GST/HST Overview

Definition

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 only the final consumer bears the economic burden.

Key rules

• GST is imposed by ETA s.165(1) at 5% on every taxable supply made in a non-participating province.
• HST is imposed by ETA s.165(2) as a combined rate in participating provinces. 2026 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 Quebec.
• 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.

Example

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.

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 Quebec, 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.

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.