Sales taxes in Canada

Federal Framework: The Goods and Services Tax

The Goods and Services Tax is a federal value-added tax levied at a rate of 5 percent on the supply of most property and services in Canada. Implemented as a multi-stage tax, the GST is applied at each level of production and distribution, but businesses registered for the tax can recover the GST paid on their business inputs through input tax credits. This structure ensures the final tax burden falls on the end consumer. The GST is administered uniformly across the country by the Canada Revenue Agency, which also handles the Harmonized Sales Tax in participating provinces. Not all supplies are subject to the full 5 percent rate. Some are designated as zero-rated, meaning they are taxed at 0 percent, while others are fully exempt from the GST.

Zero-rated supplies include basic groceries, prescription drugs, qualifying medical devices, feminine hygiene products, and most exports of goods and services. Businesses making zero-rated sales do not charge GST to their customers but can still claim input tax credits on their related expenses. Exempt supplies fall completely outside the GST system. Common examples include the sale of used residential real estate, most health care and educational services provided by professionals, and most services supplied by registered charities. A business dealing exclusively in exempt supplies is generally not permitted to register for the GST and cannot recover any tax paid on its inputs.

The requirement for a business to register for and collect the GST is primarily triggered by the small supplier threshold. A business must register if its total worldwide taxable supplies, including zero-rated supplies, exceed $30,000 over four consecutive calendar quarters. Businesses below this threshold are considered small suppliers and are not required to register, though they may choose to do so voluntarily. Once registered, a business must charge GST on its taxable supplies, file regular returns, and remit the net tax collected.

Provincial Sales Tax Systems

Provincial sales taxes add a second layer of consumption taxation in most of Canada. The approach varies, with provinces choosing among three main models: a fully harmonized tax administered federally, a separate retail sales tax administered provincially, or no provincial sales tax at all. As of 2026, five provinces use the Harmonized Sales Tax, four levy a separate Provincial Sales Tax, and one province along with the three territories have no provincial sales tax. The HST model sees the provincial portion of the sales tax integrated with the federal GST into a single, blended rate collected by the Canada Revenue Agency under one set of rules. The CRA then remits the provincial component to the respective provincial government.

Provinces with separate PST systems maintain their own distinct legislation, tax bases, and administrative bodies. These taxes are typically retail sales taxes, not value-added taxes, meaning the tax is generally applied only at the final point of sale to the consumer. A key consequence is that businesses cannot recover PST paid on their inputs, making it a cost of doing business, unlike the recoverable GST/HST. The separate PST provinces and their rates are British Columbia (7%), Saskatchewan (6%), Manitoba (7%), and Quebec, which has a unique Quebec Sales Tax (QST) of 9.975%. The QST is an exception among provincial taxes as it is structured as a value-added tax, similar to the GST.

Each PST province has its own rules regarding what is taxable and what exemptions apply. Common exemptions across provinces often include goods purchased for resale, certain items used in manufacturing or farming, and sometimes specific types of equipment. For instance, in British Columbia, a registered purchaser can provide a valid PST vendor number to a supplier to buy goods tax-free for resale. Alberta and the three northern territories, Yukon, Northwest Territories, and Nunavut, do not impose any provincial or territorial retail sales tax, so only the federal 5 percent GST applies to transactions within their jurisdictions.

Harmonized Sales Tax and Provincial Rates

The Harmonized Sales Tax represents a collaborative tax collection agreement between the federal government and participating provinces. Under the HST, the provincial sales tax is fully integrated with the federal GST, creating a single, value-added tax with a unified set of rules for the tax base, registration, filing, and input tax credits. This system reduces administrative complexity for businesses operating in multiple provinces, as they deal with one tax authority, the CRA, and file one combined return. The HST rate is the sum of the federal 5 percent GST and the provincial component, which varies by province.

The HST rates and participating provinces have evolved over time. Prince Edward Island switched to the HST on April 1, 2013. British Columbia briefly adopted it in 2010 before reverting to a separate GST/PST system after a provincial referendum. As of 2026, the HST is in effect in five provinces with the following combined rates: Ontario at 13 percent, New Brunswick, Newfoundland and Labrador, and Nova Scotia at 15 percent, and Prince Edward Island at 15 percent. The provincial portions of these rates are therefore 8 percent in Ontario and 10 percent in the Atlantic provinces. The HST applies to substantially the same base of goods and services as the federal GST.

The administration of the HST is integrated for registrants. Businesses do not register separately for GST and HST. A single GST/HST registration with the CRA covers both taxes. When filing a return, a business reports all its taxable supplies made in HST and non-HST provinces, calculates the net tax owing or refund based on the applicable rates, and submits one payment to the CRA. The federal government then distributes the provincial portions to the respective governments.

Tax Rates by Province and Territory

The total sales tax burden on a consumer in Canada is determined by their province or territory of residence. The federal GST rate of 5 percent is a constant nationwide, but the addition of a provincial sales tax, either as part of the HST or as a separate PST, creates significant regional variation in combined rates. This patchwork of rates requires businesses to carefully determine the correct tax to charge based on the customer's location, known as the place of supply rules. The following table outlines the sales tax structure and combined rates applicable in each jurisdiction.

Prince Edward Island, Nova Scotia, New Brunswick, and Newfoundland and Labrador have the highest combined sales tax rate at 15 percent. Ontario's rate of 13 percent is the lowest among HST provinces. The separate PST provinces have combined rates ranging from 11 percent in Saskatchewan to 12 percent in British Columbia and Manitoba. Quebec applies the GST and a separate QST. The territories and Alberta offer the lowest sales tax environment with only the 5 percent GST.

Obligations for Businesses and Non-Residents

Canadian businesses have clear obligations to register, collect, and remit sales taxes based on their activities and revenue. The primary trigger for GST/HST registration is exceeding the $30,000 small supplier threshold in annual taxable sales. Once registered, a business must charge the appropriate tax rate based on the customer's province, keep detailed records, file periodic returns, and remit any net tax owed to the CRA. In provinces with a separate PST, businesses may also need to register with the provincial tax authority, such as the British Columbia Ministry of Finance or Revenu Québec, and comply with a separate set of filing and remittance rules.

Non-resident businesses selling into Canada also have significant sales tax obligations. A non-resident vendor that is considered to be carrying on business in Canada must register for GST/HST under the regular regime if its annual sales to Canadian consumers exceed the $30,000 threshold. A simplified GST/HST registration and remittance regime exists for non-resident vendors who sell digital products or services to Canadian consumers, even if they do not carry on business in Canada and do not meet the $30,000 threshold. This regime was implemented to level the playing field between domestic and foreign digital service providers. Specific provinces also enforce registration requirements on out-of-province sellers. For example, British Columbia requires non-resident vendors to register for its PST if their annual revenue from sales into the province exceeds $10,000, particularly when they have inventory stored in fulfillment warehouses in BC for sale to local customers. Compliance therefore requires non-resident businesses to monitor their sales into each Canadian jurisdiction and understand the distinct rules for federal GST/HST and each separate provincial PST system.

Rebates, Exemptions, and Recent Changes

Several rebate programs exist to reduce the sales tax burden in specific circumstances, most notably for new housing. A federal GST New Housing Rebate allows individuals to recover a portion of the GST paid on a new or significantly renovated home used as a primary residence. The rebate offers 36 percent of the GST paid, up to a maximum of $6,300, for homes valued up to $450,000. Provincial rebate programs on new housing are also offered in Ontario, British Columbia, Nova Scotia, Saskatchewan, and Quebec for the QST, though the terms and conditions vary by province.

Exemptions from sales tax are widespread but differ between the GST/HST and provincial PST systems. Under GST/HST, major exemptions include most health care, educational, and financial services, as well as sales of used residential housing. In PST provinces, exemptions often target business inputs to prevent tax cascading. Common PST exemptions include goods purchased for resale, machinery and equipment used directly in manufacturing or farming, and sometimes specific items like basic children's clothing. It is the responsibility of the seller to correctly apply these exemptions.

The sales tax landscape is not static, with provinces regularly updating their tax bases and rules. A significant recent change announced in British Columbia's 2026 budget is the expansion of the Provincial Sales Tax to certain professional services, effective October 1, 2026. This expansion initially included accounting, architectural, engineering, geoscience, non-residential real estate, and security services, though the implementation for some of these services was later paused. Such changes illustrate the ongoing evolution of provincial tax policy.

Questions about Sales taxes in Canada

What is the difference between GST, PST, and HST?

The Goods and Services Tax (GST) is a federal 5 percent value-added tax applied across Canada. A Provincial Sales Tax (PST) is a separate retail sales tax levied by certain provinces on top of the GST. The Harmonized Sales Tax (HST) is a single, blended tax that combines the federal GST with a provincial sales tax component. It is administered by the federal government in participating provinces. The key difference is administrative: GST and HST are under one federal system with input tax credits, while PST is a separate provincial tax that is generally not recoverable by businesses.

Which provinces have the Harmonized Sales Tax (HST)?

As of 2026, five provinces use the Harmonized Sales Tax. These are Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. In these provinces, the Canada Revenue Agency collects a single tax that includes both the federal 5 percent GST and the provincial portion. The HST rates are 13 percent in Ontario and 15 percent in the four Atlantic provinces.

Do I have to charge sales tax on online sales to customers in different provinces?

Yes, businesses must charge the appropriate sales tax based on the customer's province of residence, known as the place of supply. For GST/HST, you charge the rate that applies in the customer's province. If you are also registered for a provincial PST, you must charge that tax on sales to customers in that province if the goods are for use there. The rules can be complex for digital products and services.

Are there any provinces with no sales tax?

No province is completely sales tax-free, as the federal 5 percent GST applies everywhere in Canada. However, Alberta and the three territories, specifically Yukon, Northwest Territories, and Nunavut, do not levy any provincial or territorial sales tax. Therefore, consumers in these jurisdictions pay only the 5 percent GST on taxable purchases. The three northern territories are partially subsidized by the federal government and their residents receive additional tax concessions.

When does a business need to register for GST/HST?

A business must register for GST/HST if it is not a small supplier, which is defined as having worldwide taxable supplies exceeding $30,000 in any single calendar quarter or over four consecutive calendar quarters. This includes revenue from zero-rated supplies. Once this threshold is exceeded, registration is mandatory. Businesses that provide only exempt supplies generally cannot register.

What is the GST/HST new housing rebate?

The GST/HST new housing rebate is a federal program that allows for a partial refund of the GST or the federal portion of the HST paid on a new or significantly renovated home used as a primary residence. For new homes valued up to $450,000, the rebate is 36 percent of the GST charged, with a maximum rebate of $6,300. This federal rebate applies to the 5 percent GST component. Several provinces offer their own parallel rebate programs for the provincial sales tax paid on new housing. These provincial rebates are available in Ontario, British Columbia, Nova Scotia, Saskatchewan, and Quebec for its Quebec Sales Tax.

Sources and further reading

• Sales taxes in Canada (Wikipedia)
• Canada, Corporate, Other taxes, Worldwide Tax Summaries (taxsummaries.pwc.com)
• Canada GST/HST Rates & Compliance for 2026 - Numeral (numeral.com)
• Updates to sales taxes, Province of British Columbia (www2.gov.bc.ca)

Checked by the Nosy Mag desk. Last updated 2026-11-01.