Quote:
Originally Posted by Daithi
It was my understanding that VAT applied to every purchase. I could definately be wrong and would value the clarification, but here is how I was told VAT works --
A farmer sells food, but he needs to buy fertalizer, water, pesticides, etc. to produce that food, and he is required to pay VAT on all these purchases. Then a Food Distrubutor purchases the farmer's food and the distributor needs to pay VAT for that food, as well as VAT for the trucks he purchased to pickup and distribute the food. Then grocery stores buy the food from the Food Distributor and they too pay VAT. Then consumers buy the food and once again pay VAT. At every level that value is added to an item then a tax is incured, thus Value Added Tax. Furthermore, the tax paid is on the added value and not on the gross cost of the item. A sales tax on the other hand is only charged on the gross price of the final sale to consumers, and when businesses are charged a sales tax it can be deducted when they file their taxes.
|
In Canada it's the GST (Goods and Services Tax) and in some provinces HST (harmonized Sales Tax). Provinces with HST have added their provincial tax to the federal GST. I'm lucky in that Alberta only charges GST which is 5%. Some items are exempt like basic groceries (bread, milk, veggies etc.). As far as I know plain peanuts are tax free but salted ones are taxed.
Businesses only pay the difference between the GST they collected and the GST they paid. If you paid more than you collected you get a refund. So for Businesses GST is fully refundable.
OK now let's get back to the topic. What was it again. Ah yes the new Sony 300 and 600.