The Goods and Services Tax (GST) is a federal tax levied at a rate of 5% on the supply of most property and services made in Canada
. It is a value-added tax (VAT) applied at each level in the manufacturing and marketing chain
. The GST is administered by the Canada Revenue Agency (CRA) and was introduced on January 1, 1991, replacing a previous hidden 13.5% manufacturers' sales tax (MST)
. In addition to the GST, there are also provincial sales taxes (PST) in Canada. In New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, the GST is combined with the provincial sales tax to form a harmonized sales tax (HST)
. The HST applies to the same tax base and under the same rules as the GST, and there is no need to register separately for GST and HST because both taxes are accounted for under the HST
. The GST/HST is a value-added tax that operates on an input/output system
. It applies to most supplies of goods and services, as well as many supplies of real property (e.g., land, buildings, and interests in such property) and intangible personal property such as trademarks, rights to use a patent, and digitized products downloaded from the internet and paid for individually
. However, the tax does not apply to supplies that are zero-rated (i.e., taxed at 0%) or exempt (e.g., used residential real property and most health care, educational, and financial services)
