The Utimate Guide to HST, GST, and PST in Canada (2026)
Table of Contents
Introduction to Canadian Sales Tax
Unlike many countries with a simple VAT (Value Added Tax), Canada operates under a dual-level tax system. This means you may be paying federal taxes, provincial taxes, or a harmonized combination of both depending on where you make a purchase.
Navigating this landscape can be confusing for consumers and business owners alike. Whether you are calculating the cost of a new car, pricing your freelance services, or filing your quarterly return, understanding the nuances of HST (Harmonized Sales Tax), GST (Goods and Services Tax), and PST (Provincial Sales Tax) is essential.
HST vs. GST + PST: What's the Difference?
The distinction lies in administration and collection.
1. The Federal GST (5%)
The Goods and Services Tax (GST) is a 5% tax levied by the federal government. It applies to arguably almost every transaction in Canada unless specifically exempted.
2. The Combined HST (13% - 15%)
In "Participating Provinces" (Ontario, New Brunswick, Nova Scotia, PEI, and Newfoundland and Labrador), the provincial government has agreed to combine their local sales tax with the federal GST. This results in a single tax called the Harmonized Sales Tax (HST). It is collected by the Canada Revenue Agency (CRA) and then distributed back to the provinces.
Benefit: This simplifies life for businesses, as they only track one tax amount and file one return.
3. The Separate PST (6% - 9.975%)
In "Non-Participating Provinces" (British Columbia, Saskatchewan, Manitoba, and Quebec), the provincial tax is kept separate. This creates a scenario where a receipt will show two distinct tax lines: one for GST and one for PST (or QST/RST).
Complexity: Businesses in these regions often have to file two separate tax returns: one to the CRA for GST, and one to their provincial body for PST.
Current Provincial Tax Rates (2026)
Here is the definitive list of sales tax rates across Canada for the current tax year.
| Province / Territory | Type | Total Rate | Breakdown |
|---|---|---|---|
| Alberta | GST Only | 5% | 5% GST + 0% PST |
| British Columbia | GST + PST | 12% | 5% GST + 7% PST |
| Manitoba | GST + RST | 12% | 5% GST + 7% RST |
| New Brunswick | HST | 15% | 15% HST |
| Newfoundland | HST | 15% | 15% HST |
| Northwest Territories | GST Only | 5% | 5% GST |
| Nova Scotia | HST | 15% | 15% HST |
| Nunavut | GST Only | 5% | 5% GST |
| Ontario | HST | 13% | 13% HST |
| PEI | HST | 15% | 15% HST |
| Quebec | GST + QST | ~14.975% | 5% GST + 9.975% QST |
| Saskatchewan | GST + PST | 11% | 5% GST + 6% PST |
| Yukon | GST Only | 5% | 5% GST |
Exemptions and Zero-Rated Goods
Not everything attracts tax. The CRA distinguishes between taxable, zero-rated, and exempt supplies.
Zero-Rated Supplies (0% Tax)
These are goods where the consumer pays $0 tax, but the business can still claim credits for the tax they paid to produce them.
- Basic groceries (meat, dairy, produce)
- Prescription drugs and dispensing fees
- Medical devices (hearing aids, artificial teeth)
- Exports (goods sold to customers outside Canada)
- Feminine hygiene products
Exempt Supplies (No Tax Charged)
These are goods where no tax is charged, but the business cannot claim credits for their own expenses.
- Used residential housing (resale homes)
- Long-term residential rent (1 month+)
- Most health, medical, and dental services performed by licensed physicians
- Educational services (courses that lead to a degree/diploma)
- Financial services (bank fees, insurance premiums)
- Daycare services
Guide for Small Businesses: Registration
One of the most common questions for new entrepreneurs is: "Do I need to charge tax?"
The answer depends on your revenue. You are considered a Small Supplier if your total taxable revenues are $30,000 or less in a single calendar quarter or over the last four consecutive calendar quarters.
- Under $30k: You do NOT have to register. You do not charge GST/HST, but you also cannot claim ITCs.
- Over $30k: You MUST register immediately. You must start charging tax on your invoices and remit it to the government.
Pro Tip: Many businesses register voluntarily even before hitting $30k to look more professional and to recover the HST paid on startup costs like computers, office rent, and inventory.
Input Tax Credits (ITCs) Explained
If you are GST/HST registered, you are effectively a tax collector for the government. However, the system is designed so that the tax burden falls on the final consumer, not the business.
This is where Input Tax Credits come in. An ITC is simply a refund of the GST/HST you paid on business expenses.
Example:
- You sell a service for $1,000 + $130 HST. You collected $130.
- You bought a new laptop for $1,000 + $130 HST to run your business. You paid $130.
- When you file your return: $130 (Collected) - $130 (Paid) = $0 Remittance.
This mechanism ensures that tax is only paid on the value added at each stage of production.