UNDERSTANDING INCOME TAX - LEARNING MATERIALS FOR LITERACY AND BASIC SKILLS

The GST credit is not the same thing as the GST. They are related, but they are not the same thing.

The GST is the seven cents extra that we pay for every dollar we spend. When we buy something, the amount on the price tag is how much money the store owner keeps, and the tax that is added on at the cash is how much the store owner passes on to the government.

GST (Goods and Services Tax)	GST Credit (Goods and Services Tax Credit)
This is seven cents on a dollar that everyone in Canada pays when they buy something. The store gives this seven cents to the government. We pay GST on clothes, books, meals in restaurants, CDs, taxi rides, and many other things. We don't pay GST on rent, prescription drugs, and most groceries.	This is money that the government pays to people who have low and modest incomes, to give them back some or all of the money they paid as GST. People receive this money four times a year, either as a cheque or deposited directly into their bank accounts.

Some people can pay this extra money easily, but the government knows that it's difficult for others. How can the government make it more fair? They don't ask some people to pay the GST and not others, because that would get too complicated. Cash register

Instead, the government asks everyone to pay the GST, and then gives some money back to the people who have low or modest incomes. This money that the government gives back is called the GST credit. The government sends the GST credit to people as cheques in the mail, or deposits it directly into people's bank accounts.

You might be thinking, "Sales tax is more than seven cents on a dollar." You're right. And this article is right, too. This is because the GST isn't the only sales tax. There is also the PST (provincial sales tax), which is 8 cents in Ontario. We usually put the GST and the PST together and think of paying a total of fifteen cents tax on every dollar.