Nunavut is unique in Canada because it does not have a territorial sales tax. Instead, residents and businesses in Nunavut are only subject to the federal Goods and Services Tax (GST), which is currently set at 5%. This makes the tax environment in Nunavut different from other provinces and territories where provincial or harmonized sales taxes are also in place.
Here are key points to understand about Nunavut’s tax structure:
Key Features:
- No Territorial Sales Tax: Nunavut does not impose its own sales tax on top of the federal GST.
- Goods and Services Tax (GST): The standard federal GST of 5% applies to most goods and services purchased in Nunavut. This is the only sales tax that applies.
- Exemptions: Certain goods and services may be exempt from the GST, such as basic groceries, medical devices, and other essentials, which are typical exemptions across Canada.
Implications for Businesses and Consumers:
- Consumers: When purchasing goods and services in Nunavut, consumers pay only the 5% GST, which is generally lower than the combined sales tax rates in most other provinces and territories.
- Businesses: For businesses operating in Nunavut, the tax reporting is simpler because they only need to deal with the federal GST and not an additional territorial tax.
If you are a business owner or consumer in Nunavut, it’s important to understand that this low sales tax rate helps reduce the cost of goods compared to other regions in Canada, where combined federal and provincial sales taxes can be significantly higher.
