Definition
HST (harmonized sales tax) is a single sales tax that combines the 5 percent federal GST with a provincial sales tax in Ontario and the four Atlantic provinces. It is charged and reported like GST, through the Canada Revenue Agency. The rate is 13 percent in Ontario and 14 or 15 percent in the Atlantic provinces.
Also called: Harmonized sales tax, GST/HST, Ontario HST
HST in practice
HST applies based on where the supply is made, not where the seller is located. A business in Alberta selling services to a client in Ontario generally charges 13 percent HST, while the same service to a client in Alberta carries only 5 percent GST.
Registrants show HST as one line on the invoice, together with their GST/HST registration number, and claim input tax credits for the GST and HST they pay on business purchases.
Quebec, British Columbia, Saskatchewan, and Manitoba do not use HST. They charge GST plus their own provincial sales tax, which is registered and reported separately.
Example
A Toronto consultant invoices a client in Ottawa $4,000 for a project. The invoice adds $520 of HST at 13 percent, for a total of $4,520, and shows her GST/HST number.
Frequently Asked Questions
Which HST rate do I charge?
Use the rate for the province where the supply is made, which usually depends on where your client is for services and where goods are delivered. Check the CRA's place of supply rules for edge cases.
Do I need to register separately for HST?
No. GST and HST share one GST/HST registration with the Canada Revenue Agency, under your business number.
Related terms
- GST GST (goods and services tax) is a broad consumption tax applied to most goods and services, functioning like VAT.
- PST PST (provincial sales tax) is a sales tax charged by some Canadian provinces on top of the 5 percent federal GST, in provinces that have not harmonized with it.
- Business number (BN) A business number (BN) is the nine-digit number the Canada Revenue Agency assigns to a business to identify it for federal tax programs.
- Small supplier A small supplier is a Canadian business whose worldwide taxable sales, together with those of associated businesses, are $30,000 or less over four consecutive calendar quarters.
- Input tax credit An input tax credit is the VAT or GST a registered business paid on its own purchases, which it can deduct from the VAT or GST it collected on its sales.
- Sales tax Sales tax is a consumption tax added to the price of goods and some services at the point of sale, collected by the seller and remitted to the state or local government.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.