HST Rates and Definition
Provincial HST Rates & Who Has to Charge It
Harmonized sales tax (HST) is a consumer tax resulting from a combination of the Canadian federal goods and services tax (GST) and provincial sales tax (PST). It is collected by the Canada Revenue Agency (CRA) which then remits the appropriate amounts to participating provinces.
Explanation of HST
HST resulted from attempts by the federal government to pressure provinces to abandon their individual provincial sales tax systems in favor of a blended tax that would increase competition among Canadian businesses.
Unfortunately, due to resistance by some provinces, the HST has not been universally implemented and some provinces still charge and administer their own provincial or retail taxes in addition to GST.
To compensate low income individuals who are affected by the GST/HST, the federal—and some provincial—governments issue a GST/HST credit, a tax-free quarterly payment intended to offset all or part of the GST/HST paid. Eligibility for the GST/HST credit is determined from the previous year's tax return.
HST vs. Other Tax Used in Canada
Canadian provinces and territories use the following tax systems to charge their customers:
- Ontario. This province implemented HST on July 1, 2010.
- Nova Scotia, New Brunswick, Newfoundland and Labrador. HST has been in effect since 1997.
- Prince Edward Island. This province implemented the HST on April 1, 2013.
- British Columbia. Switched to HST on July 1, 2010 but opposition led to a referendum resulting in the province converting back to the PST/GST on April 1, 2013, and paying back the $1.6 billion HST transition subsidy originally given to the province by the federal government.
- Saskatchewan, Manitoba, and Quebec. PST is commonly used in these provinces. However, Quebec sales tax is identified by the acronym QST.
- Alberta, Yukon, Nunavut, and the Northwest Territories. These provinces have no provincial sales taxes and therefore no HST. Consumers are charged the GST on taxable goods and services.
The following table presents the type and amount of taxes that each Canadian province or territory uses:
|BC||GST 5% & PST 7%||As of April 1, 2013.|
|Saskatchewan||GST 5% & PST 5%|
|Manitoba||GST 5% & RST 7%||The provincial sales tax is known as retail sales tax (RST).|
|Quebec||GST 5% & QST 9.5% (QST)||As of January 1, 2013, the QST rate will be 9.975%, but will no longer be charged on GST. This results in no change to the total tax.|
|New Brunswick||HST 13%|
|Nova Scotia||HST 15%|
|Newfoundland & Labrador||HST 15%||As of July 1, 2016, the HST rate increased from 13% to 15%.|
|Prince Edward Island||HST 15%||As of Oct. 1, 2016, the HST rate increased to 15%.|
|Northwest Territories||GST 5%|
Goods and Services Sold Outside the Province or Country
Because of the differing tax regimes, selling goods and services to another province or territory is not easy for Canadian businesses. You must charge either HST or GST/PST according to the destination provincial/territorial rates. For example, if your business resides in Ontario but you are shipping goods to Manitoba, rather than charging the Ontario rate of 13% HST on the sale, you would charge 5% GST and 7% Manitoba RST.
HST/GST/PST does not apply to sales of goods and services to jurisdictions outside of Canada. This includes sales to Canadian businesses as long as the destination address is outside Canada. For example, if a business in British Columbia sells a product to a business located in Nova Scotia but the product is to be used and shipped outside of the country, there is no HST/GST/PST charged on the transaction.
If your business is located in a province that uses HST, it's your responsibility to charge, collect, and remit HST. As with the GST, there is a small supplier exception. If your small business makes less than $30,000 annually, you are not required to register for GST/HST. However, you may want to register voluntarily, so you can claim input tax credits on the goods and services you consume in the course of doing business.