Investor Presentaiton
CORPORATE LAW
BY ALAIN RANGER
BRAZIL - CANADA COMPARATIVE LAW
between zero-rated supplies and exempt supplies relates to the
availability of input tax credits.
Persons supplying zero-rated supplies (supplies that are taxable at a rate
of 0%) are generally entitled to recover GST/HST incurred to make those
supplies through a claim for input tax credits. The zero-rating mechanism
ensures that no GST/HST is collected from the final purchaser of the
property or services and that no GST/HST is embedded in the cost of
the property or service. Some of the more common examples of zero-
rated supplies include certain medical and health related property,
basic groceries and goods exported from Canada for supply, use or
consumption outside of Canada.
Persons making only exempt supplies (supplies that are not subject to
GST/HST) are generally not entitled to recover the GST/HST incurred
to make those supplies (though, in certain limited circumstances, a
partial rebate of GST/HST may be available). Accordingly, some GST/
HST expense will ultimately be embedded in the cost of any exempt
property or service. The most common example of such a supply is that
of financial services (which includes insurance).
The GST/HST is automatically levied on tangible property that is imported
into Canada. This tax is generally paid by the importer of record at the
time of importation. The GST/HST is also levied on intangible property
or services that are considered to be supplied outside of Canada and
then used in Canada. Where such a property or service is used in Canada,
the business importing such property or service is generally required to
self-assess the GST/HST, although broad exemptions from this self-
assessment also exist.
(1) Provincial Sales Tax
All Canadian provinces, with the exception of Alberta, levy a provincial
sales tax, either independently or in conjunction with the federal GST.
The rates of provincial sales tax range from 5% to 10%. Like Alberta,
none of the three Canadian territories Yukon, Northwest Territories and
Nunavut levy any sales tax other than the federal GST (at a rate of 5%).
As outlined above, the provinces of New Brunswick, Nova Scotia,
Newfoundland, Ontario and Prince-Edward Island do not directly levy
a provincial sales tax. Instead each of these provinces have entered into
an agreement with the Federal Government that results in the Canada
Revenue Agency collecting provincial tax as a component of the HST.
Ontario
While the HST is generally subject to the same rules as the GST, there are
some province-specific rules. In Ontario there are point-of-sale rebates for
a limited range of consumer products and special rules restricting input
tax credits for the provincial component on certain expenses incurred
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