CANADA – Canada’s national tax system is set to take a huge hit with the introduction of the Goods and Services Tax (GST).
Under the GST, consumers will have to pay the GST on every purchase, regardless of whether they buy directly from a retailer or from a third party, and regardless of the price tag.
The GST will be introduced on July 1, 2019, and will apply to all goods and services, regardless if they are purchased online or in person.
Under this tax regime, the consumer will pay GST at the rate of 4 per cent of the goods and goods-related transaction value.
There are a number of important things to know about the GST system, so here’s a look at how the system works.
What is the GST?
The GST is a tax levied on all goods, including food, beverages, tobacco, medicine, and clothing, and is levied at the point of sale (POW).
The tax is administered by the Canada Revenue Agency (CRA), which is an arm of the government of Canada.
This means that all goods are subject to the tax and the consumer can only pay GST on the amount of the tax that they owe, regardless how much of the purchase price they actually pay.
What does the GST do?
The government has estimated that the GST will raise approximately $1.2 trillion over the next three years.
That means that the government is estimating the amount that consumers will pay in taxes over the course of the year.
It also assumes that consumers make purchases at home, where they pay the tax, and then buy and pay the goods at a local retail outlet (LRO).
If consumers buy a product at a retail store, the tax is also paid at the LRO.
Consumers who buy online also pay the full tax at the PPC, and there are also other costs that the CRA has estimated will be passed on to consumers, such as GST/HST and transaction charges.
The CRA estimates that the annual tax collection of the Canadian economy will reach $1 trillion over five years.
The total GST collected from the tax will be divided evenly among all provinces and territories, so the average rate for each province and territory is about $0.25 per $1,000 of GST.
The government is also expected to collect an additional $1 billion in revenue over five year period.
How does the tax affect me?
The government estimates that there will be an increase in consumer costs due to the GST.
In 2018, consumers paid a total of $7 billion in taxes and fees, including GST.
For 2019, consumers are expected to pay $7.5 billion.
As of October 2020, the federal government estimates the tax collection from the GST has grown by $1-billion, and the number of taxpayers who paid the GST was expected to grow by $2.2-billion.
This means the government estimates it will collect approximately $6.2 billion in additional taxes in 2019.
What are the benefits to Canadians?
The new system will have a direct impact on many Canadians.
For example, if a customer purchases an item at a grocery store and does not pay the sales tax, the GST is collected at the store, and that money is refunded to the consumer.
Similarly, if an online shopper purchases an online service and does pay the online sales tax in the LRE, the money is then refunded back to the customer.
The increase in the cost of goods and their value will also have an impact on consumers.
Many consumers who buy goods online will have fewer options to choose from, and many will also find that they cannot access some online shopping services.
Other goods, such the housing market, could be affected.
Additionally, many Canadians who are currently paying GST on online purchases will be forced to pay it on the regular in 2019, which means they may not be able to spend the money they have saved.
If the GST rate is too high, the government may also find it difficult to collect revenue from those individuals who are not in the GST bracket.
The Canadian Association of Food Centres (CAFC) estimated that approximately 80 per cent to 90 per cent or more of the estimated $1-$1.25 trillion that consumers could pay in GST will come from online purchases, but the total GST revenues from online transactions will only be about $200-300 million per year.
The federal government says that it will take up to four years to collect the GST revenue from online sales.
Are there other ways that the tax could affect me if I am Canadian?
There are other ways in which the GST could impact you, including: The cost of the GST increases if consumers do not spend their GST refund.