GST, or goods and services tax, is a sales tax which is charged on most goods and services sold in Canada.  In Nova Scotia, New Brunswick and Newfoundland and Labrador, the GST has been "harmonized" with the provincial sales tax, to become harmonized sales tax, or HST.  It is expected that both Ontario and BC will be harmonizing their sales tax, effective July 1, 2010.  Ontario's HST rate will be 13%, while BC's rate will be 12%.  See Ontario HST and BC HST for more information.

Any business which is registered to collect GST/HST will be able to recover any GST/HST paid on purchases made in the course of their commercial activities, by claiming "input tax credits" when filing their GST returns.

GST/HST rate reductions

Effective January 1, 2008

The GST rate is reduced from 6% to 5% effective January 1, 2008.  The HST rate was reduced from 14% to 13%.

See the following Canada Revenue Agency (CRA) web pages regarding the rate reduction:

Effective July 1, 2006 to December 31, 2007

The GST rate was reduced from 7% to 6% effective July 1, 2006.  The HST rate was reduced from 15% to 14%.

For further information on the rate reduction, see the CRA web pages:

Transitional rules for the change in GST/HST rates in 2006

Canada Revenue Agency has issued some documents to help taxpayers with the change to the rates, in particular with transactions which start prior to July 1st 2006 and are completed on or after July 1st 2006.  See the following CRA publications:

Revised: December 10, 2009