HST vs GST: What's the Difference?

Canadian sales tax confuses almost everyone at first, because it isn’t one system — it’s three, and which one applies depends on the province you’re selling into.

The three systems

GST (Goods and Services Tax) is the federal 5% tax. It applies across Canada.

HST (Harmonized Sales Tax) is what happens when a province merges its provincial sales tax with the GST into one combined rate, collected together and filed on one return. Ontario, New Brunswick, Newfoundland and Labrador, Prince Edward Island, and Nova Scotia are HST provinces.

PST/RST/QST are separate provincial sales taxes that live alongside the 5% GST in British Columbia, Saskatchewan, Manitoba, and Quebec. These are administered separately from GST and have their own registration rules and returns.

Alberta, Yukon, Northwest Territories, and Nunavut have no provincial sales tax — GST only.

The practical rule: charge based on where your customer is

For most goods and services, you charge the rate of the province of your customer, not your own. An Ontario business invoicing an Ontario customer charges 13% HST. The same business shipping to Alberta charges 5% GST. Selling into a PST province can also create separate provincial obligations depending on what you sell and how much — worth a specific conversation if that’s you.

Do you even need to register?

If your worldwide taxable sales are $30,000 or less across four consecutive calendar quarters, you’re a “small supplier” and registration is optional. Cross that threshold and registration becomes mandatory — and this is where a lot of growing businesses get caught, because the clock starts when you cross it, not when you notice.

Registering voluntarily before you must can still make sense, because of the next part.

Input tax credits: the half people forget

Once registered, the GST/HST you pay on business purchases comes back to you as input tax credits (ITCs) — you remit the difference between the tax you collected and the tax you paid. Miss ITCs and you’re donating money to the CRA.

Two details we fix constantly in cleanups:

• Meals and entertainment: only 50% of the GST/HST is claimable, matching the 50% income-tax deductibility.
• Missing receipts: an ITC needs documentation. Bank statements alone don’t meet CRA’s requirements for larger purchases — keep the receipts (digitally is fine; that’s how we work).

Filing frequency and deadlines

CRA assigns annual, quarterly, or monthly filing based on your revenue. Each return reports tax collected, ITCs claimed, and the net owing or refund. Miss a filing and interest compounds — and multiple outstanding periods is one of the fastest ways to turn a manageable balance into a real problem.

Our tax calendar has the key CRA deadlines, and HST/GST tracking and filing prep is built into our bookkeeping packages. If you’re behind on filings or not sure whether you should have registered by now, get in touch — untangling exactly this is a normal Tuesday for us.