The value-added tax (VAT) in Canada is a federal tax applied to most goods and services bought and sold in the country. The standard VAT rate is 5% which applies to most goods and services. Some items are taxed at a higher rate of 13% or 15% and some are exempt from VAT.
The VAT is paid by businesses on their taxable supplies of goods and services. When a business charges VAT on its taxable supplies it collects an amount of VAT equal to the tax rate multiplied by the price of the supply. The business then remits this amount to the government.
Businesses can recover the VAT they pay on their inputs by claiming a credit from the government. The credit is equal to the VAT paid on the inputs minus any VAT payable on the outputs. This results in a net payment of VAT to the government of only the difference between the VAT paid on the inputs and the VAT collected on the outputs.
The VAT system in Canada is designed to be revenue neutral. This means that in theory the government should not lose or gain revenue as a result of the VAT. In practice however the VAT does result in some revenue for the government. This is because businesses are not perfect in their record-keeping and because some businesses do not charge VAT on their taxable supplies.
The government has taken steps to reduce the amount of revenue it receives from the VAT. For example it has introduced a GST/HST credit for low-income individuals and families. It has also exemptd certain items from the VAT such as food and child care services.
The VAT is an important source of revenue for the government. It is estimated that the VAT brings in about $30 billion per year. This is about 2% of the total revenue of the federal government.
What value-added tax (VAT) rate applies in Canada?
Answer: The current VAT rate in Canada is 5%.
When did the current VAT rate become effective in Canada?
Answer: The current VAT rate of 5% became effective on January 1 2008.
What are the VAT rates for specific goods and services in Canada?
Answer: The specific VAT rates for goods and services in Canada vary depending on the product or service.
What is the VAT on hotel accommodations in Canada?
Answer: The VAT rate for hotel accommodations in Canada is 9%.
What is the VAT on restaurant meals in Canada?
Answer: The VAT rate for restaurant meals in Canada is 5%.
What is the VAT on admission to a movie theatre in Canada?
Answer: The VAT rate for admission to a movie theatre in Canada is 0%.
What is the VAT on passenger transportation services in Canada?
Answer: The VAT rate for passenger transportation services in Canada is 5%.
What is the VAT on digital downloads in Canada?
Answer: The VAT rate for digital downloads in Canada is 5%.
What is the VAT on books in Canada?
Answer: The VAT rate for books in Canada is 0%.
What is the VAT on newspapers in Canada?
Answer: The VAT rate for newspapers in Canada is 0%.
What is the VAT on children’s clothing in Canada?
Answer: The VAT rate for children’s clothing in Canada is 0%.
What is the VAT on women’s clothing in Canada?
Answer: The VAT rate for women’s clothing in Canada is 0%.
What is the VAT on men’s clothing in Canada?
Answer: The VAT rate for men’s clothing in Canada is 0%.
What is the VAT on footwear in Canada?
Answer: The VAT rate for footwear in Canada is 0%.
What is the VAT on sporting equipment in Canada?
Answer: The VAT rate for sporting equipment in Canada is 0%.
