claimed the GST was implemented because the MST...
(GST), a value-added tax levied by the federal governmentGovernment of CanadaThe Government of Canada, formally Her Majesty's Government, is the system whereby the federation of Canada is administered by a common authority; in Canadian English, the term can mean either the collective set of institutions or specifically the Queen-in-Council... - The combined Harmonized Sales TaxHarmonized Sales TaxThe Harmonized Sales Tax is the name used in Canada to describe the combination of the federal Goods and Services Tax and the regional Provincial Sales Tax into a single value added sales tax in five of the ten Canadian provinces: Ontario, New Brunswick, Newfoundland and Labrador, British...
(HST), also a value-added tax, a single, blended combination of the PST and GST which is used in British ColumbiaBritish ColumbiaBritish Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
, OntarioOntarioOntario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
, and the Atlantic provincesAtlantic CanadaAtlantic Canada is the region of Canada comprising the four provinces located on the Atlantic coast, excluding Quebec: the three Maritime provinces – New Brunswick, Prince Edward Island, and Nova Scotia – and Newfoundland and Labrador...
of New BrunswickNew BrunswickNew Brunswick is one of Canada's three Maritime provinces and is the only province in the federation that is constitutionally bilingual . The provincial capital is Fredericton and Saint John is the most populous city. Greater Moncton is the largest Census Metropolitan Area...
, Newfoundland and LabradorNewfoundland and LabradorNewfoundland and Labrador is the easternmost province of Canada. Situated in the country's Atlantic region, it incorporates the island of Newfoundland and mainland Labrador with a combined area of . As of April 2011, the province's estimated population is 508,400...
, and Nova ScotiaNova ScotiaNova Scotia is one of Canada's three Maritime provinces and is the most populous province in Atlantic Canada. The name of the province is Latin for "New Scotland," but "Nova Scotia" is the recognized, English-language name of the province. The provincial capital is Halifax. Nova Scotia is the...
. The HST is then collected by the Canada Revenue AgencyCanada Revenue AgencyThe Canada Revenue Agency is a federal agency that administers tax laws for the Government of Canada and for most provinces and territories, international trade legislation, and various social and economic benefit and incentive programs delivered through the tax system...
, which then remits the appropriate amounts to the participating provinces.
Every province except Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
has implemented either a provincial sales tax or the Harmonized Sales Tax. The federal GST rate is 5 percent, effective January 1, 2008.
The territories
Provinces and territories of Canada
The provinces and territories of Canada combine to make up the world's second-largest country by area. There are ten provinces and three territories...
of Yukon
Yukon
Yukon is the westernmost and smallest of Canada's three federal territories. It was named after the Yukon River. The word Yukon means "Great River" in Gwich’in....
, Northwest Territories
Northwest Territories
The Northwest Territories is a federal territory of Canada.Located in northern Canada, the territory borders Canada's two other territories, Yukon to the west and Nunavut to the east, and three provinces: British Columbia to the southwest, and Alberta and Saskatchewan to the south...
, and Nunavut
Nunavut
Nunavut is the largest and newest federal territory of Canada; it was separated officially from the Northwest Territories on April 1, 1999, via the Nunavut Act and the Nunavut Land Claims Agreement Act, though the actual boundaries had been established in 1993...
do not have either the HST or territorial sales taxes. Only the GST is collected. The three northern jurisdictions are heavily subsidized by the federal government, and its residents receive some additional tax concessions due to the high cost of living in the north.
Provincial sales taxes
Separate Provincial Sales Taxes (PST) are collected in the provinces of ManitobaManitoba
Manitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other...
, Prince Edward Island
Prince Edward Island
Prince Edward Island is a Canadian province consisting of an island of the same name, as well as other islands. The maritime province is the smallest in the nation in both land area and population...
, Quebec
Quebec
Quebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level....
(Quebec Sales Tax or QST, French: Taxe de Vente du Québec or TVQ), and Saskatchewan
Saskatchewan
Saskatchewan is a prairie province in Canada, which has an area of . Saskatchewan is bordered on the west by Alberta, on the north by the Northwest Territories, on the east by Manitoba, and on the south by the U.S. states of Montana and North Dakota....
. Goods to which the tax is applied vary by province, as does the rate. Moreover, for those provinces whose provincial sales tax is applied to the combined cost and GST, provincial revenues decline or increase with respective changes in the GST. Of the provincial sales taxes, only the QST (and the HST) are value-added
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
; the rest are cascading
Cascade tax
A cascade tax or cascading tax is a turnover tax that is applied at every stage in the supply chain, without any deduction for the tax paid at earlier stages. Such taxes are distorting in that they create an artificial incentive for vertical integration. They have been replaced in Europe and many...
taxes.
| Province | Type | Prov. rate (%) | Combined fed./prov. rate (%) | Notes |
|---|---|---|---|---|
| Alberta Alberta Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces... |
GST | 0 | 5 | There is a 4% tax on lodging. |
| British Columbia British Columbia British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858... |
HST | 7 | 12 | |
| Manitoba Manitoba Manitoba is a Canadian prairie province with an area of . The province has over 110,000 lakes and has a largely continental climate because of its flat topography. Agriculture, mostly concentrated in the fertile southern and western parts of the province, is vital to the province's economy; other... |
GST + PST | 7 | 12 | |
| New Brunswick New Brunswick New Brunswick is one of Canada's three Maritime provinces and is the only province in the federation that is constitutionally bilingual . The provincial capital is Fredericton and Saint John is the most populous city. Greater Moncton is the largest Census Metropolitan Area... |
HST | 8 | 13 | |
| Newfoundland and Labrador Newfoundland and Labrador Newfoundland and Labrador is the easternmost province of Canada. Situated in the country's Atlantic region, it incorporates the island of Newfoundland and mainland Labrador with a combined area of . As of April 2011, the province's estimated population is 508,400... |
HST | 8 | 13 | |
| Northwest Territories Northwest Territories The Northwest Territories is a federal territory of Canada.Located in northern Canada, the territory borders Canada's two other territories, Yukon to the west and Nunavut to the east, and three provinces: British Columbia to the southwest, and Alberta and Saskatchewan to the south... |
GST | 0 | 5 | |
| Nova Scotia Nova Scotia Nova Scotia is one of Canada's three Maritime provinces and is the most populous province in Atlantic Canada. The name of the province is Latin for "New Scotland," but "Nova Scotia" is the recognized, English-language name of the province. The provincial capital is Halifax. Nova Scotia is the... |
HST | 10 | 15 | |
| Nunavut Nunavut Nunavut is the largest and newest federal territory of Canada; it was separated officially from the Northwest Territories on April 1, 1999, via the Nunavut Act and the Nunavut Land Claims Agreement Act, though the actual boundaries had been established in 1993... |
GST | 0 | 5 | |
| Ontario Ontario Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa.... |
HST | 8 | 13 | |
| Prince Edward Island Prince Edward Island Prince Edward Island is a Canadian province consisting of an island of the same name, as well as other islands. The maritime province is the smallest in the nation in both land area and population... |
GST + PST | 10.5 effective 10 nominal |
15.5 eff. 15 nom. |
Provincial rate is nominally 10%, but is also applied to federal 5% GST. Effective provincial rate is 10.5%. |
| Quebec Quebec Quebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level.... |
GST + QST | 8.925 effective 8.5 nominal |
13.925 eff. 13.5 nom. |
Provincial rate is nominally 8.5%, but is also applied to federal 5% GST. Effective provincial rate is 8.925%. Quebec is one of the only jurisdictions in the Western World to tax on tax, by adding their provincial tax on top of the federal tax. Rate will increase to 9.5% on January 1, 2012. Effective provincial rate is 9.975% and combined is 14.975%. |
| Saskatchewan Saskatchewan Saskatchewan is a prairie province in Canada, which has an area of . Saskatchewan is bordered on the west by Alberta, on the north by the Northwest Territories, on the east by Manitoba, and on the south by the U.S. states of Montana and North Dakota.... |
GST + PST | 5 | 10 | There is a separate 10% liquor consumption tax. The non-alcoholic portion of a restaurant meal is not taxed. |
| Yukon Yukon Yukon is the westernmost and smallest of Canada's three federal territories. It was named after the Yukon River. The word Yukon means "Great River" in Gwich’in.... |
GST | 0 | 5 |