Final answer:
The correct statement about fully taxable and zero-rated supplies in a participating province is that fully taxable supplies are taxed at the HST rate, and zero-rated supplies at 0.0 percent, with input tax credits available for expenditures related to both types of supplies.
Step-by-step explanation:
The correct answer to the question of which statement related to fully taxable and zero-rated supplies in a participating province is correct is: b. Fully taxable supplies are taxed at the HST rate and zero-rated supplies are taxed at 0.0 percent. Expenditures related to both types of supplies are eligible for input tax credits.
In the context of the Harmonized Sales Tax (HST) in Canada, fully taxable supplies are indeed taxed at the HST rate applicable in a participating province. On the other hand, zero-rated supplies are taxed at 0.0 percent, which means they are taxable but at a rate of zero, allowing businesses to claim input tax credits for the GST/HST paid on purchases and expenses related to making these zero-rated supplies.
Input tax credits are available to businesses for both fully taxable and zero-rated supplies because they are both part of taxable supplies, though zero-rated supplies are at a tax rate of zero. This system is intended to avoid tax cascading, ensuring that tax is paid only by the final consumer.