What Is GST/HST? Rates, Credits, and Registration in Canada

GST and HST are Canada’s federal consumption taxes on most goods and services. The Goods and Services Tax is a 5% federal tax that applies across the country, and the Harmonized Sales Tax is a single combined rate charged in provinces that have merged their provincial sales tax with the federal GST.¹ Both are administered by the Canada Revenue Agency, both are value-added taxes collected at every stage of a transaction chain, and both ultimately land on the final consumer.²

How the Tax Actually Works

Under the federal Excise Tax Act, every buyer of a taxable good or service in Canada owes GST at 5% on the purchase price.¹ In provinces that have harmonized their provincial sales tax with the federal portion, the two merge into a single HST rate that the CRA administers as one charge.²

Businesses do not absorb this cost. They charge GST or HST to their customers, subtract the tax they paid on their own business purchases (through a mechanism called input tax credits), and remit the difference to the CRA. A manufacturer pays GST on raw materials but recovers that amount when filing. The retailer who buys the finished product does the same. Only the final consumer, with no business purchases to claim against, carries the full tax. The design prevents tax from stacking on tax at every stage of production.

Taxable, Zero-Rated, and Exempt

The Excise Tax Act sorts goods and services into three categories, and the label decides what appears on your receipt.

Taxable supplies are the default. Clothing, electronics, furniture, restaurant meals, professional consulting, and most services carry the full GST or HST rate. If a good or service is not specifically listed as zero-rated or exempt, it is taxable.³

Zero-rated supplies are technically taxable but at a rate of 0%. Basic groceries such as bread, milk, and vegetables, prescription medications, and certain medical devices like hearing aids fall in this group.³ Businesses selling zero-rated goods charge no tax to customers but can still recover the GST/HST they paid on their own expenses.

Exempt supplies carry no tax at all, and businesses providing them cannot recover the tax they paid on their inputs. Common examples include health and dental services, educational programs offered by schools, long-term residential rent, and financial services such as loan interest and insurance premiums.³

Zero-rated and exempt look identical to the consumer. The difference matters for the business collecting.

Tax Rates by Province and Territory

What you pay depends on where the transaction takes place. Provinces and territories fall into two camps: those that have folded their provincial tax into a single HST, and those that keep the 5% GST separate from any provincial-level tax.

HST Provinces

Five provinces charge a combined HST:⁴

Ontario: 13% (5% federal + 8% provincial)
New Brunswick: 15% (5% federal + 10% provincial)
Newfoundland and Labrador: 15% (5% federal + 10% provincial)
Prince Edward Island: 15% (5% federal + 10% provincial)
Nova Scotia: 14% (5% federal + 9% provincial), reduced from 15% effective April 1, 2025⁵

GST-Only Provinces and Territories

Alberta, British Columbia, Manitoba, Saskatchewan, Quebec, Northwest Territories, Nunavut, and Yukon charge only the 5% federal GST.⁴ Several of these jurisdictions add a separate provincial sales tax that the CRA does not administer:

British Columbia: 7% PST on most taxable goods and some services
Saskatchewan: 6% PST
Manitoba: 7% RST (retail sales tax)⁶
Quebec: 9.975% QST, administered by Revenu Québec rather than the CRA⁷
Alberta, Northwest Territories, Nunavut, and Yukon: no provincial or territorial sales tax; only the 5% GST applies

Quebec calculates QST on the sale price without including the GST, so the two taxes do not compound. Because Revenu Québec handles QST separately, businesses operating there deal with two filings rather than one.

The GST/HST Credit for Individuals

To offset the consumption tax burden on lower- and modest-income households, the federal government pays a tax-free quarterly GST/HST credit.⁸ You don’t apply separately. The CRA determines eligibility automatically from the net income on your annual tax return, and payments arrive in July, October, January, and April.

For the July 2025 to June 2026 payment period, the maximum annual amounts are:⁹

Single individual: $533
Married or common-law couple: $698
Per child under 19: $184

These amounts phase out as income rises. File your return on time even if you owe no tax, because the CRA will not issue the credit without a filed return to base the calculation on.

When a Business Has to Register

If you sell taxable goods or services in Canada, whether you must register for GST/HST turns on one number: $30,000.

You qualify as a small supplier, and can skip registration, if your total worldwide taxable revenues (including zero-rated sales) stay at or below $30,000 over four consecutive calendar quarters. Public service bodies get a higher threshold of $50,000.¹⁰

The moment you cross $30,000, registration is triggered immediately. Not at the end of the quarter, not 30 days later. Your effective date of registration is the day of the specific sale that pushed you over, and you must charge GST/HST on that transaction. You have 29 days from that date to apply for your GST/HST account.¹¹

Associated businesses pool their revenues for this test. Two corporations controlled by the same individual, for example, combine their taxable revenues when checking against the $30,000 threshold.¹² The calculation excludes revenue from financial services, sales of capital property, and goodwill from the sale of a business.¹⁰

Businesses below the threshold can register voluntarily.¹² Doing so unlocks input tax credits, which for a small business with heavy startup costs can produce a net refund. The trade-off is that you must charge tax on your sales and file returns, and once voluntarily registered you must stay registered for at least one year before cancelling.¹³

Foreign businesses selling digital products to Canadian consumers face their own version of the rule. Since July 1, 2021, a non-resident vendor must register if revenue from taxable digital supplies to Canadian consumers exceeds $30,000 over any 12-month period. When a non-resident sells exclusively through a registered distribution platform, those sales count toward the platform’s threshold instead.¹⁴

Recovering Tax Through Input Tax Credits

Registered businesses recover the GST/HST paid on purchases and expenses related to commercial activities through input tax credits. You claim ITCs on your return, subtract them from the tax you collected, and remit the difference. If your credits exceed what you collected, the CRA sends a refund.¹⁵

Three conditions must be met to claim an ITC: you acquired the property or service for use in commercial activities, you were registered during the reporting period when the tax became payable, and you have the required supporting documentation.¹⁵ Expenses tied to exempt supplies do not qualify. A dental office, for example, cannot claim ITCs on equipment used to provide tax-exempt dental services.

Filing Frequency and Deadlines

How often you file depends on your annual taxable revenue:

$1,500,000 or less: annual filing, with the option to file monthly or quarterly
$1,500,001 to $6,000,000: quarterly filing, with the option to file monthly
Over $6,000,000: monthly filing, no other option

Monthly and quarterly filers must submit their return and payment within one month after the end of the reporting period. Annual filers with a fiscal year-end other than December 31 have three months after year-end. Annual filers with a December 31 year-end who earned business income during the year owe payment by April 30 but have until June 15 to file the return itself.¹⁶ If a due date lands on a weekend or public holiday, the deadline moves to the next business day.

Annual filers whose net tax for the previous fiscal year was $3,000 or more may also owe quarterly instalment payments during the current year.¹⁷ Missing an instalment triggers the same interest charges that apply to any late payment.

Penalties and Interest for Late or Wrong Filings

Filing a return late when you owe money triggers a penalty of 1% of the amount owing, plus 0.25% of that amount for each complete month the return is overdue, up to 12 months.¹⁸ Interest also accrues on unpaid amounts. The prescribed interest rate on overdue GST/HST for the first quarter of 2026 is 7%.¹⁹

Businesses required to file electronically face a $100 penalty for the first offence and $250 for each subsequent return not filed electronically.¹⁸ Ignoring a formal CRA demand to file adds a separate $250 penalty on top of any other penalties.²⁰ Filing a return with inaccurate information carries a penalty of at least 5% of the error amount, increasing by 1% per month until corrected, to a maximum of 10%.

Repeated failure to file can, in extreme cases, lead to criminal prosecution. A summary conviction carries a fine between $1,000 and $25,000, imprisonment of up to 12 months, or both.²⁰

1
Justice Laws Website – Department of Justice Canada. Excise Tax Act RSC 1985 c E-15 – Section 165
2
Government of Newfoundland and Labrador. Harmonized Sales Tax
3
Canada Revenue Agency (CRA). Type of Supply
4
Canada Revenue Agency (CRA). Charge and Collect the Tax – Which Rate to Charge
5
Canada Revenue Agency. Nova Scotia HST Rate Decrease – Questions and Answers on General Transitional Rules for Personal Property and Services
6
Province of Manitoba. Retail Sales Tax
7
Revenu Québec. Tables of GST and QST Rates
8
Canada Revenue Agency. GST/HST Credit
9
Canada Revenue Agency. How Much You Can Get – GST/HST Credit
10
Canada Revenue Agency. Small Suppliers
11
Canada Revenue Agency (CRA). General Information for GST/HST Registrants
12
Canada Revenue Agency. When to Register for and Start Charging the GST/HST
13
Canada Revenue Agency. Voluntary Registration
14
Government of Canada. Cross-Border Digital Products and Services Threshold Amounts – GST/HST for Digital-Economy Businesses
15
Canada Revenue Agency (CRA). Input Tax Credits
16
Canada Revenue Agency. Reporting Requirements and Deadlines – File Your GST/HST Return
17
Canada Revenue Agency. Find Out if You Need to Pay GST/HST by Instalments
18
Canada Revenue Agency. GST/HST Filing Penalties
19
Government of Canada. Interest Rates for the First Calendar Quarter
20
Canada Revenue Agency. Penalties and Interest – GST/HST Memorandum 16.2