In GST tax terms, the inclusion ratio represents which of the following?

In GST tax terms, the inclusion ratio represents which of the following?

• A. 0%
• B. 100%
• C. 50%
• D. Percentage of the trust's value that is subject to GST tax

Answer: (D)

The inclusion ratio is the percentage of the trust’s value that is subject to GST tax. It shows how much of the trust remains exposed to GST after accounting for the GST exemption allocated to it. It’s calculated as 1 minus the amount of exemption allocated divided by the trust’s total value. So it can be 0% (the whole value sheltered by exemption), 100% (no exemption sheltering any value), or any percentage in between depending on how much exemption is allocated. For example, with a $1,000,000 trust and $400,000 of exemption allocated, the inclusion ratio is 0.6, meaning 60% of the trust’s value is subject to GST tax.

The inclusion ratio is the percentage of the trust’s value that is subject to GST tax. It shows how much of the trust remains exposed to GST after accounting for the GST exemption allocated to it. It’s calculated as 1 minus the amount of exemption allocated divided by the trust’s total value. So it can be 0% (the whole value sheltered by exemption), 100% (no exemption sheltering any value), or any percentage in between depending on how much exemption is allocated. For example, with a $1,000,000 trust and $400,000 of exemption allocated, the inclusion ratio is 0.6, meaning 60% of the trust’s value is subject to GST tax.