Area of Law: Tax Law
Answer # 196
Harmonized Sales Tax (HST) and Goods and Services Tax (GST)Region: Ontario Answer # 196
The Goods and Services Tax, or GST, is a tax that applies to most property and services in Canada. Some provinces 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 province or territory you live in determines whether you collect GST only, HST only, or a combination of GST and Provincial Sales Tax (PST).
- New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island – 15% HST
- Ontario – 13% HST
- Alberta, British Columbia, Manitoba, Saskatchewan, Quebec, the Northwest Territories Nunavut and Yukon – 5% GST.
- PST is collected in addition to GST in Manitoba (7%), Saskatchewan (6%) and British Columbia (7%)
- Quebec businesses also collect 9.975% QST (administered by Revenu Québec)
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.
Small suppliers – revenue $30,000 and less
Generally, you are considered a small supplier and are not required to register and collect/remit for GST/HST (although you may volunteer to do so) if the total amount of all your revenue (before expenses) from all your businesses and those of your associates, is $30,000 or less in any single calendar quarter and in the last four consecutive calendar quarters.
For general information regarding GST and HST in Canada, visit the Canada Revenue Agency website.
For legal advice and assistance with tax planning, a CRA tax dispute, or other tax issues, contact Tax Chambers LLP
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