Area of Law: Business Law
Answer Number: 0206
Harmonized Sales Tax (HST) and Goods and Services Tax (GST)Region: Ontario Answer Number: 0206
The Goods and Services Tax, or GST, is a tax that applies to most property and services in Canada. The provinces of Ontario, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador have harmonized their provincial sales tax with the GST to create the Harmonized Sales Tax (HST). Generally, the HST applies to the same property and services as the GST.
The 13% HST took effect in Ontario in 2010, replacing the GST and the Provincial Sales Tax (PST).
Visit Canada Revenue Agency to see a listing of all provincial and territorial GST and HST rates.
What is exempt from HST?
The HST applies to almost all goods and services. However, a limited number of sales or supplies are exempt from HST. In Ontario, HST is not charged on the following items:
- Basic groceries
- Prescription drugs
- Some medical devices
- Municipal public transit
- Health and education services
- Legal aid
- Most financial services
- Child care
- Music lessons
- Residential rents
Also, consumers do not have to pay the 8% Ontario portion of the HST for:
- Qualified prepared food and beverages sold for a total of $4 and under
- Print newspapers
- Children’s clothing and footwear
- Children’s car seats and car booster seats
- Feminine hygiene products
- Books (including audio books)
Responsibility of businesses to collect HST
While the consumer pays the tax, businesses are responsible for collecting and remitting it to the government. Businesses that are required to have a GST or HST registration number are called registrants.
Registrants collect the GST or HST on most of their sales and pay GST or HST on most purchases they make to operate their business. They can then claim an input tax credit, to recover the GST or HST paid or payable on supplies and services they bought to use in their business.
Registrants are required by law to file GST or HST tax returns, and to:
- collect GST/HST
- keep track of the GST/HST they paid
- submit any resulting net tax owing to the federal government.
If the business has paid more GST or HST than it collected, the federal government will refund the difference to them.
For general information regarding GST and HST in Canada, visit the Canada Revenue Agency website.
For legal advice in deciding which form of business is right for you, assistance with setting up your business, and for all other business matters, contact our preferred business lawyers, Singer Business Law .
For help filing your tax returns, contact H&R Block.
For legal advice and assistance with tax planning, a CRA tax dispute, or other tax issues, contact our preferred Tax lawyers and see who’s right for you:
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