Remember These Important Points on GST

The Goods and Services Tax (GST) applies to most goods and services. going to implements at 4%.

The GST is a value-added tax, because the government only receives tax on the increase in the value of the good at each stage of distribution.

Zero-rated items are goods and services that at the time of this lesson have the GST percentage set of 0%. Sellers of zero-rated goods and services will receive a rebate of any GST they paid in acquiring those goods and services from their suppliers while sellers of GST exempt goods and services will not.

A GST Payable account is kept in the general ledger. This account is a record of the tax collected on sales (credited) and paid on purchases (debited). The balance represents what must be remitted to the federal government.

GST collected on sales - GST paid on purchases = GST remitted to the Government.

A credit balance in the GST Payable account is remitted to the government on a monthly, quarterly, or annual basis depending on the size of the business.

If there is a debit balance, the company will receive a refund from the government because it has paid more on purchases than it has collected on sales