The Harmonized Sales Tax (HST) is a Federal tax imposed in provinces and territories of Canada that started on July 1, 2010. It includes the Goods and Services Tax (GST) which has been harmonized with the GST previously imposed by each province or territory. The HST replaced most provincial sales taxes as well as the GST which had existed since 1991.
What are some of the differences between The Harmonized Sales Tax (HST) and Provincial Sales Taxes?
The main difference is that while you might be required to pay both taxes, you usually only pay one tax – either HST or PST – at checkout when shopping online in Canada.
So what is the HST rate in New Brunswick?
On July 1, 2010, it is currently 10% on Provincial Sales Tax (PST) and 15% on General Sales Tax (GST).
If you are from Canada or live in Canada, the Canada Revenue Agency (CRA) uses two main categories to clarify the rules that help determine if an item falls under one of these two taxes:
1. You pay either HST or PST when buying or selling an item and this is something you can utilize in your business.
2. You pay GST on a service.
What are the rules for HST?
You must pay one of the two taxes:
If you are buying or selling goods, you do not pay HST. In other words, you only pay sales tax when purchasing items from: your business; a retail store; and a rented space. (For example, if you rent your office to someone who takes out a rental agreement, you would owe HST.) On the other hand if you own property or work in an office space owned by someone else you would have to report how much money is collected from those renting spaces by paying sales tax. So if you are renting out your own home and have tenants or if you are renting an office space which is owned by someone else, you would still have to pay sales tax on your rental fees.
If you are getting services, such as having a technical person fix your computer or you need to get a lawyer to help you resolve an issue with CRA, then the GST applies.
The HST is a tax in Canada imposed by the Government of Canada. Currently, the applicable rates are 10% in the Atlantic provinces and 15% for all other provinces and territories (except for Nova Scotia, where it is 13%).
Where does the HST come from?
The HST or Goods and Services Tax was made law in July 2010 as a part of a Liberal government plan to harmonize provincial sales taxes. It replaced the GST (Goods and Services Tax) that had been collected by the provinces since 1991. Under this new system, Canadians will pay sales tax on most purchases wherever they live instead of paying goods-and-services tax only on goods purchased within one province. The elimination of GST on goods being sold between provinces will be welcomed by businesses, as they will only pay GST on the portion of the revenue that comes from within their province.
The HST is still a point of confusion to many and it is still unclear if it will ultimately increase or decrease prices for Canadians. For example, in Ontario, if you buy a pair of jeans for $100 at one store you are likely to pay about $10 in sales tax. However, if you go to another store that has no HST and buy that same pair of jeans for just $95 then you will not pay any sales tax.