You may find Canada’s laws regarding taxes on products and services very different when compared to European countries. The first thing to note is that taxes are set from province to province, so the amounts and quantity of these taxes will vary across the country. Several are of course the same all across the Canada, but some are specific to certain provinces.
- The national tax is the TPS (Taxe sur les produits et services / tax on product and services)
The TPS is a federal tax, equal to 5% of the products and service’s price. There are certain exemptions from the TPS, including prescription medicine, most food items or used vehicles.
All provinces of Canada are subject to the TPS, but several add their own taxes on top. In New Brunswick, Newfoundland/Labrador, Nova Scotia, Ontario and Prince Edward Island, rather than implementing another tax, they have increased the percentage of TPS and called it the TVH (Taxe de Vente Harmonisée).
British Columbia, Manitoba and Saskatchewan all add a separate provincial sales tax (PST) or a retail sales tax (RST) on top of the federal TPS.
- TVQ, “taxe de vente du Québec” is a tax specific to the state of Québec
This tax is equal to 9.975% of the gross price of the product or service, meaning that you calculate it without the TPS added first. It functions the same way the TPS: most products and services are taxed. However, it does not apply on medicines, food items or a number of other exceptions.
- Another informal tax: Tips
A tip is what you give to a waiter or service provider for a service. It is generally 15% of the total bill after the addition of TPS and TVQ. Even if this tax is not written in law, it is an important part of Canadian culture, and it is considered rude not to tip (in Québec, tips are considered part of a server’s income, and so subject to income tax – if you don’t tip, your server will end up paying income tax on money they’ve never been given!)
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