HST tax in Canada, short for Harmonized Sales Tax, is a single consumption tax that folds the federal 5% Goods and Services Tax together with a provincial sales tax into one rate charged at the register. Five provinces use it, at combined rates of 13%, 14%, or 15%. Businesses collect the full amount from customers and send it to the Canada Revenue Agency, which then routes the provincial share back to each province.1Canada Revenue Agency. Requesting a GST/HST Ruling or Interpretation Most goods and services are taxable, but groceries, prescription drugs, and a handful of other essentials are not.
How the Combined Tax Works
Before the HST, buyers in participating provinces paid two separate taxes on the same purchase: the federal GST and a Provincial Sales Tax. Harmonization put both on a single line. The CRA administers the whole system under Part IX of the federal Excise Tax Act.
The HST is a value-added tax. That means it applies at every stage of production and distribution, not just at the final sale to you. A lumber mill charges HST to a furniture maker, the furniture maker charges HST to a retailer, the retailer charges HST to you. What keeps the tax from stacking is the input tax credit: registered businesses recover the HST they paid on their own purchases when they file. Only the final consumer actually absorbs the cost.
HST Rates by Province
Each participating province sets its own provincial component on top of the 5% federal portion:
- Ontario: 13% (5% federal + 8% provincial)2Revenu Québec. HST Rates
- New Brunswick: 15% (5% federal + 10% provincial)
- Newfoundland and Labrador: 15% (5% federal + 10% provincial)
- Nova Scotia: 14% (5% federal + 9% provincial), reduced from 15% as of April 1, 20253Province of Nova Scotia. Nova Scotia’s HST to Drop in 2025
- Prince Edward Island: 15% (5% federal + 10% provincial)
The rate applies uniformly across each province, so there is no city-by-city variation like the local sales taxes in the United States.
Provinces That Do Not Use the HST
Everywhere else in Canada, you’ll see something different on your receipt. Alberta, the Northwest Territories, Nunavut, and Yukon charge only the 5% federal GST. British Columbia adds a 7% PST, Manitoba adds a 7% PST, and Saskatchewan adds a 6% PST on top of the GST. Quebec runs its own system, pairing the 5% GST with a 9.975% Quebec Sales Tax (QST). If you’re doing business across provincial lines, you may need to register separately for PST or QST in those jurisdictions.
What HST Is Charged On
The HST covers most goods and services bought in a participating province: clothing, electronics, furniture, restaurant meals, hotel stays, home renovations, haircuts, legal and accounting fees, and motor vehicle purchases. Newly built homes trigger HST at closing. Digital subscriptions and online services are taxable too, whether the seller is Canadian or foreign.4Canada Revenue Agency. Cross-Border Digital Products and Services
The CRA sorts every supply into three buckets: taxable at the full rate, zero-rated (taxed at 0%), or exempt (outside the system).
Zero-Rated Supplies
Zero-rated items are technically taxed, just at a rate of 0%. You pay nothing at the register. Basic groceries such as milk, bread, vegetables, and meat fall here, along with prescription drugs and certain medical devices like hearing aids.5Canada Revenue Agency. Type of Supply Most exports also count as zero-rated. Because these supplies remain inside the tax system, the businesses that sell them can still recover HST on their own inputs.
Exempt Supplies
Exempt supplies sit fully outside the HST. You won’t see the tax on long-term residential rent, most healthcare and dental services, childcare, tuition at recognized institutions, or most financial services.5Canada Revenue Agency. Type of Supply Providers of exempt supplies cannot claim back the HST they pay on their own business expenses, so that cost often shows up quietly in the price.
Ontario Point-of-Sale Rebates
Ontario removes the 8% provincial portion of the HST automatically on certain items. You still pay the 5% federal GST, but the provincial share comes off at the register. Qualifying items include children’s clothing and footwear, children’s car seats, diapers, printed books, newspapers, and prepared food and beverages sold for $4 or less.6Government of Ontario. HST Ontario Point-of-Sale Rebates Other HST provinces run their own rebate programs, so check with your province if you live outside Ontario.
New Housing Rebate
Buying or building a new home in an HST province can qualify you for the GST/HST new housing rebate, which returns part of the tax you paid. The rebate has a federal component and, in some provinces, a provincial component with its own rules.7Canada Revenue Agency. GST/HST New Housing Rebate The home must be your primary residence. The federal portion is subject to property value limits. Ontario’s provincial rebate can reach $24,000 regardless of the home’s fair market value, and the Atlantic provinces set their own thresholds and caps. The specifics differ enough that the CRA’s rebate page is the right place to run your numbers.
The GST/HST Credit for Individuals
The GST/HST credit is a tax-free quarterly payment the CRA sends to lower- and modest-income individuals and families to offset the consumption tax they pay through the year. You don’t apply. The CRA works out your eligibility and amount from your annual income tax return, which is why filing matters even in a year you earned little or nothing.8Canada Revenue Agency. Who Is Eligible – GST/HST Credit
Payments arrive in July, October, January, and April, with amounts recalculated each July from the prior year’s return. The credit is not taxable and does not go on your return.9Canada Revenue Agency. GST/HST Credit – How Much You Can Get Families with children receive more, and the amount phases out as household income rises. Several participating provinces add their own credits on top.
If You Run a Business: Registration, ITCs, and Filing
You must register for a GST/HST account with the CRA once your taxable sales cross $30,000 over the previous four consecutive calendar quarters. There is also a same-quarter rule: if you exceed $30,000 within a single calendar quarter, you lose small-supplier status immediately before the sale that pushes you over.10Canada Revenue Agency. When to Register for and Start Charging the GST/HST11Canada.ca. Small Suppliers Public service bodies have a higher $50,000 threshold. Below the limit, registration is optional. Voluntary registration can still make sense if you sell mostly to other businesses or deal in zero-rated supplies, because it lets you claim input tax credits on your own costs. Once registered, the HST you collect is not yours; you hold it in trust and remit it to the CRA.
Input Tax Credits
Input tax credits are the mechanism that keeps HST from cascading down the supply chain. You claim back the HST you paid on business expenses when you file, and remit only the difference between HST collected and HST paid. If your credits exceed what you collected, the CRA sends a refund.12Canada Revenue Agency. Input Tax Credits
Common eligible expenses include rent, utilities, office supplies, professional fees, vehicle costs, fuel, travel, and startup costs. Meals and entertainment qualify, but only the allowable portion. Claims require documentation, typically an invoice showing the supplier’s GST/HST registration number and the tax charged, and the expense has to be reasonable relative to your business. A few things are always excluded: personal expenses, recreational club memberships, and purchases used to make exempt supplies. Businesses using the quick method of accounting give up ITCs on operating expenses in exchange for a simpler calculation.
Filing Schedules
The CRA assigns your filing frequency based on annual taxable sales:13Canada Revenue Agency. Make Changes to Your GST/HST Account
- $1.5 million or less: annual (default)
- $1.5 million to $6 million: quarterly
- Over $6 million: monthly
Monthly and quarterly filers have one month after the reporting period ends to file and pay. Annual filers with a December 31 fiscal year-end must pay by April 30 and file by June 15. Annual filers with any other year-end have three months for both.14Canada Revenue Agency. Reporting Requirements and Deadlines – File Your GST/HST Return Weekend or holiday deadlines roll to the next business day.
Late Filing and Late Payment
Missing a filing deadline triggers a penalty of 1% of the balance owing plus one-quarter of that 1% for every full month the return is late, up to 12 months. The maximum works out to 4% of the amount owed.15Canada Revenue Agency. GST/HST Filing Penalties No balance owing, no penalty. On top of that, the CRA charges compound daily interest on any overdue balance at rates set quarterly. Even if you can’t pay in full, file on time so the filing penalty doesn’t pile on top of the interest.
Non-Resident and Digital-Economy Sellers
Selling digital products or services from outside Canada to Canadian consumers generally means registering for GST/HST. Since July 2021, non-resident vendors of digital services have been required to register under a simplified GST/HST regime and charge tax on sales to Canadian customers who are not themselves GST/HST registrants.16Canada Revenue Agency. GST/HST for Digital-Economy Businesses – Overview
The simplified regime is built for businesses that sell only to consumers and don’t need to recover Canadian tax on their own expenses. If you sell through a distribution platform such as an app store, the platform operator usually takes on the collection and remittance obligation. If you’re registered under the normal regime rather than the simplified one, you keep the collection responsibility yourself, even for platform sales.4Canada Revenue Agency. Cross-Border Digital Products and Services The same $30,000 small-supplier threshold applies. Non-residents selling physical goods have separate rules that depend on where the goods are delivered and how they clear customs, so the digital regime does not cover every cross-border scenario.