The Goods and Services Tax, which are often referred to as GST is a type of regressive tax that the provinces of Alberta, Saskatchewan, and Ontario have agreed to harmonize. This harmonization has increased trade opportunities for businesses across the board in Canada. Goods in Alberta, for example, are less costly than those in other provinces while importation of goods from other countries is easier to do. In addition, there are several features of the new GST that make it attractive to businesses. Read on to find out about the advantages of Goods and Services Tax in Canada.
First, it eliminates the hassle of buying imported goods in cash. When shopping for luxury goods like automobiles, trucks, and boats, one must use their provincial sales tax. While this can be inconvenient, most provinces offer retailers a grace period within which they are allowed to sell imported items at wholesale prices. Even though this practice is widely accepted across the board, some provinces still charge additional fees. For instance, New Brunswick levies an additional 15% in its goods tax on purchases while neighboring Nova Scotia does not charge any PST at all. If you live in one of these provinces, it is highly recommended that you visit the provincial sales office for more information on how to get the best price for your imported items.
Secondly, if you are not buying goods for resale purposes, it makes sense to have luxury goods for consumption. Since you pay less in taxes on consumption, the money that you would otherwise have been paying in sales tax can be put to good use. This includes funding educational expenses or adding a luxury item to your home. Many provinces also allow you to increase the amount of money that you pay in taxes on luxury goods annually so long as you have kept your residence in that province for a certain period of time.
Thirdly, you can claim a tax credit for items that are custom-made or hand-made. These include items that are made to order from a manufacturer and that is custom-designed. A tax credit for these items is available in each of Canada’s provinces, but since these claims cannot exceed the value of $100, they are normally automatically reduced when you file your income tax return. There are also several other conditions that must be met before you can take advantage of this credit, including the fact that the item must have been custom made or hand-made and that the sale must have occurred within two years of the date of your claim.
The fourth type of tax credit is for luxury goods used for tourism purposes. This includes a tax credit for items that are listed as such on your travel assessment or that are displayed in your hotel room book or catalogue. Such items that are deemed luxury goods and that are claimed can include such things as tickets to the opera, tickets to see a play, plane tickets, a cruise to a special destination, or a spa day at a luxury spa. In addition to the luxury goods tax credit, if you claim these items, you may also be able to claim tax credits for business airfares, transportation services, meals, and even certain prescription drugs.
Just as there are several different types of tax credits available in each province, there are also several different credits that are based on the province you reside in. Most of the provinces offer a basic tax credit of up to five hundred dollars per month in regular income. Some of the provinces also offer a top-up tax credit on top of the basic tax credit up to a maximum of eight hundred and fifty dollars per month.
If you are currently holding a Canadian passport, it may be possible for you to enjoy tax benefits when you are shopping in Canada. Luxury goods tax credit information should be checked with the Revenue Canada website. This is an automated system that receives and calculates tax payments in Canada and abroad. When you are considering purchasing luxury goods for consumption in Canada or importing luxury goods for consumption outside of Canada, make sure that you are able to deduct the cost of the item from the price you paid for it. There are special codes that apply to the goods tax in Canada, but there are also general rules that apply to the goods tax in all provinces.
You may also be eligible for a foreign tax credit if you are a resident of Canada. This applies if you purchase or import any type of depreciated production, such as furniture, automobiles, musical instruments, works of art and records of artistic creations. However, some of these items will not qualify for tax benefits under the goods tax in Canada if they are acquired for personal use. Generally, you must meet the income guidelines established by the Canada Revenue Agency to qualify for a foreign tax credit.