GST vs. HST vs. PST: Which Canadian Sales Tax Applies to Your Business?

If you sell to customers in more than one Canadian province, you've probably realized the sales tax situation is more complex than it first appears. There isn't one sales tax in Canada — there are three types, applied differently depending on the province.

Here's the plain-language breakdown.

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The Three Types of Canadian Sales Tax

GST — Goods and Services Tax

The federal sales tax. Rate: 5%. Applies everywhere in Canada.

Businesses register for GST once their taxable revenues exceed $30,000 (or voluntarily before that). GST is administered by the CRA.

HST — Harmonized Sales Tax

HST combines the federal GST with a provincial component into a single tax. The provinces that use HST have agreed to administer sales tax federally through the CRA, simplifying things for businesses.

| Province | HST Rate | |----------|---------| | Ontario | 13% | | Nova Scotia | 15% | | New Brunswick | 15% | | Newfoundland & Labrador | 15% | | Prince Edward Island | 15% |

If you sell to customers in these provinces, you charge HST. You register for HST the same way you register for GST — it's one registration through the CRA.

PST — Provincial Sales Tax

Some provinces charge their own provincial sales tax separately from the federal GST:

| Province | PST Rate | Combined with GST | |----------|---------|-------------------| | British Columbia | 7% | 12% total | | Saskatchewan | 6% | 11% total | | Manitoba | 7% | 12% total | | Quebec (QST) | 9.975% | 14.975% total |

In these provinces, you may need to register separately with the provincial government to collect PST — in addition to the federal GST registration. Quebec's QST is administered by Revenu Québec, not the CRA.

Alberta and territories: No provincial sales tax. Only 5% GST.

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Which Tax Do You Charge?

The tax you charge depends on where your customer is located, not where your business is based:

• Customer in Ontario → charge 13% HST
• Customer in BC → charge 5% GST + potentially 7% PST (if your product/service is PST-taxable)
• Customer in Quebec → charge 5% GST + 9.975% QST (if registered in Quebec)
• Customer in Alberta → charge 5% GST only

For many service businesses providing digital or professional services, the PST rules in BC, Saskatchewan, and Manitoba may not apply. Physical goods, software, and certain digital services trigger different PST requirements.

If you sell across multiple provinces, a CPA familiar with multi-jurisdictional tax is worthwhile.

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When Do You Need to Register?

Mandatory threshold: Once your worldwide taxable revenues exceed $30,000 in a single calendar quarter, or in four consecutive quarters, you must register for GST/HST within 30 days.

Voluntary registration: You can register before the $30,000 threshold. This lets you:

• Claim Input Tax Credits (ITCs) on your business expenses
• Present a more established image to clients

Most businesses that incur significant startup costs benefit from early registration — the ITC recovery on equipment, software, and professional fees can be substantial.

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Input Tax Credits (ITCs) — Getting Your Money Back

When you're GST/HST registered, you can recover the GST/HST you paid on business expenses as Input Tax Credits. This is a major benefit of registration.

Example:

• You collect $1,300 HST from clients in a quarter
• You paid $260 HST on business expenses (laptop, software, professional fees)
• You remit: $1,300 − $260 = $1,040 to the CRA

If you're in a startup phase and spending more than you're earning, you may actually receive a refund from the CRA.

To claim ITCs, you need valid tax invoices showing the supplier's GST/HST registration number.

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How to Track It All

For GST/HST (CRA-administered provinces)

Record every sale split into two accounts:

• Revenue (net amount)
• HST Payable (tax collected)

Record every expense split into:

• Expense (net amount)
• HST Recoverable (tax paid — your ITC)

At remittance time: HST Payable − HST Recoverable = net remittance.

Good bookkeeping software handles this automatically when you tag transactions correctly.

For PST

Track PST separately from GST. PST paid on expenses is generally not recoverable (it's a cost to the business). PST collected must be remitted to the provincial government on the schedule they specify — typically monthly or quarterly.

For Quebec (QST)

Register separately with Revenu Québec. Track QST collected and QST paid on expenses (QST ITCs) separately from GST. Two remittances: one to CRA (GST), one to Revenu Québec (QST).

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Common Mistakes

1. Charging the wrong rate for out-of-province customers — always use the customer's province
2. Missing PST registration in BC, Manitoba, or Saskatchewan when you're selling taxable goods
3. Not claiming ITCs — the most common and most expensive mistake
4. Using HST collected as operating cash — it's never your money

For more on tracking HST correctly, see our detailed HST guide for Canadian small business owners.

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The Bottom Line

Canadian sales taxes are manageable once you understand the structure:

• HST provinces: one registration, one remittance to CRA
• PST provinces: separate provincial registration and remittance
• Quebec: separate QST registration with Revenu Québec
• Alberta and territories: GST only

Register on time, track both sides (collected and paid), and remit on schedule. Missing remittances is one of the most expensive ways to interact with the CRA.

See our full Canadian small business tax guide for a comprehensive overview of all your tax obligations.

Bookkeeper automatically separates HST from revenue in every transaction and generates CRA-ready HST reports for each remittance period. Start free.