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Canada GST/HST Guide

the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) in Canada. The GST is the 5% federal tax on the supply of the goods and the services in Canada. The HST (the Harmonized Sales Tax) is the combined federal+provincial sales tax — 13% in Ontario, 15% in Nova Scotia, New Brunswick, Newfoundland, and Prince Edward Island. The provincial sales taxes (PST) — 7% in BC, 6% in Saskatchewan, 6% in Manitoba (the "retail sales tax" — the GST is applied separately from the PST). The Quebec Sales Tax (QST) — 9.5% (the QST is administered by Revenu Québec). The GST/HST registration is mandatory when the total taxable revenue exceeds $30,000 in the 4 consecutive calendar quarters (the "small supplier" threshold). The Input Tax Credits (ITCs) allow the business to recover the GST/HST paid on the business expenses (the "recapture" of the input tax — the business deducts the GST/HST paid from the GST/HST collected). The Quick Method of accounting — the simplified ITC calculation (the business applies the "remittance rate" to the total revenue, including the GST/HST collected). The GST/HST return (the Form GST34 — the "GST/HST Return for the Registrants") is filed monthly, quarterly, or annually (the "GST/HST reporting period" depends on the revenue). The GST/HST rebate for the "public service bodies" (the charities, the non-profits, the municipalities, the hospitals) — the "PSB rebate" (the partial rebate of the GST/HST paid).

GST/HST Rates by Province

• GST only (5%): Alberta, British Columbia, Saskatchewan, Manitoba, Northwest Territories, Nunavut, Yukon. The GST is applied to all the taxable goods and the services.
• HST (13% or 15%): Ontario (13% — 5% federal + 8% provincial), Nova Scotia (15% — 5% federal + 10% provincial), New Brunswick (15%), Newfoundland and Labrador (15%), Prince Edward Island (15%).
• QST (9.5%): Quebec — the QST is 9.5% on the goods and the services (the QST is calculated on the price including the GST). The effective QST rate is approximately 9.975% when the GST is included in the QST base.
• PST (retail sales tax): BC (7% on the goods and the certain services), Saskatchewan (6% on the goods), Manitoba (6% on the goods and the services). The PST is applied separately from the GST.

GST/HST Registration

• Small supplier threshold: $30,000 in the total taxable revenue (the "taxable supplies" — the revenue from the goods and the services before the GST/HST) in the 4 consecutive calendar quarters. The registration is mandatory when the threshold is exceeded. The registration is voluntary for the businesses below $30,000.
• Taxable supplies: The supplies (the goods and the services) that are subject to the GST/HST (the "zero-rated supplies" — the groceries, the prescription drugs, the medical devices — are taxed at 0% but are still the "taxable supplies"). The "exempt supplies" (the health services, the child care, the financial services, the residential rent) are NOT the "taxable supplies" (the GST/HST is NOT charged on the exempt supplies).
• Registration process: The business registers through the CRA My Business Account or the Form RC1 (the "Request for a Business Number and the GST/HST Accounts"). The registration is effective on the "effective date" (the date the business exceeds the $30,000 threshold or the voluntary registration date).

Input Tax Credits (ITCs)

• ITC entitlement: The registrant can claim the ITCs for the GST/HST paid on the business expenses (the "input tax" — the GST/HST paid on the purchases). The ITCs reduce the "net tax" (the GST/HST collected minus the ITCs).
• ITC restrictions: The ITCs are NOT available for the "exempt supplies" (the financial services, the residential rent, the health services). The ITCs for the meals and the entertainment are limited to 50% of the GST/HST paid (the "50% ITC rule").
• ITC documentation: The registrant must keep the receipts that show the GST/HST charged (the "GST/HST receipt" — the vendor's GST/HST registration number, the date, the amount, the tax charged).

Quick Method of Accounting

• Eligibility: The small businesses with the annual revenue (including the GST/HST) of $400,000 or less (the "Quick Method" threshold). The business cannot use the Quick Method if the revenue exceeds $400,000 (the GST/HST portion only).
• Remittance rates: The business applies the CRA's remittance rate (the "Quick Method remittance rate" — for example, the 8.8% for the Ontario retailers, the 4.4% for the Ontario service providers) to the total revenue (including the GST/HST). The remittance rate replaces the "net tax" calculation (the ITCs are NOT claimed separately).
• ITC substitution: The Quick Method streamlines the ITC calculation — the business does NOT claim the individual ITCs (the remittance rate factors in the average ITCs). The business can still claim the ITCs on the capital property (the "capital ITCs" — the ITCs on the equipment, the vehicles, the real property).

For the payroll rules and the source deductions, see our Payroll Guide →. For the sole proprietorship and the business income reporting, see our Sole Proprietorship Guide →.