GST and HST are consumption taxes that Canadians pay on most goods and services. They show up on almost every receipt you get. Understanding how they work helps you know what you're paying, whether you qualify for a rebate, and — if you run a small business — when you need to collect them.
GST stands for Goods and Services Tax. It is a federal tax of 5% applied to most goods and services sold in Canada. It was introduced in 1991, replacing the old Manufacturers' Sales Tax. The federal government collects GST and uses it to fund government programs.
HST stands for Harmonized Sales Tax. Several provinces have combined (harmonized) the federal 5% GST with their provincial sales tax into a single tax called HST. From a consumer perspective, it is simpler — one combined tax on your receipt instead of two separate ones.
Alberta is notable for having no provincial sales tax — a common reason it is cited as a lower-cost province for purchasing goods. Residents of Alberta pay 5% on most purchases where residents of Ontario pay 13%.
Most goods and services are taxable — but there are important exceptions:
These are taxable at 0% — no GST/HST is charged but businesses can still claim input tax credits:
These are genuinely exempt — no GST/HST applies and no input tax credits can be claimed:
The federal government provides a GST/HST credit to lower-income Canadians to offset the regressive nature of consumption taxes (since lower-income households spend a higher proportion of their income, they are hit harder by sales taxes).
The GST/HST credit is a quarterly payment. For 2024–2025 (based on your 2023 tax return), the maximum annual amounts are approximately:
Payments are made in January, April, July, and October. You do not need to apply — filing your income tax return automatically triggers the CRA to assess your eligibility. This is one more reason every Canadian — even those with no income — should file their taxes every year.
The credit phases out as your income rises. A single person with net income above approximately $54,000 receives no GST/HST credit.
If you run a small business or are self-employed and your revenue exceeds $30,000 in a calendar quarter or over four consecutive quarters, you are required to register for GST/HST, collect it from your customers, and remit it to the CRA.
Businesses below the $30,000 threshold are "small suppliers" and are not required to register, though they can do so voluntarily. Once registered, you can claim Input Tax Credits (ITCs) — meaning you can recover the GST/HST you paid on business expenses, which reduces your net remittance.
When a business collects GST/HST from customers, it does not keep the money. It holds it in trust and remits it to the CRA on a regular schedule (monthly, quarterly, or annually depending on the business's revenue). The business then subtracts any GST/HST it paid on its own business purchases (ITCs) from what it owes. Only the net difference goes to the government.
Example: A freelancer charges a client $1,000 + 13% HST in Ontario = $1,130 total. The freelancer remits $130 to CRA, minus any HST paid on business expenses (like a laptop, software, or office supplies).
New homes are subject to GST/HST. For new homes priced under $450,000 federally, there is a GST/HST New Housing Rebate that partially offsets the tax. Provincial components have their own rebate structures. If you are buying a newly built home in Canada, ask your builder or lawyer about applicable rebates — they can be significant.
In late 2024, the federal government introduced a temporary two-month GST/HST exemption (December 14, 2024 to February 15, 2025) on a range of goods including prepared foods, restaurant meals, children's clothing, books, and certain toys and games. This was a one-time measure — the exemption ended on February 15, 2025.
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