General Discussion

Businesses that purchase goods and services that are consumed, used or supplied in the course of their "commercial activities" can claim "input tax credits" subject to prescribed documentation requirements (i.e., when they remit to the Canada Revenue Agency the GST they have collected in any given period of time, they are allowed to deduct the amount of GST they paid during that period). This avoids "cascading" (i.e., the application of the GST on the same good or service several times as it passes from business to business on its way to the final consumer).[4] In this way, the tax is essentially borne by the final consumer.

The Goods and Services Tax (GST) is a multi-stage sales tax levied on taxable goods and services. The GST applies on each exchange of taxable goods and services, from the initial producer or supplier through intermediate producer or supplier to consumers. To ensure that the value added at each stage of the supply chain is taxed only once, producers and suppliers are able to recover the GST paid on their purchases of business inputs through "input tax credits."