Canadian sales tax: GST, HST, PST and QST explained

What Canadian sales tax is

Canadian sales tax is a layered system: a 5% federal goods and services tax (GST) applies across the country, five provinces blend it with a provincial portion into one harmonized sales tax (HST), and four provinces charge their own tax beside the GST. It matters because the rate on each invoice depends on where the supply is made, not where the seller is based.

In mechanics GST and HST are value-added taxes. A registrant charges tax on its taxable sales, recovers the tax it pays on business inputs as input tax credits (ITCs), and remits the difference. Quebec's QST works the same way, with input tax refunds (ITRs). The retail sales taxes of British Columbia, Saskatchewan and Manitoba are different: they are single-stage taxes on the final user, and a business generally cannot recover them.

Four agencies can be involved. The Canada Revenue Agency (CRA) administers GST and HST. Revenu Québec administers the QST and, for businesses located in Quebec, the GST and HST as well. British Columbia, Saskatchewan and Manitoba administer their own provincial taxes with their own registrations and returns. This guide covers how the pieces fit on one invoice and one set of books.

• Federal: GST 5%, or HST where a province has harmonized
• Quebec: GST 5% plus QST 9.975%, both administered by Revenu Québec
• British Columbia, Saskatchewan, Manitoba: GST plus a separate provincial retail tax
• Alberta and the three territories: GST only

Rates by province and territory, as of September 2026

The CRA's GST/HST calculator lists the rates below as of September 2026. The most recent rate change was in Nova Scotia, where the HST fell from 15% to 14% on 1 April 2025. Rate changes come with transitional rules for supplies that straddle the date, which is why each invoice line should keep the rate it was issued with rather than looking up a current rate.

Treat the percentages as a starting point, not the whole answer. Each provincial tax has its own list of exempt and specially rated items, and the provincial retail taxes do not always follow the GST base. British Columbia, for example, taxes software broadly and charges 10% on liquor.

• Ontario: HST 13%
• Nova Scotia: HST 14% since 1 April 2025
• New Brunswick, Newfoundland and Labrador, Prince Edward Island: HST 15%
• Quebec: GST 5% plus QST 9.975%
• British Columbia: GST 5% plus PST 7%
• Saskatchewan: GST 5% plus PST 6%
• Manitoba: GST 5% plus RST 7%
• Alberta, Yukon, Northwest Territories, Nunavut: GST 5% only

Three models on one invoice: HST, GST plus PST, GST plus QST

Under HST there is one tax and one rate. The CRA's rule is to show the total HST rate on the invoice and not to show the federal and provincial parts separately. The whole 13%, 14% or 15% is recoverable by a registrant as an ITC, so HST is a final cost mainly for consumers and for those who cannot claim ITCs, such as unregistered small suppliers and businesses making exempt supplies.

Where a provincial retail tax applies, the two taxes are calculated side by side on the price before tax. The CRA instructs registrants to calculate GST on the price excluding the PST, and British Columbia charges PST on the price before GST. A 2,000 dollar taxable sale in Vancouver therefore carries 100 dollars of GST and 140 dollars of PST, 2,240 dollars in total. Stacking one tax on the other overstates the invoice.

Quebec also calculates both taxes on the selling price: 5% GST and 9.975% QST, so 1,000 dollars of taxable services carries 50.00 dollars of GST and 99.75 dollars of QST, 1,149.75 dollars in total. Revenu Québec also describes a one-step calculation at the combined 14.975% rate, which gives the same total; the GST and QST amounts are still reported in separate parts of the return, so the ledger should keep them apart.

Place of supply: which province's rate applies

The place of supply rules decide which province a supply is made in, and therefore which rate applies. For goods the rule is delivery: goods are supplied in the province where they are delivered or made available to the customer, and goods the supplier ships are treated as delivered at their destination. A Winnipeg seller shipping to Halifax charges Nova Scotia's 14% HST; the same seller handing the goods over in its Winnipeg store charges GST and Manitoba RST.

For services the CRA's general rule looks at the customer. The place of supply is the province of the recipient's address if the supplier obtains that address in the ordinary course of business; where there are several addresses, the one most closely connected with the supply is used. Only when no address is obtained do the rules fall back to where the service is performed. Services relating to real property follow the property, and intangible personal property has its own rules based largely on where the rights can be used.

A worked case shows the effect. A Calgary IT consultancy bills 20,000 dollars to a client whose business address is in Toronto and 20,000 dollars to a client in Edmonton. The Toronto invoice carries 13% HST, 2,600 dollars; the Edmonton invoice carries 5% GST, 1,000 dollars. The consultancy is in Alberta, where no provincial tax exists, yet it collects Ontario HST because the customer's address decides.

Registration: small suppliers, voluntary registration and provincial accounts

A business is a small supplier, and need not register for GST/HST, while its worldwide taxable supplies, together with those of associated persons, are 30,000 dollars or less in a single calendar quarter and over the last four consecutive quarters (50,000 dollars for public service bodies). If the 30,000 dollars is exceeded within a single quarter, small supplier status ends at once and tax applies to the supply that crossed the line. The QST uses the same 30,000 dollar small-supplier threshold, and a business located in Quebec registers for both taxes with Revenu Québec.

Many small businesses register voluntarily, because only registrants can claim ITCs and business customers often prefer suppliers that show a registration number. The trade-off is that a registrant must charge tax, file returns and keep records to the CRA's standard.

Provincial retail taxes need separate registrations. A British Columbia business that sells taxable goods, software or services in the ordinary course of business must register to collect PST, with a small-seller exception for a business that has no established retail premises and 10,000 dollars or less of eligible retail sales in the previous 12 months and expected in the next 12. Sellers located outside British Columbia can also have to register when they sell to customers in the province. Saskatchewan and Manitoba run their own registrations and returns.

Recovering tax: ITCs, ITRs and non-recoverable PST

Registrants claim ITCs for GST and HST paid on inputs used in commercial activities. Most can claim an ITC up to the due date of the return for the last reporting period that ends within four years after the period in which the credit could first have been claimed; listed financial institutions have a two-year limit, as do persons whose threshold amounts exceed 6 million dollars in both the current and the preceding fiscal year, unless at least 90% of their supplies in either of the two preceding years were taxable, or they are charities. Quebec registrants recover QST as ITRs through Revenu Québec.

An ITC depends on the supplier's invoice. For purchases of 100 dollars or more the invoice must show the supplier's GST/HST registration number and the tax charged or rate; from 500 dollars it must also show the buyer's name, a description of the supply and the payment terms. Invoices missing these details are a common reason for ITCs being denied on audit.

British Columbia states plainly that there are no PST input tax credits. PST paid on goods, software or services for the business's own use is part of their cost, and where a supplier does not charge PST, for example an out-of-province vendor, the buyer must self-assess it. The entry for 10,000 dollars of office equipment bought from a Burnaby supplier shows the difference:

• Dr Office equipment (cost including PST) 10,700
• Dr GST recoverable (ITC) 500
• Cr Accounts payable 11,200
• The 700 dollars of PST is depreciated with the equipment; the 500 dollars of GST comes back on the next return

Worked example: one month of multi-province invoices

A Montreal distributor registered for GST/HST and QST ships 10,000 dollars of taxable goods to each of four business customers in one month. The place of supply is the delivery address, so each invoice carries a different tax. The distributor is located in Quebec, so it reports all of the GST and HST, including Ontario and Nova Scotia HST, on its combined return with Revenu Québec.

The sales journal for the month posts Dr Trade receivables 44,697.50 / Cr Sales 40,000.00 / Cr GST/HST payable 3,700.00 / Cr QST payable 997.50. Debits equal credits. GST and HST can share one payable account because the return reports them together; QST needs its own account because it has its own part of the return.

In the same month the distributor paid 1,200 dollars of GST/HST and 900 dollars of QST on its purchases. On the GST/HST part of the return it reports 40,000 dollars of sales, 3,700 dollars of tax collected, 1,200 dollars of ITCs and net tax of 2,500 dollars. On the QST part it reports 997.50 dollars collected, 900.00 dollars of ITRs and net tax of 97.50 dollars. The ledger's two payable accounts, less the two recoverable accounts, must equal those figures.

• Montreal: GST 500.00 + QST 997.50, total 11,497.50
• Toronto: HST 13% 1,300.00, total 11,300.00
• Halifax: HST 14% 1,400.00, total 11,400.00
• Calgary: GST 5% 500.00, total 10,500.00
• Month: sales 40,000.00, GST/HST 3,700.00, QST 997.50, invoiced 44,697.50

Filing: GST34, FPZ-500 and provincial returns

The CRA assigns a reporting period from annual taxable supplies: annual up to 1.5 million dollars, quarterly above 1.5 million and up to 6 million, and monthly above 6 million. Monthly and quarterly filers file and pay one month after the period ends. Annual filers file and make the final payment three months after the fiscal year end; sole proprietors with a 31 December year end and business income pay by 30 April and file by 15 June. Annual filers whose net tax is 3,000 dollars or more pay quarterly instalments.

A business located outside Quebec files the GST/HST return, known on paper as the GST34, with the CRA. Since 2024 all registrants except charities and selected listed financial institutions must file electronically, unless the CRA grants an exemption. The key lines are line 101 for sales and other revenue, line 103 for GST/HST collected or collectible, line 106 for ITCs, and line 109 for net tax, which is line 105 less line 108.

A business located in Quebec files one combined GST/HST and QST return with Revenu Québec, known on paper as form FPZ-500, electronically since 2024. Provincial retail taxes sit outside both: British Columbia PST is filed through eTaxBC by the last day of the month after the reporting period, and Saskatchewan and Manitoba have their own returns.

• Up to 1.5 million dollars of taxable supplies: annual
• Over 1.5 million to 6 million dollars: quarterly
• Over 6 million dollars: monthly
• Monthly and quarterly: file and pay one month after the period
• Annual: three months after the fiscal year end

Common errors and the controls that prevent them

Most Canadian sales tax errors come from set-up rather than arithmetic. A system that applies the seller's own provincial rate to every invoice, or that holds one tax code per customer instead of deciding tax from the delivery or billing address, will be wrong for every out-of-province sale. The controls below are the ones auditors test first.

• Rate follows the place of supply, not the seller's head office
• GST calculated on the price before PST, never on top of it
• HST shown as one combined rate on the invoice
• Supplier registration number captured on every purchase invoice of 100 dollars or more
• BC PST on the business's own purchases booked as cost, and self-assessed when not charged
• QST held on its own ledger account for the combined return
• A rate change handled from its effective date, without rewriting old invoices
• The return reconciled to the tax accounts before the period is locked

How Skyline Nexus ERP handles Canadian sales tax

In Skyline Nexus ERP each tax is a tax rate with a single percentage, and rates can be combined into a tax group of sub-taxes. That lets a Quebec sale carry 5% GST and 9.975% QST, or a British Columbia sale carry 5% GST and 7% PST, as the components of one tax group, while 13%, 14% or 15% HST is one rate chosen on the sale line. With auto-posting switched on, each final sale posts a balanced journal in the background, with output tax computed per line on the same basis as the tax report, and sales returns are issued as credit notes that reverse revenue and tax.

The VAT Return screen prefills tax-exclusive sales and purchase bases and tax for a date range and business location, which your bookkeeper transfers to the CRA, Revenu Québec or provincial return, and the VAT Analysis report lists input and output tax from the ledger for the reconciliation. The ledger's tax settings hold one VAT Input and one VAT Output account, so if you file the combined FPZ-500 we agree with you during set-up how the GST/HST and QST parts will be reported. If you operate branches in several provinces, each can be a business location with its own invoice numbering scheme, and the trial balance, profit and loss and balance sheet filter by location. Periods can be locked once a return is filed, and the Accounting Audit Trail records who changed what, with old and new values.

Tax rates are single percentages without effective-date history, so a change such as Nova Scotia's is set up as a new rate from the day it applies. Direct electronic filing of Canadian returns from inside Skyline Nexus ERP is part of the Canadian roll-out; tell us your provinces and we will confirm your go-live date.