What is the Goods and Services Tax (GST)?

The Goods and Services Tax (GST) is a federal requirement in Canada that applies to most goods and services sold or provided in the country. It was introduced to establish a single, broad-based tax that replaces various provincial and federal sales taxes, thereby streamlining the tax process. The GST is assessed at a percentage of the sale price and collected by businesses on behalf of the federal government, which then redistributes the revenues.

Understanding its function as a federal requirement is crucial, as it distinguishes the GST from taxes that are under provincial jurisdiction, such as provincial income taxes. It is also different from a luxury tax or excise duty, which target specific products or luxury items rather than a broad range of goods and services. Knowing that GST is federally mandated helps clarify its application across Canada, demonstrating its importance in the national financial framework.