Goods and Services Tax GST in Alberta

Sales tax in Alberta

The current legislation assessed taxes on some commodities and services, including furs, amusements, coal and electricity. Pipelines and other similar goods and services were also taxed prior to 1936.

On April 1, 1936, the province of Alberta became the first and only provincial government in Canadian history to default on a debt payment, marking a watershed milestone in the country’s political history. Premier William Aberhart’s government responded to this default by passing The Ultimate Purchasers Tax Act, which was the province’s first general sales tax and established the province’s first general sales tax. There were a few exceptions to the Act’s application, which took effect on May 1, 1936 and levied a 2 percent sales tax on the sale of virtually all items. [3] It was until later in the year 1936 that the Retail Sales Tax Act, 1936, was passed and the Ultimate Purchasers Tax Act was repealed, resulting in only minimal alterations to the tax system.

Specifically, the Act to Amend the Ultimate Purchasers Tax Act, which was passed by Aberhart’s government in 1937, provided that the tax might be suspended by the Lieutenant Governor in Council in perpetuity. In reaction to strong public resistance, Aberhart’s cabinet decided on August 1, 1937, to suspend the tax indefinitely until further notice. Patrick Burns’ death resulted in a nearly $1,000,000 tax payment (about equivalent to $17,800,000 in 2020), which was nearly equal to the amount of money lost as a result of the suspension of the tax. This made it even more believable.

As a result of the rise of the oil sector in succeeding years, future administrations in Alberta were able to avoid sales taxes and even post budget surpluses.

On January 1, 1991, the government of Prime Minister Brian Mulroney enacted Canada’s first general federal sales tax, which was set at a rate of seven percent.

According to the Alberta Taxpayer Protection Act, which was introduced by Ralph Klein’s government in 1995 and signed into law the following year, a referendum on any wide provincial sales tax would be required.

Effective immediately, the government of Prime Minister Stephen Harper reduced the general federal sales tax from ten percent to six percent on July 1, 2006.

With effect from January 1, 2008, the Harper government reduced the general federal sales tax rate to 5 percent, resulting in a total reduction in the sales tax rate to 5 percent.

 

Sales Taxes in Canada

A number of different types of sales taxes exist in Canada, including the provincial sales tax (PST), the Quebec sales tax (QST), the Goods and Services Tax (GST), and the Harmonized Sales Tax (HST), which is a combination of the provincial sales tax and the GST in some provinces and is known as the Harmonized Sales Tax (HST).

• The Goods and Services Tax (GST) is applicable to the vast majority of goods and services produced in Canada; however, there are several exceptions.
• Unless a special exemption exists, the PST is a retail sales tax that must be paid when a taxable good or service is purchased for personal or business use in the province of Ontario.
• The HST is normally applied on the same set of goods and services as the GST, unless otherwise specified. The HST was implemented by harmonising the provincial sales taxes of the participating provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island) with the GST in order to adopt the HST.
• The GST (Goods and Services Tax), which is computed at a rate of 5 percent on the selling price, is the most frequent sales tax in Quebec.
• Taxes on goods and services (other than GST) are determined at a rate of 9.975 percent on the selling price excluding GST.

PROVINCE	APPLICABLE SALES TAX	GST1	HST1	QST2	PST3	TOTAL
Alberta	GST	5%				5%
British Columbia	GST + PST	5%			7%	12%
Manitoba	GST + PST	5%			7%	12%
New Brunswick	HST		15%			15%
Newfoundland and Labrador	HST		15%			15%
Northwest Territories	GST	5%				5%
Nova Scotia	HST		15%			15%
Nunavut	GST	5%				5%
Ontario	HST		13%			13%
Prince Edward Island	HST		15%			15%
Quebec	GST + QST	5%		9.975%		14.98%
Saskatchewan	GST + PST	5%			6%	11%
Yukon	GST	5%				5%

1. Most of the time, the GST/HST on shipments is calculated based on the rate that is in effect in the destination province, rather than the rate that is in force in the source province.
2. Québec Sales Tax (QST) is generally only applicable to shipments that originate within the province of Quebec (i.e., when Quebec is both the shipment origin and destination province).
3. In the vast majority of circumstances, provincial sales tax (PST) is not applicable to shipping charges, which includes the vast majority of surcharges and other fees. However, the HST, on the other hand, is applicable in the vast majority of situations.

A value-added tax in Canada is comprised of two types of value-added taxes: the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST). Both taxes were implemented on January 1, 1991, and they replaced the previously existing 13.5 percent Federal Sales Tax (which was a concealed tax on manufactured goods). The Goods and Services Tax (GST/HST) is levied under the Excise Tax Act’s Part IX, which is known as the Goods and Services Tax Act. As of January 1, 2008, the rate of tax is 5 percent, down from the previous rate of 7 percent, which was reduced in two stages of one percent each by the legislature. Originally, the rate was set at 7 percent. Several provinces have amalgamated their provincial sales taxes with the GST to form what is known as the Harmonized Sales Tax, or HST, which is managed by the federal government and is collected by the federal government. The provinces that are involved in this lawsuit include Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island, and the province of Ontario. Provinces have different rates for the Harmonized Sales Tax (HST), with the lowest being 13 percent in Ontario, 13 percent in New Brunswick, 13 percent in Newfoundland and Labrador, and the highest being 15 percent in Nova Scotia. Given that sales taxes are not levied in the three territories of Yukon, the Northwest Territories, and Nunavut, only the 5 percent Goods and Services Tax (GST) must be collected in these jurisdictions. Quebec administers both the federal Goods and Services Tax (GST) as well as its own provincial sales tax, which is known as the Quebec Sales Tax (QST). Canada’s only jurisdiction with the task of implementing the Goods and Services Tax (GST), which is normally administered by the Canada Revenue Agency, Saskatchewan is a leader in the global market (CRA).

GST/HST is a value-added tax, which implies that the tax is paid by the final customer who purchases the products and services, rather than by the government as a whole. When speaking in GST/HST terms, the vendor (also known as the supplier) charges the GST on its sales at every intermediate stage of processing (for goods) or at the time of supply of all services, while the vendor (also known as the supplier) claims a credit for all GST/HST paid to its suppliers. Let us take, for example, our Canadian tax law firm as an illustration. Taxes on our Canadian clients are charged to them at the rate that is applicable in their province of residence, and we are entitled to a tax credit for the entire amount of tax that we pay to the Canadian government. Following that, we submit a payment to the Canada Revenue Agency (CRA) in the amount of the disparity. A manufacturer would be subject to the same constraints as a distributor. The company would also claim input tax credits for the GST/HST it had paid in addition to charging the tax to its customers. In part due to the fact that sales conducted outside of Canada are not subject to GST/HST, exporters are frequently able to claim a GST/HST refund on their purchases. Tax refunds, on the other hand, are now subject to GST/HST audits on a consistent basis.

Goods and Services Tax (GST)/Harmonized Sales Tax (HST) registration is required (HST)

The yearly sales threshold for GST/HST registration is $30,000 in the United States. Any business that generates sales in excess of this threshold amount is required to register with the government and charge GST/HST for the calendar year in which the threshold amount is exceeded. In order to be eligible for input tax credits, businesses with less than $30,000 in annual sales can chose to register for the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST). Failure to collect and return GST/HST is a tax infraction under the Excise Tax Act, and is subject to tax prosecution as well as tax penalties, which can include fines and jail sentences, if convicted of the crime. Filing a false or misleading statement under paragraph 327(1) of the Excise Tax Act, or failing to file a return under subsection 326(1) of the Excise Tax Act, are examples of GST/HST tax offences.

GST/HST Filing Requirements, as well as Audit Requirements

Monthly, quarterly, or annual GST/HST returns are required to be filed, depending on the volume of sales. Accounting for GST/HST audits is more common than accounting for income tax audits, and most businesses can expect to have GST/HST auditors visit them at some time during the year. GST/HST audits are almost often conducted as a result of a refund claim being submitted.

Directors of the corporation are liable for GST/HST.

Unless they can demonstrate that they made reasonable steps to ensure that the corporation attempted to pay any GST/HST taxes owed to them, directors of corporations are generally personally liable for unpaid GST and HST obligations. If a corporation is unable to pay the GST/HST taxes that are owed to the province or territory, a director responsibility assessment under Section 323 of the Excise Tax Act may be issued.

In the case of GST/HST objections and appeals

You must file a Notice of Objection within 90 days of receiving a GST/HST assessment or reassessment if you disagree with the assessment. If you do not agree with the assessment, you may appeal the decision. It is possible to request a one-year extension of the objection deadline if the 90-day period for filing an objection is not observed. The CRA has complete discretion over whether or not to grant the time extension, and it is not compelled to do so. If the results of a Notice of Objection are unsatisfactory, an appeal to the Tax Court of Canada can be filed within 90 days of the date of the Notice of Objection. If the deadline for filing an appeal is missed a second time, another alternative is to file a request for an extension of time with the Tax Court itself. It’s not uncommon for tax payers to be denied extensions unless they can demonstrate that they are the result of exceptional circumstances beyond their control.

For income tax objections and appeals, the filing of an objection (or Tax Court appeal) does not preclude the continuation of collection activities by the Canada Revenue Agency (CRA). Since this is an ongoing process, the Revenue Canada collections officers will continue to collect the GST/HST obligation while the appeal is being reviewed.