Question 1

What is the difference between GST and HST in Canada?

Accepted Answer

GST (Goods and Services Tax) is a 5% federal tax that applies across all of Canada. HST (Harmonized Sales Tax) is a single combined tax used in five provinces (Ontario at 13%, and New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island at 15%) that merges the federal GST and provincial sales tax into one rate. In HST provinces, businesses only file one tax return instead of separate federal and provincial returns.

Question 2

How is GST calculated in Canada?

Accepted Answer

The federal GST is calculated by multiplying the purchase amount by 5% (0.05). For example, on a $200 purchase, GST = $200 x 0.05 = $10. In provinces with HST, the harmonized rate applies instead — for example, in Ontario, HST = $200 x 0.13 = $26. In provinces with separate PST, both taxes are calculated independently on the original amount and then added together.

Question 3

Which provinces have HST and what are the rates?

Accepted Answer

Five provinces use the Harmonized Sales Tax (HST): Ontario at 13%, and New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island at 15%. The HST includes the 5% federal GST component plus a provincial component. These provinces chose to harmonize their sales taxes to simplify compliance for businesses operating across provincial borders.

Question 4

How does Quebec QST work with GST?

Accepted Answer

Quebec has its own provincial sales tax called QST (Quebec Sales Tax) at 9.975%, administered by Revenu Quebec rather than the CRA. Both GST (5%) and QST (9.975%) are calculated separately on the original purchase price. For a $100 purchase: GST = $5.00, QST = $9.98, total tax = $14.98. This gives Quebec an effective combined rate of 14.975%, slightly lower than the 15% HST in Atlantic provinces.

Question 5

When do I need to register for GST/HST in Canada?

Accepted Answer

You must register for GST/HST when your total taxable revenues exceed $30,000 in a single calendar quarter or over four consecutive calendar quarters (the small supplier threshold). Taxi and ride-sharing drivers must register regardless of revenue. You can also register voluntarily below the threshold, which allows you to claim input tax credits (ITCs) on business purchases. Registration is done through the CRA Business Registration Online service.

Question 6

Are groceries taxed in Canada?

Accepted Answer

Basic groceries are zero-rated for GST/HST purposes in Canada, meaning they are technically taxable but at a 0% rate. This includes most unprocessed food items like fruits, vegetables, meat, dairy, bread, and cereals. However, prepared foods, restaurant meals, snack foods, candy, soft drinks, and alcoholic beverages are taxed at the full GST/HST rate. Some provinces also exempt additional items from their provincial sales tax.

Question 7

Can I claim GST/HST input tax credits?

Accepted Answer

Yes, GST/HST-registered businesses can claim input tax credits (ITCs) to recover the GST/HST paid on purchases and expenses used in their commercial activities. To claim ITCs, you must have valid documentation (receipts or invoices showing the supplier's GST/HST registration number), the purchases must be for business use, and you must claim them within four years. Certain items like personal expenses, club memberships, and 50% of meal and entertainment expenses are restricted.

Canada GST/HST Calculator — Tax by Province