Canada Sales Taxes: GST, PST, RST, and HST Public Bookkeeper

The rate is 15%, including the federal 5% and a 10% provincial sales tax. Every province except Alberta has implemented either a provincial sales tax or the Harmonized Sales Tax. E-commerce businesses must determine if they have a “nexus” or significant presence in a province to establish whether they need to register for PST. Nexus can be created by having a physical location, employees, or substantial sales in the province.

• Indigenous Peoples, Governments, and Diplomats are also exempt from GST/HST.
• Canada’s tax system is designed to support federal and provincial governments in providing essential services and infrastructure.
• If you are paying the HST, such as 13% in Ontario, you add 13% on top of the retail selling price.
• In circumstances whereby you are supplying basic groceries such as milk and bread to your customers in Alberta or Ontario, then there is no such need for you to collect GST/HST/PST.
• Each province has its own set of guidelines, so it’s important to familiarize yourself with your province’s specific rules.

A zero-rated item is taxable at a rate of 0%, meaning GST/HST applies but at no cost to the consumer. PST is charged on certain services in some provinces, depending on local regulations. The HST rate is determined by combining the 5% GST with a provincial rate specific to the province using HST. Yes, businesses with annual revenues above $30,000 must register for GST with the Canada Revenue Agency (CRA). Provinces calculate PST on the original prices of the goods and/or services.

The territories of Nunavut, Yukon, and the Northwest Territories do not pay territorial sales taxes. This article covers everything you must know about sales taxes in Canada, including how to calculate GST, HST, and PST and what is exempt. With Deskera, you can easily apply the Canada  GST tax rates to your transactions and generate a proper sales invoice.

Unlike the GST or HST, the PST is administered by individual provinces, each with its own rates, rules, and exempt items. GST, HST, and PST impact shipping costs, logistics, and compliance, influencing how goods move across borders and within Canada. Businesses shipping goods to provinces like British Columbia, Quebec, and Saskatchewan that don’t levy HST, must account for PST in addition to GST. This dual tax obligation can be complex, requiring detailed record-keeping to ensure customers are charged the right taxes, and precise tax remittance to avoid penalties. Certain goods and groups are exempt from sales tax, including essential items like basic groceries, prescription drugs, and some medical devices.

Once you have registered for your QST account, you must follow the rules specified by Revenu Quebec when reporting and remitting your QST. A GST small supplier is the sole proprietor, partnership, or corporation, whose total taxable revenue expenses are $30,000 or lesser annually. According to the Canada Revenue Agency (CRA), as long as your business taxable revenue before expenses exceeds $30,000 in the last four quarters, you must register for a GST account. In circumstances whereby you are supplying basic groceries such as milk and bread to your customers in Alberta or Ontario, then there is no such need for you to collect GST/HST/PST.

Essential Tax Tips for Self-Employed Canadians: Maximize 2025 Deductions

Some provinces apply PST to digital products, while others do not. Additionally, digital services sold to Canadian consumers by non-resident suppliers are subject to GST/HST, requiring foreign companies to register and remit these taxes. The Goods and Services Tax (GST) is a federal sales tax in Canada that applies to the sale of most goods and services. Introduced in 1991, this value-added tax is levied at each stage of the production and distribution chain.

When to register for and start charging the GST/HST

With sales tax regulations constantly evolving, understanding the distinctions between GST, HST, and PST can be a challenge. But fear not — this guide will break down everything you need to know about these taxes and how they apply to your business in 2025. If you are paying GST and PST, such as in Manitoba, where it is a combined 12%, you pay both sales taxes at the point of sale, and CRA remits the PST portion to the province. This includes a 5% federal sales tax and a 10% provincial sales tax. When combined with the 5% GST, you pay a total of 12% sales tax on most goods and services.

• The GST is collected by businesses and remitted to the Canada Revenue Agency (CRA).
• An ecommerce business plan can help you organize your business, set concrete goals, and appeal to potential investors.
• Get the basics down so you can focus on delivering top-notch experiences to your customers without worrying about surprise tax bills later on.
• HST is a combined tax merging GST with PST, applied in certain provinces with varying rates.

Enter the total amount payable for a purchase after all applicable sales taxes are applied. Enter the amount charged for a purchase before all applicable sales taxes, including the Goods and Services Tax/Harmonized Sales Tax (GST/HST) and any Provincial Sales Tax (PST), are applied. Businesses should also be aware of input tax credits (ITCs), which allow them to recover the GST or HST they pay on business-related purchases. This system helps to ensure that the tax burden ultimately falls on the final consumer rather than on businesses throughout the supply chain. Ultimately, GST Canada is paid by consumers who purchase goods and services.

Can You Save Money with PayPal Shipping?

If you’re unsure about your specific tax obligations or need help navigating complex sales tax issues, consulting with a tax professional is always a good idea. They can provide tailored advice to help your business stay on track and maximize any available tax credits or deductions. The combined sales tax (HST) in Toronto is 13%, of which 5% is a federal tax and 8% is provincial.

While the GST offers a consistent federal tax rate, the PST introduces regional variability, and the HST provides streamlined taxation in certain provinces. Understanding these taxes is crucial for consumers and businesses alike. For consumers, these taxes affect the overall cost of goods and services, while businesses must ensure compliance with tax collection and remittance requirements. Failing to accurately account for these taxes can lead to significant financial and legal repercussions.

How to file PST return in British Columbia?

Introduced in 1991, the GST is designed to be a broad-based tax that applies at a rate of 5% across all provinces and territories. This uniform rate simplifies the taxation process for businesses and consumers, ensuring that the tax burden is consistent regardless of location. The GST is a value-added tax, meaning it is collected at each stage of the production and distribution chain, ultimately being borne by the end consumer.

Understanding the sales tax system in Canada can be challenging, given the different types of taxes that apply across the provinces and territories – they work quite differently to US sales tax. gst pst canada It’s important to note that in non-harmonized provinces like these, businesses often need to charge both GST and PST, which can complicate accounting and tax filings. The separate administration means that businesses dealing in multiple provinces need to be aware of compliance regulations for each jurisdiction. The Provincial Sales Tax (PST) is a tax applied separately by certain provinces, adding another layer to the tax system in Canada.

When combined with the federal 5% GST, you pay a total of 11% on most goods and services purchased in the province. The HST in Ontario is 13%, of which 5% is the federal GST, and 8% is the provincial retail sales tax. There is the federal sales tax referred to as the Goods and Services Tax (GST).

Tax Credits and Deductions for Home Purchases and Renovations in Canada

And, when it’s time to submit your tax return, all of your paperwork will be in perfect order. Small businesses operating in Canada are required to collect sales tax. One key difference between the GST/HST and other PST systems is that the GST/HST is a tax that applies across Canada, while the PST is a provincial tax that varies by province. This means that the tax rate and rules for PST can vary depending on where the good or service is provided, adding an additional layer of complexity for online sellers.