Canadian GST/HST

The tax applied on the final sale of a product or service in Canada is called Sales Tax. The following sales taxes are levied in Canada, based on region:

  • GST: A Federal Tax called (GST - Goods and Services Tax) is levied by the federal government in every province in Canada.
  • PST: In addition to GST, every province (except Alberta) levies a provincial tax called PST (Provincial Sales Tax).

  • HST (GST + PST combined): The combination of GST and PST (the total tax that you have to think about paying) is called HST (Harmonized Sales Tax) in the provinces of New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island. These provinces don't apply GST and PST separately; they levy one combined tax called HST.

  • QST and RST:

    • The provincial sales tax applied in Quebec is called QST (Quebec Sales Tax). Merchants in Quebec are required to pay GST and QST for all the sales made.
    • The provincial sales tax in Manitoba is called RST (Retail Sales Tax). Merchants in Manitoba are required to pay GST and RST for all sales made.

Depending on the province or territory in which you operate your business, you need to collect either a combination of GST and PST, GST or only HST.

GST/HST Rules

Here are a few important GST/HST rules you should be aware of. For more on the ins and outs of GST/HST, check out the Canadian government's GST/HST page for businesses .

Registration

If you run a business in Canada or provide sales/services in Canada and your turnover for the last four quarters exceeds CAD $30,000, you must register for GST/HST. Find out more about registering for GST/HST   here. When you register for GST/HST, you will receive a business number (BN) - you will need to display the first nine digits of your GST/HST account number on your invoices to be CRA compliant.

Sale Tax Rates

If you are selling to customers residing within the province where you are domiciled, your tax rate applies. However, if you are selling to customers residing outside your province, or are domiciled in another part of the world selling to customer residing in Canada, the tax rate of their province applies.

Here is a breakdown of the tax rates:

HST combines PST with GST to create one tax (this means that if you're applying for HST, you don't have to apply for GST too). If you are domiciled in an HST-participating province, you will collect sales tax at the following rates:

  • New Brunswick: 15%
  • Newfoundland and Labrador: 13%
  • Nova Scotia: 15%
  • Ontario: 13%
  • Prince Edward Island: 14%

 

If you are domiciled in the following provinces, you need to collect 5% GST as well as provincial sales tax, with provincial sales tax rates as follows:

  • British Columbia: 7% provincial sales tax (PST)
  • Manitoba: 8% retail sales tax (RST)
  • Quebec: 9.975% Quebec sales tax (QST)
  • Saskatchewan: 5% provincial sales tax (PST)

 

If you are domiciled in the province of Alberta or in one of the three territories (Northwest Territories, Nunavut or the Yukon), you do not need to collect sales tax on goods and services beyond the 5% GST.

Note:

If you are selling to customers residing in another province in Canada, you should apply their tax rate to invoices rather than yours.

Taxable and Non-taxable goods

All sales made in Canada classify into three categories: those that are taxable, those are zero-rated (meaning they are taxable but are taxed at 0%) and those that are exempt from tax. It is important to determine where your product catalog falls so that an appropriate tax rate can be applied to your customers' invoices.

 See also

 

Note: Digital products and services are taxable in Canada.


Disclaimer: The sales tax rates and rules on this page could be changed. Please look at www.canada.ca for the current sales tax rates if applicable.



This page last updated on: Aug 26, 2020

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