GST/HST Overview

What GST and HST are

The Goods and Services Tax (GST) is a 5% federal value-added tax imposed on most supplies of goods and services made in Canada, under Part IX of the Excise Tax Act. The Harmonized Sales Tax (HST) is the same federal tax combined with a provincial component in five participating provinces, administered by the Canada Revenue Agency under a single return. Registrants collect the tax on their taxable sales and recover the tax paid on inputs through Input Tax Credits, so eligible commercial inputs generally do not retain the tax; exempt activities and restricted ITCs can leave tax as a business cost.

The law puts the tax on the buyer. ETA s.165(1) makes every recipient of a taxable supply made in Canada pay 5% on the value of the consideration, and s.165(2) adds the provincial part, at that province's rate, when the supply is made in a participating province. A registered seller charges the tax, holds it for the Receiver General and remits it with its return. That is why under the regular method, GST/HST collected is recorded as a liability rather than sales revenue. The Quick Method has separate income-tax treatment for amounts retained.

Which rate applies, province by province

• GST generally applies at 5% to taxable supplies made in Canada other than zero-rated supplies. In a non-participating province that 5% is the whole federal tax.
• HST is the 5% federal part plus the provincial part imposed by ETA s.165(2) in participating provinces. 2026 combined rates: Ontario 13%, New Brunswick 15%, Newfoundland and Labrador 15%, Prince Edward Island 15%, Nova Scotia 14% (reduced from 15% on April 1, 2025).
• Alberta, British Columbia, Saskatchewan, Manitoba, Quebec, Yukon, Northwest Territories, and Nunavut apply GST only at 5%. BC, Saskatchewan, and Manitoba layer their own provincial sales tax on top, and Quebec administers QST alongside the GST through Revenu Québec. A business physically located in Quebec files its GST/HST returns with Revenu Québec on Revenu Québec's forms, not with CRA, unless it is a selected listed financial institution.
• The rate that applies to a given sale depends on the place-of-supply rules in ETA s.142 and Schedule IX, not on where the seller is located.
• Non-residents can still be required to register and collect GST/HST if they make taxable supplies in Canada above the small-supplier threshold.
• Provincial sales taxes do not follow the GST base. BC PST applies to goods and to a specific list of services, and most professional services are outside it, so a BC consulting invoice usually carries GST and no PST. A provincial sales tax also has its own registration with the province, separate from the GST/HST account with CRA. See BC PST.

AB / GST

5%

BC / GST

5%

SK / GST

5%

MB / GST

5%

Ontario

13%

Nova Scotia

14%

New Bruns.

15%

NL

15%

PEI

15%

Example: one seller, several rates

A BC corporation sells $1,000 of consulting services to three clients located in BC, Ontario, and New Brunswick. The place-of-supply rules determine which rate applies on each invoice.

BC client (place of supply: BC)
Debit:  Accounts Receivable      $1,050.00
Credit: Consulting Revenue       $1,000.00
Credit: GST Payable (5%)            $50.00

Ontario client (place of supply: ON)
Debit:  Accounts Receivable      $1,130.00
Credit: Consulting Revenue       $1,000.00
Credit: HST Payable (13%)          $130.00

New Brunswick client (place of supply: NB)
Debit:  Accounts Receivable      $1,150.00
Credit: Consulting Revenue       $1,000.00
Credit: HST Payable (15%)          $150.00

The corporation reports all three amounts on the same GST/HST return (line 103), with HST collected in harmonized provinces flowing through to the participating provinces automatically.

GST and a provincial sales tax are two separate charges with separate rules. The BC consulting invoice above carries no PST. If the same corporation sold a $1,000 laptop from a BC location, the invoice would show both taxes, and each would go to a different government:

Laptop sold in BC
Price                            $1,000.00
GST (5%), remitted to CRA           $50.00
PST (7%), remitted to BC            $70.00
Invoice total                    $1,120.00

When a business has to register

A business must register once its worldwide taxable supplies, together with those of its associates, go over $30,000 in a single calendar quarter or over four consecutive calendar quarters. Below that line it is a small supplier: it does not charge the tax, and it cannot recover the tax it pays. The exact end dates for each test, what counts toward the total, and who must register at any revenue level are on the $30,000 threshold page.

A one-person consulting corporation crosses the line sooner than it might expect. Billing $3,000 a month from January gives $36,000 over the four quarters of that first year, so small-supplier status ends on January 31 of the following year and tax is charged on every taxable invoice after that.

A small supplier can also register before it has to, so it can claim Input Tax Credits on its costs. See voluntary registration.

How the amount you remit is worked out

Each return nets collected or collectible tax and eligible Input Tax Credits. Paper returns show these separately on lines 103 and 106; electronic returns generally combine them with adjustments on lines 105 and 108. The difference, after adjustments, is net tax on line 109. When the credits are larger than the tax collected, the return shows a refund instead.

GST collected from clients (paper line 103)       $2,000
ITCs on business expenses (line 106)         ($800)
Net tax remitted to CRA (line 109)           $1,200

Only purchases made for the business qualify: CRA denies ITCs on personal purchases, and each claim needs a supporting document. An ITC missed in one period can be claimed on a later return within the time limit. The rules are on the Input Tax Credits page.

When returns and payments are due

CRA assigns a reporting period at registration based on annual taxable supplies. A registrant can elect to file more often than its assigned period, never less often.

• Monthly and quarterly filers: the return and payment are due one month after the end of the reporting period.
• Annual filers: the return and final payment are due three months after the fiscal year-end.
• Annual filers who are individuals with business income and a December 31 year-end: the payment is due April 30 and the return June 15.
• Annual filers pay quarterly instalments, due one month after the end of each fiscal quarter, unless the instalment base is under $3,000 (ETA s.237). Details are on the filing frequency page.

A late return costs 1% of the amount owing plus a quarter of that 1% for each complete month it is late, up to 12 months (ETA s.280.1).

Net tax owing:                        $4,000
Return filed 3 complete months late

1% of the amount owing:                  $40
25% of $40 = $10, times 3 months:        $30
Late-filing penalty:                     $70

Simpler ways to do the arithmetic

Two optional methods cut the bookkeeping. The Quick Method lets a registrant whose annual worldwide taxable supplies, including GST/HST, are $400,000 or less remit a flat percentage of its tax-included sales instead of claiming ITCs on operating costs. A service business with both its permanent establishment and eligible supplies in non-participating provinces remits 3.6%, with a 1% credit on the first $30,000 of eligible supplies each fiscal year, and ITCs on capital purchases can still be claimed. Bookkeepers, accountants, lawyers, actuaries, and people who provide financial consulting, tax consulting, or tax return preparation cannot use it. The Simplified ITC Method keeps real ITCs but works them out from tax-included purchase totals.

Common mistakes

• Charging the home-province rate to every customer. The rate depends on the place of supply, not the seller's address.
• Forgetting that Quebec's QST is a separate tax administered by Revenu Québec, not by CRA.
• Assuming PST (BC, SK, MB) is an HST province. These provinces apply GST plus a separate retail sales tax.
• Continuing to charge Nova Scotia HST at 15% after the April 1, 2025 rate cut to 14%.
• Treating the GST collected as revenue. GST/HST collected is a liability owed to the Receiver General, not income.
• Adding BC PST to a consulting fee. Most professional services are outside BC PST even though GST applies.
• Leaving a taxable sale off the tax once registered. Taxable supplies made in Canada from the effective date generally carry GST/HST at the applicable rate; zero-rated supplies still have a 0% rate even after registration.
• Claiming ITCs on personal purchases paid from the business account. CRA denies them, and an owner-manager's personal spending belongs in a shareholder account, not in expenses.
• Not tracking ITCs as they happen. Tax paid on business costs is only recovered if it is claimed, and the claim window closes after four years for most registrants.
• Filing late in a balance-owing period. The penalty grows every complete month, and the 1% base is charged even for one day late.

Related concepts

The overview ties together the rest of this category. Registration brings a business into the regime, the $30,000 threshold determines when registration becomes mandatory, supply classification drives whether tax is collected, ITCs let the registrant recover tax paid on inputs, and place of supply fixes which province's rate applies. The filing frequency rules set when each return is due.