GST / HST
Canada's federal Goods and Services Tax (GST) and the Harmonized Sales Tax (HST), which combines GST with a provincial portion in participating provinces.
In short
- GST is 5% across Canada. HST replaces GST and provincial sales tax in Ontario and the Atlantic provinces.
- Registered businesses charge it on sales and recover the tax they pay on purchases through input tax credits.
- Registration is required once taxable sales exceed $30,000 over four consecutive calendar quarters.
The GST is a 5% federal value-added tax on most goods and services sold in Canada. In five provinces, it is combined with the provincial sales tax into a single HST: 13% in Ontario, 14% in Nova Scotia, and 15% in New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
The other provinces
- Quebec: GST applies, plus the Quebec Sales Tax (QST) at 9.975%. Revenu Québec administers both in the province.
- British Columbia, Saskatchewan and Manitoba: GST applies, plus a separate provincial sales tax with its own rules.
- Alberta and the territories: GST only.
How it works for a business
A registered business charges GST/HST on its taxable sales and pays GST/HST on its business purchases. On each return, it remits the tax collected minus the tax paid, which it claims as input tax credits. The tax is ultimately paid by the final consumer, who cannot claim it back.
Registration and filing
Businesses must register once their worldwide taxable supplies exceed $30,000 in a single calendar quarter or over four consecutive quarters; below that, they are small suppliers and may register voluntarily. Filing is monthly, quarterly or annually, depending mostly on revenue. Some supplies are zero-rated, such as basic groceries and exports, and some are exempt, such as most residential rent and many financial services.
Worked example
A quarter for an Ontario business
An Ontario consulting firm bills $120,000 of taxable services in a quarter and charges 13% HST, $15,600. It pays $2,860 of HST on its rent, software and supplies. On its return, it remits $15,600 − $2,860 = $12,740 to the CRA.