ARTICLE · 09 SEPTEMBER 2024

GST/HST 101: Division II & III Supplies

Millar Kreklewetz

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Since the GST was first implemented in 1991, a continual source of misconception has been that the GST represents a single tax. In fact, there are potentially four different applications of the GST...

CanadaTax

Robert Kreklewetz

Jack Millar

Since the GST was first implemented in 1991, a continual source of misconception has been that the GST represents a single tax. In fact, there are potentially four different applications of the GST – i.e., reflected in Divisions II through IV.1 of the Excise Tax Act ("ETA"). When combined with the provincial HST component, further permutations can occur.

A major source of work (because of mistakes made by Canadian residents and non-residents alike) has been the application of Divisions II and III of the ETA, which are reviewed here, and which can quite counterintuitively result in the application of both a 5% GST and up-to a 15% GST/HST on one single supply of goods. Effectively, tax applying twice on a single transaction!

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