How Much is GST in BC? Calculations, Rebates, & Exemptions
Taxes is a term that often triggers a collective sigh among citizens yet fuels the essential functions of our society. Different provinces in Canada apply taxes at different rates instead of having a single national rate built into prices. If you live in British Columbia, you must understand the taxes that apply to you, especially the goods and services tax (GST). So, how much is GST in BC? Well, British Columbia charges a 5% federal Goods and Services Tax (GST).
What Is GST (Goods and Services Tax)?
The goods and services tax (GST) is a sales tax that usually applies to the supply of nearly all goods and services for domestic consumption in Canada.
The Canadian federal government imposes GST to help cover the cost of running the country. Conversely, merchants collect goods and services tax at the point of sale and remit the money to the Canada Revenue Agency (CRA).
How Much Is GST in BC?
Calculating sales tax in BC is easy. As mentioned, the province charges a 5% federal Goods and Services Tax (GST). Most goods and services are charged this sales tax, with some exceptions.
You can use a free sales tax calculator provided by the government of Canada to calculate the sales tax for BC or any other province or territory.
For instance:
John would like to purchase a new smart TV. According to the shopping feature on his Google search, he finds the best deal in town for $1,499.00. But when he gets to the checkout counter, the price is different. Why? One of the reasons is because of the Goods and Services Tax (GST).
Here’s the math:
Purchase price x sales tax rate (GST) = amount of tax
$1,499 x (5%) = 74.95
Amount of tax + purchase price = after-tax total
74.95 + 1,499 = 1,573.95
The price of the smart TV is now $1,573.95.
What Are the Total Sales Taxes in British Columbia?
The total sales tax is the sum of the GST and PST (Provincial Sales Tax) added to your bill when making a purchase. It is the Canadian sales tax, usually expressed as a percentage of the purchase price.
Only two territories and one province in Canada do not charge provincial sales tax (PST). The rest must pay GST and PST on almost all purchases.
On the other hand, British Columbia is one of the provinces that charges a separate 5% federal Goods and Services Tax (GST) and 7% Provincial Sales Tax (PST), while other provinces and territories combine both sales taxes to form a harmonized sales tax.
Let’s calculate the total sales taxes in BC using our previous example of John and his smart TV.
The purchase price was $1,499.
The GST is 5% and the PST is 7%.
So, how much total tax did he pay?
Purchase price x sales tax rates (GST) = amount of GST tax
$1,499 x (5%) = 74.95
Purchase price x sales tax rates (PST) = amount of PST tax
$1,499 x (7%) = 104.93
Amount of tax (GST + PST) + purchase price = after-tax total
(74.95+ 104.93) + 1,499
John paid $1678.88 for the smart TV after sales tax.
What Are the Rebates and Exemptions from the GST in BC?
There are usually two categories of exemptions for goods and services tax: zero-rated goods and services and direct exemptions. The difference relates to how businesses deal with costs associated with the exemptions. However, you won’t have to pay GST on items from these categories as a consumer.
i). Zero-Rated Goods and Services
- Medical devices
- Prescription medications, except for drugs available over-the-counter
- Feminine hygiene products
- Basic groceries like dairy products, eggs, meats, fish, vegetables, cereals, tea, and coffee.
- Some foods, including snacks, carbonated beverages, and liquor, are subject to HST.
ii). Directly Exempt Goods and Services
- Medical and dental services
- Day-care services
- Educational services that are awarded a certificate or diploma or that are required for a specific practice
- Rental accommodations for more than a month
- Residential resales of a previously owned and used property
- Legal aid services
- Financial services like bank fees
New Home GST Rebates in British Columbia
There are two categories of GST rebates for new home purchases in BC: the GST New Housing Rebate and the GST New Residential Rental Rebate.
1. GST New Housing Rebate
i). Full GST New Housing Rebate
The full GST N.H. Rebate is 36% of the 5% GST. This rebate may apply to new homes under $350,000 in BC that a buyer intends to use as their main residence.
For instance:
Assume a new home is valued at $340,000, excluding GST.
Purchase price: $340,000
Full GST of 5%: $17,000
Purchase price with full goods and services tax (GST) = $357,000
GST N.H. Rebate Calculation: 36% of the GST paid, or $6,300 (the lesser of either)
$ 6,300 is the maximum rebate.
36% of $17,000 (5% GST) = $6,120
Therefore;
GST After Rebate: $17,000 – $6,120 = $10,880
Purchase Price + Full GST – GST Rebate = $350,880
ii). Partial GST New Housing Rebate
The partial GST N.H. Rebate applies to property purchases between $350,000 and $450,000. The rebate is gradually reduced for new homes valued in this price range.
Homes worth more than $450,000 are ineligible for the GST New Home Rebate and must pay the full 5% GST on the new home purchase.
For instance:
The partial GST N.H. rebate calculation is:
36% of the GST paid, or $6,300 (the lesser of either) x [$450,000 – the purchase price] / $100,000
$ 6,300 is the maximum rebate.
Assume a new home is valued at $420,000, excluding GST.
Purchase price: $420,000
Full GST of 5%: $21,000
Purchase price with full goods and services tax (GST) = $441,000
GST N.H. Rebate Calculation: 36% of $21,000= 7, 560
So, we will use $6,300, the maximum rebate, because it’s lesser.
Partial GST N.H. Rebate Calculation: (Full GST Rebate of $6,300) x ($450,000 – $420,000) / $100,000 = $1,890
Therefore;
GST After Rebate: $21,000 – $1,890 = $19,110
Purchase Price + (GST – GST Rebate) = $439,110
Keep in mind that if you are claiming the rebate in BC, you must pay GST in full at the time of completion and can’t include the GST amount in your mortgage.
To be eligible for the GST New Housing Rebate, the individual must have:
- Purchased new housing or constructed or considerably renovated housing for use as your (or a family member’s) primary residence, including housing on leased land (provided the lease is for at least 20 years or offers you the option to purchase the land).
- You constructed or significantly renovated your home yourself or hired someone else to do it for use as your (or your family member’s) primary residence, and the home’s fair market value after the construction or renovation is substantially finished is less than $450,000.
- Purchased shares in a cooperative housing development to use the unit in the co-op as your (or a family member’s) primary residence.
Note that qualifying housing also includes mobile homes, modular homes, and floating homes.
2. GST New Residential Rental Rebate
The GST NRR Rebate is eligible for buyers planning to use their new house as a rental property.
The calculation for full and partial rebates in this category is the same (36% of 5% GST). Like the GST N.H. Rebate, the full GST New Residential Rental Rebate is only available on new homes valued up to $350,000. On the other hand, a partial GST New Residential Rental Rebate is available for homes valued between $350,000 and $450,000.
To be eligible for the GST New Residential Rental Rebate:
- The purchaser must not be allowed to claim input tax credits for any part of the tax payable on the rental unit’s acquisition.
- The owner must hold the unit to make exempt supplies (for instance, a residential tenancy).
- The tenants must use the house as their main residence for at least one year, and the purchaser must submit a copy of the tenancy agreement with a term of at least one year.
- The rental home must be a “qualifying residential unit,” meaning the person applying for the GST rebate must be the homeowner. The house must be self-contained as stipulated by the Excise Tax Act.
Frequently Asked Questions on How Much is GST in BC
1. Do I charge GST or PST in BC?
If your business in British Columbia is registered for GST, you must charge GST on taxable supplies of goods and services. This includes most goods and services not specifically exempt or zero-rated for GST. On the other hand, unless an exception applies, you must charge provincial sales tax (PST) on all taxable goods and services you sell. There are no general exemptions if you sell goods or services in British Columbia to customers outside of BC, such as tourists.
2. Do you pay GST in BC?
The BC province pays 7% PST and 5% GST on taxable goods and services. Entities listed on Schedule A of the Reciprocal Taxation Agreement are eligible for a full GST rebate from the Canada Revenue Agency (CRA).
3. What is GST exempt in BC?
Certain goods and services in British Columbia are exempt from the GST, including;
- Medical and dental services
- Prescription medications, except for drugs available over-the-counter
- Feminine hygiene products
- Basic groceries
- Day-care services
- Educational services that are awarded a certificate or diploma or that are required for a specific practice
4. Who has to charge GST in BC?
In BC, businesses that meet certain criteria must charge and collect GST federal tax on the goods and services they supply. For instance, businesses with annual global taxable supplies exceeding $30,000 within 12 months must register for GST.
Featured Image by Towfiqu barbhuiya on Unsplash
