Canada GST/HST/PST/QST

Table of Contents:

1. What is GST?
2. What is HST?
3. What is Provincial Level Sales Tax?

What is GST?

The federal sales tax, known as the Goods and Services Tax (GST), applies 5% to most supplies of goods and services made in Canada. It also applies to supplies of real property (land, buildings), intangible personal property, such as trademarks, and rights to use a patent and digitized products.

Businesses registered for GST/HST can claim an input tax credit (ITC) on GST/HST incurred during commercial activities. GST/HST is not typically a net cost for registered entities.

What is HST?

The Harmonized Sales Tax (HST) is a sales tax that combines the federal GST rate of 5% with an additional provincial sales tax. This tax applies only to participating Canadian provinces and applies to the same base of property and services as GST but at a different rate. The HST rate may vary depending on the province.

The participating provinces in Canada that are subject to the HST are the following:

• New Brunswick – 15%;
• Newfoundland and Labrador – 15%;
• Nova Scotia – 15%;
• Ontario – 13%;
• Prince Edward – 15%

What is Provincial Level Sales Tax?

Provincial sales tax is commonly known as PST or QST in Quebec. Quebec and Saskatchewan have separate provincial sales tax and federal GST. Like GST, PST and QST are applied to most sales of goods and supplies.

Registered businesses that pay QST may claim an input tax credit (ITC) on QST incurred during commercial activities, similar to GST. This means that QST is typically not an additional cost for registered businesses.

It is important to note that the PST imposed by Saskatchewan is a consumption tax that cannot be recovered. As such, it is meant to be paid by the end-user of the product or service. However, some exemptions may be available, such as the sale for resale exemption.

The tax rates in the following provinces will be affected by the changes:

• Quebec – 9.975%;
• Saskatchewan – 6%;