GST and HST explained: What Canadian businesses need to know
Registering for GST/HST as a business? Learn more about what these sales taxes are, your responsibilities as a business and how to register.
Updated 
9 min. read
The GST and HST are Canadian sales taxes administered by the CRA, or in some cases, Revenu Québec.- Charging GST/HST is required if your business makes $30,000 in taxable revenue over a 12-month period.
- You can register for a GST/HST number online through your My CRA Account or by mail.
If you live in Canada, you know the price you see for a product or service is not usually the price you pay at checkout. Why? Because most businesses are required to collect sales taxes, namely the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST).
While there are some exceptions, such as basic groceries or certain items for children, most goods and services sold in Canada will have one of these taxes levied on them.
For business owners, it’s important to understand the GST/HST system and how to register for a tax number. Non-compliance can be a costly error! Let’s dive in.
What are the GST, PST and HST?
The GST, PST and HST are all salestaxes. They’re paid by consumers on goods and services. Businesses collect these taxes on the government’s behalf and remit them to the CRA. In Québec, these taxes are remitted to Revenu Québec.
Goods and Services Tax (GST)
The Goods and Services Tax (GST) is a federal sales tax that applies across all provinces and territories. Nationwide, the current rate is 5% on most goods and services, unless they are classified as “zero-rated” or exempt under the Excise Tax Act. While this rate has remained constant, it can be changed by the federal government.
Provincial sales taxes (PST, RST and QST)
Some provinces apply an additional sales tax on top of the GST. Depending on the province, this tax is called the Provincial Sales Tax (PST), Retail Sales Tax (RST) or Québec Sales Tax (QST). These provinces currently charge a separate provincial tax:
- British Columbia (7% PST)
- Saskatchewan (6% PST)
- Manitoba (7% RST)
- Québec (9.975% QST)
In Alberta and the three territories, GST is the only sales tax charged. All other provinces combine the GST with their provincial sales tax to form a Harmonized Sales Tax (HST).
Harmonized Sales Tax (HST)
To simplify tax collection, the Harmonized Sales Tax (HST) combines the GST and provincial sales tax into one single tax rate, in participating provinces. This makes it easier for customers to calculate exactly how much they’re paying for goods and services as well.
Sales taxes across Canada
Sales tax varies by province and territory. Here are the current sales taxes applied in each of the provinces and territories in Canada:
| Province/Territory | Type(s) | Total Rate | Breakdown |
|---|---|---|---|
| Alberta | GST only | 5% | 5% GST |
| British Columbia | GST + PST | 12% | 5% GST + 7% PST |
| Manitoba | GST + RST | 12% | 5% GST + 7% RST |
| New Brunswick | HST | 15% | Combined |
| Newfoundland and Labrador | HST | 15% | Combined |
| Northwest Territories | GST only | 5% | 5% GST |
| Nova Scotia | HST | 14% | Combined |
| Nunavut | GST only | 5% | 5% GST |
| Ontario | HST | 13% | Combined |
| Prince Edward Island | HST | 15% | Combined |
| Quebec | GST + QST | 14.975% | 5% GST + 9.975% QST |
| Saskatchewan | GST + PST | 11% | 5% GST + 6% PST |
| Yukon | GST only | 5% | 5% GST |
Note: Tax rates are subject to change and are accurate at time of publishing. Please refer to the latest federal and provincial/territorial tax guidelines for the most current information.
Business owners need to keep in mind that GST/HST is generally charged based on where customers are located, not where the business operates. For example, if a wholesale florist in Toronto sends a shipment of flowers to a customer in Halifax, they’ll need to charge the sales tax rate in Nova Scotia, rather than the one in Ontario.
For more information, refer to the CRA Page on place-of-supply rules.
When do I need to start collecting GST/HST?
If your business earns more than $30,000 in gross income (what you earn before you deduct business expenses) during any 12-month period, you must get a GST/HST number and collect GST/HST from your customers. There’s some income that doesn’t count for GST/HST collection, including salary from a job, grants, and sales outside of Canada.
If you make more than $30,000 and you don’t sign up, the Canada Revenue Agency (CRA) won’t send you a reminder or a warning—but you’re not off the hook. When the CRA finds out that you should be filing GST/HST returns, you could face substantial fines.
For some businesses in Canada, GST/HST registration is mandatory even if you don’t hit the $30,000 threshold. For example, taxi operators or commercial ride-share drivers need to register and collect GST/HST regardless of how much money they earn in a year.
How do I register my business for GST/HST?
Before you can collect GST/HST, you’ll need to register your business with the CRA. You can do this online through the CRA’s My Business Account portal by using the Business Registration Online (BRO) service, or by mail.
There are different application requirements for Canadian residents and non-residents doing business in Canada, so ensure you’re in the right stream before moving ahead.
Once your business is registered, the CRA will assign you a business number (BN). You’ll need this to apply for your GST/HST number, which you can also do through the Business Registration Online service in your CRA account or by mail. From there, you can start charging and collecting sales tax.
Where does GST/HST registration fit during business launch?
Step 1: Choose a business structureStep 2: Register your business name (if required)Step 3: Get a Business Number (BN) from the CRA
Step 4: Add a GST/HST account (if required or beneficial)Step 5: Open a business bank account
Reading your GST/HST number
Your GST/HST number will be 15 characters long and include your 9-digit business number. So, for example, if your business number were 1 2 3 4 5 6 7 8 9, your GST/HST number might be: 1 2 3 4 5 6 7 8 9 R T 0 0 0 1. The “RT” in this number identifies the GST/HST program, while the last four digits represent the specific account.
What you’ll need to provide when you register
When you register, the CRA will ask for a few details about your business to determine when and how you should start collecting GST/HST. Be prepared to provide:
Basic personal and business information
This includes:
- Your name and that of any other owners
- The postal code of your home address
- The legal name of your business
- Your business number
- A physical business address
- The business type (i.e., sole proprietorship, corporation, partnership, etc.)
- The Social Insurance Number (SIN) of all owners
- A general description of business activity
Your effective date of registration
This is usually the day your business becomes officially required to register, which often coincides with when it exceeds $30,000 in taxable revenue over a 12-month period. For example, if you opened your business on January 1st but didn’t cross the $30,000 threshold until December 1st, you’d only be required to start collecting GST/HST from that date onward.
Your fiscal year for GST/HST
For most businesses, this is the same as the tax year (which also usually aligns with the calendar year). However, it can differ depending on your structure.
Total annual revenue
This is the estimated total amount of money your business earns in a year, before any expenses. The CRA uses it to determine if registration is mandatory and how often you’ll need to file.
Your responsibilities after getting a GST/HST number
Once you’ve got your GST/HST number set up, it’s time to start collecting taxes on your sales, as this money belongs to the CRA. This involves a bit more than just increasing your prices.
For every estimate and invoice, be sure to add in a GST/HST line under the subtotal and add the calculated amount to the balance due. You also need to include your GST/HST number when supplying goods or services of $100 or more to let customers know you’re charging taxes legitimately.
When you file your taxes, you'll need to file a GST/HST return and pay all the money you’ve collected to the CRA. That means the funds need to be easily accessible. To make things easier, consider opening a business savings account to hold the GST/HST money you’ve collected and to separate these funds from day-to-day cash flow. That way it’s safe, protected and accessible when you need to make your payment at filing time, and helps avoid any surprises.
If you’re unsure when to register or how GST/HST will affect your cash flow, a business banking advisor can help you plan ahead.
Should I collect GST/HST if my business earns less than $30,000?
If your business earns less than $30,000 in annual taxable revenue, you’re considered a small supplier, meaning you don’t have to register for GST/HST. That said, choosing to register anyway might work in your favour. Once registered, you can claim input tax credits (ITCs), which allow you to recover the GST/HST paid on eligible business expenses by deducting it from your CRA return.
For example, if you run a lawn mowing company in Ontario and you charge a client $100, you’d bill a total of $113 because of the province’s 13% HST. If you later spend $200 to get your mower serviced, you’d be charged $26 in HST by the repair shop. When you file your GST/HST return, you’d report $13 in GST/HST collected, but you’d also be able to claim tax credits of $26, meaning you’d likely get a refund of $13 from the CRA.
As a new business, there’s a good chance that you’re spending more than you’re making, so registering for a GST/HST number can save you money.
GST/HST frequently asked questions
HST varies by province. Ontario charges 13%, Nova Scotia 14%, and New Brunswick, Newfoundland and Labrador, and Prince Edward Island 15%. Other provinces apply a 5% GST plus a separate provincial sales tax (PST), while Alberta and the territories only charge 5% GST.
Generally, goods imported for sale in Canada are subject to GST by the Canada Border Services Agency (CBSA). The exception are those considered zero-rated goods . Exports, on the other hand, are typically zero-rated, meaning you won’t need to charge GST/HST to your international customers.
If you apply online, your application is usually processed immediately, so you can get a GST/HST number right away. If you apply by mail, it might take a few weeks for the CRA to process.
Nothing! Applying for and receiving a GST/HST number is completely free. However, keep in mind that you must register your business first, which can cost anywhere from $60 to $500.
Not exactly. Your business number is a unique nine-digit number assigned to your business by the Canada Revenue Agency (CRA). Your GST/HST number is a specific program account linked to that business number. You’ll notice that your GST/HST number contains your business number, but also a two-letter program identifier (usually “RT”) and a four-digit reference number (usually “0001”).
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The content is provided for general informational and educational purposes only.The content is simplified and not tailored to individual circumstances.The content does not constitute tax, legal, accounting, or other professional advice.The content is based on laws and administrative guidance that are subject to change. Tax legislation, rates, and administrative practices may change and can vary depending on individual circumstances. Readers should consult the Canada Revenue Agency, Revenu Québec, or a qualified tax professional to confirm current requirements and determine their specific obligations.The application of GST/HST rules depends on specific facts and circumstances.Readers should not act on the information without obtaining professional advice tailored to their particular situation.BMO does not guarantee the completeness or ongoing accuracy of the information and does not undertake any obligation to update it.BMO is not responsible for any losses or damages resulting from reliance on this article or on linked third party content.