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What are GST and HST?

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Sales Taxes ->GST/HST -> What are GST and HST?

What are GST and HST?

GST, or goods and services tax, is a sales tax which is charged on most goods and services sold in Canada.  In many provinces, the GST has been "harmonized" with the provincial sales tax, to become harmonized sales tax, or HST.  For information on sales tax rates in each province and territory, see our tables of sales tax rates (link at bottom of page).

Any business which is registered to collect GST/HST will be able to recover GST/HST paid on purchases made in the course of their commercial activities, by claiming "input tax credits" when filing their GST returns.  Usually the input tax credits will be for 100% of the GST or HST incurred on supplies for your commercial activities.  Input tax credits cannot be claimed if they relate to purchases made in order to provide exempt supplies (see RC4022 at bottom).  In most cases of GST or HST on meals and entertainment expenses, only 50% of the GST/HST can be recovered, and the other 50% is not a deductible expense.  See the link at bottom of page for more information.

GST/HST rate changes

Both Ontario and BC implemented the HST, effective July 1, 2010.  Ontario's HST rate is 13%, while BC's rate was 12%.  However, BC returned to a PST and GST system on April 1, 2013.  See Ontario HST and BC HST for more information.

Nova Scotia increased their HST rate to 15%, effective July 1, 2010.  Canada Revenue Agency (CRA) has issued the following publications:

bullet Notice256 HST Rate Increase for Nova Scotia - Questions and Answers on Housing Rebates and Transitional Rules for Housing and Other Real Property Situated in Nova Scotia
bullet GI-062 Harmonized Sales Tax for Ontario, British Columbia and Nova Scotia - Point-of-Sale Rebate on Feminine Hygiene Products
bullet GI-063    Harmonized Sales Tax for Ontario, British Columbia and Nova Scotia - Point-of-Sale Rebate on Children's Goods
bullet GI-087 Harmonized Sales Tax: Stated Price Net of GST/HST New Housing Rebate in Nova Scotia

GST Rate Reduction Effective January 1, 2008

The GST rate was reduced from 6% to 5% effective January 1, 2008.  The HST rate was reduced from 14% to 13%.  Since then, of course, other provinces have implemented HST - see the table of sales tax rates in each province (above) for current rates.  See the following CRA web pages regarding the rate reduction:

bullet Notice 226 - GST/HST rate reduction in 2008
bullet GI-038 - The 2008 GST/HST rate reduction

Effective July 1, 2006 to December 31, 2007

The GST rate was reduced from 7% to 6% effective July 1, 2006.  The HST rate was reduced from 15% to 14%.  

Other Resources on TaxTips.ca

Tables of Sales Tax Rates in Each Province and Territory

GST or HST on Meals and Entertainment Expenses

Canada Revenue Agency Resources:

bulletRC4022 General Information for GST/HST Registrants
bulletRC4022 re Input Tax Credits

Revised: December 10, 2016

 

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