Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold in Canada. It is administered by the Canada Revenue Agency (CRA) and applies to both businesses and consumers. As of now, the federal GST rate is 5%, though some provinces combine it with their own sales tax to create the Harmonized Sales Tax (HST).

Businesses that earn more than $30,000 in annual revenue are generally required to register for a GST/HST account. Once registered, they must collect GST on taxable sales and remit it to the CRA. Businesses can also claim Input Tax Credits (ITCs) to recover the GST paid on business-related purchases, effectively taxing only the value added at each stage of production or service delivery.

Not all goods and services are taxed the same. Some items are zero-rated (taxed at 0%, such as basic groceries), while others are exempt (not subject to GST at all, like certain financial and health services).

GST is reported and remitted through periodic filings, often monthly, quarterly, or annually, depending on business size. Understanding and managing GST properly ensures compliance, avoids penalties, and keeps your business finances running smoothly.

In short, GST is a key part of Canada’s tax system and a crucial responsibility for registered businesses.