Overview of charging and collecting sales tax 

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As a Canadian business owner, it's important to know how and when to charge sales taxes for the goods and services you sell and supply to your customers. Our guide to charging and collecting sales tax will provide you with an understanding of your responsibilities, as well as some valuable resources to help you charge sales taxes and remit them properly to the government.

This information is an overview on charging and collecting taxes for business. Before making any business decisions on taxation, please refer to the Canada Revenue Agency and your provincial or territorial revenue agency.

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Charging sales tax

Do you sell goods or provide services in Canada? If so, you are required to collect sales tax from your customers on many of the items they purchase.

Depending on the province or territory in which you operate your business, you need to collect either:

  • A combination of GST and PST
  • GST only
  • HST

HST combines PST with GST to create one tax. If you operate in an HST-participating province, you will collect sales tax at the following rates:

  • New Brunswick: 13%
  • Newfoundland and Labrador: 13%
  • Nova Scotia: 15%
  • Ontario: 13%
  • Prince Edward Island: 14%

If you operate in the following provinces, you need to collect 5% GST as well as provincial sales tax, with provincial sales tax rates as follows:

  • British Columbia: 7% provincial sales tax (PST) on retail price only
  • Manitoba: 8% retail sales tax (RST) on retail price only
  • Quebec: 9.975% Quebec sales tax (QST) on retail price only
  • Saskatchewan: 5% provincial sales tax (PST) on retail price only

If you operate in the province of Alberta or in one of the three territories (Northwest Territories, Nunavut or the Yukon), you do not need to collect sales tax on goods and services beyond the 5% GST.

Tax rates per province/territory
Province/Territory Type GST (%) PST (%) Total tax rate (%)
Alberta GST 5 0 5
British Columbia GST + PST 5 7 12
Manitoba GST + PST 5 8 13
New Brunswick HST 5 8 13
Newfoundland and Labrador HST 5 8 13
Northwest Territories GST 5 0 5
Nova Scotia HST 5 10 15
Nunavut GST 5 0 5
Ontario HST 5 8 13
Prince Edward Island HST 5 9 14
Quebec GST + PST 5 9.975 14.975
Saskatchewan GST + PST 5 5 10
Yukon GST 5 0 5

 

Charging sales tax to out-of-province/territory customers and to foreign customers

If you are a vendor in one province or territory and you make sales to residents of another province or territory, what sales taxes do you charge them? When you sell and ship or deliver taxable goods and services to out-of-province/territory customers, the sales tax that applies in your customer's province or territory is generally applicable.

Alberta, Nunavut, Northwest Territories, Yukon

If you sell goods and services to residents of Alberta, Nunavut, Northwest Territories or the Yukon, you are required to collect GST.

Prince Edward Island, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario

When you sell to HST-participating provinces (Prince Edward Island, New Brunswick, Newfoundland and Labrador, Nova Scotia and Ontario), you are required to collect HST in the amount applicable to the province and include it in your GST/HST return. In this case, since you are already registered for GST, you are automatically registered for HST, even if you do not operate in an HST-participating province.

British Columbia

You are required to register to collect PST if you regularly do all of the following:

  • Sell taxable goods to customers in BC
  • Accept purchase orders for taxable goods from customers located in BC
  • Deliver taxable goods to a location in BC
  • Solicit persons in BC (through advertising or other means) for orders to purchase taxable goods

You are also required to register to collect PST if you regularly do all of the following:

  • Sell taxable software or telecommunication services to customers in BC
  • Accept purchase orders for taxable software or telecommunication services from customers located in BC
  • Solicit persons in BC (through advertising or other means) for orders to purchase taxable software or telecommunications services

  • Small Business Guide to PST
    Applies only to: British Columbia

    Understand the basics of BC's provincial sales tax, find out if you must register for PST, and also learn how it applies to the goods and services you purchase for your business.

Manitoba

If you sell taxable goods and services to residents of Manitoba, you are required to register under the Retail Sales Tax Act and collect retail sales tax, if all of the following apply:

  • You solicit sales in Manitoba (via advertising or other means).
  • You accept orders originating in Manitoba.
  • The taxable goods are for consumption/use in Manitoba — not for resale.
  • You cause the taxable goods to be delivered to Manitoba, regardless of who pays for the delivery.

  • Taxation Division
    Applies only to: Manitoba

    Learn about your tax collection and remittance obligations as a Manitoba business owner.

Quebec

You must register to collect and remit the Quebec sales tax (QST) only when you have operation in the province (such as production or marketing activities), when you hire an employee and/or when you have an address in Quebec. Otherwise, you are not obligated to collect QST on behalf of the province if you sell taxable goods and services to residents of Quebec.

Saskatchewan

If you sell goods and services to residents of Saskatchewan, the province asks you to consider registering to collect PST as a convenience to your customers; however, if you do not, the responsibility will be on your customers to pay the PST on their out-of-province purchases.

  • Provincial tax obligations
    Applies only to: Saskatchewan

    Learn about your provincial tax collection and remittance obligations when doing business in Saskatchewan.

Foreign customers (outside of Canada)

If you sell goods and services to international customers, you are not required to collect GST/HST or PST, provided they take delivery of the goods or services outside of Canada. If international customers, such as tourists, make purchases within your province or territory, they are required to pay the GST/HST and PST. In some cases, they may be eligible to receive a GST/HST refund.

What goods and services are subject to sales tax?

Before you begin selling goods and services, familiarize yourself with what is and isn't taxable.

Many retail goods and services are subject to GST/HST; however, some supplies, such as basic groceries, prescription drugs, most livestock and many agricultural and fishery products are zero-rated. This means that GST/HST applies to them, but at a rate of 0%.

Other supplies, such as child care, health, dental and legal aid services, residential rentals and music lessons are GST/HST exempt.

The basic difference between zero-rated and exempt goods and services is that you can claim input tax credits for those that are zero-rated, while you cannot for those that are exempt.

If you operate your business in a province that charges PST, you will also want to familiarize yourself with the goods and services that are subject to PST.

  • Zero-rated (0%) goods and services

    Find out what goods and services do not have GST/HST applied to them, but for which you can still claim input tax credits.

  • Exempt goods and services

    Learn what goods and services do not have GST/HST applied to them, and for which you cannot claim input tax credits.

  • GST/HST information for the travel and convention industry

    Find out how to charge GST/HST on accommodation, tour packages, transportation services, and meeting rooms for your tourism business.

  • International Fuel Tax Agreement (IFTA)
    Applies only to: Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Saskatchewan, Québec, Manitoba, British Columbia, Alberta

    Are you providing interprovincial or international-passenger or freight-transportation services? If so, discover the benefits of this Agreement and see what your obligations are.

  • Taxation Division
    Applies only to: Manitoba

    Learn about your tax collection and remittance obligations as a Manitoba business owner.

  • Revenu Québec — Business Portal
    Applies only to: Québec

    Is your company based in Quebec? If so, learn about your fiscal obligations including taxes and deductions.

  • Provincial tax obligations
    Applies only to: Saskatchewan

    Learn about your provincial tax collection and remittance obligations when doing business in Saskatchewan.

How do I collect GST/HST?

To begin with, you need to register for a GST/HST account. This is done through the Canada Revenue Agency, except in Quebec, where you need to register through Revenu Québec.

A small supplier does not have to register for a GST/HST account. To be considered as such, your business must be a sole proprietorship, partnership or corporation with $30,000 or less in total revenue in the last four consecutive calendar quarters or in any single calendar quarter.

Once you begin collecting GST/HST, you need to inform your customers. Receipts, invoices and contracts are the most common ways of letting clients know what they are being charged. You may also be required to provide specific information on invoices for customers who are also GST/HST registrants, so that they can claim input tax credits.

  • Charge my customers GST/HST

    Follow these steps to learn which goods or services are taxable, the right amount of GST/HST to charge, invoice requirements, and which records to keep.

What are input tax credits?

You can recover GST/ HST that you pay or owe on purchases and expenses related to your business activities in the form of input tax credits. Input tax credits are then counted against the GST/HST that you collect during each reporting period.

When claiming input tax credits, it is important to know exactly what qualifies. Generally speaking, if you do not use the item you are purchasing directly for business purposes, you cannot claim an input tax credit for it.

There are other examples of purchases you cannot claim, such as:

  • Goods and services used to make GST/HST-exempt goods and services
  • Goods or services used for personal consumption
  • Membership fees to any club that is primarily for recreational or dining use, unless the membership is acquired for resale
  • Some capital property

It is a good idea to familiarize yourself with the many rules and regulations regarding input tax credits. For more information, see:

  • Input tax credits

    Learn how you can recover the GST/HST you pay on goods and services that you purchase specifically for your business operations.

How do I calculate GST/HST?

GST/HST is added to the retail price of goods and services. For example, in Alberta, where only GST applies, you would calculate a $100 item in the following way:

Retail price: $100
GST (5%): $5
Total: $105

In Ontario, an HST-participating province, you would calculate the sales tax like this:

Retail price: $100
HST (13%): $13
Total: $113

Keep in mind that in the PST provinces, sales taxes are calculated in different ways, that is:

In Manitoba and Saskatchewan, PST, like GST, is calculated on the retail price only. The two taxes are then added to the retail price for your total. For example, in Manitoba:

Retail price: $100
GST (5%): $5
PST (7%): $7
Total: $112

  • Business registration online

    Register for a business number, GST/HST, corporation income tax, payroll and import/export accounts in one convenient online location.

  • GST/HST rates

    Use this chart to see which provinces and territories use the GST or HST and find both current and previous rates.

  • Revenu Québec — Business Portal
    Applies only to: Québec

    Is your company based in Quebec? If so, learn about your fiscal obligations including taxes and deductions.

How do I report and send GST/HST to the government?

Once you are registered for GST/HST, Canada Revenue Agency (CRA) will assign you a reporting period; you file a GST/HST return for each reporting period. Your GST/HST return will show CRA the amount of GST/HST you collected during the reporting period, along with the amount of input tax credits you are claiming.

If you operate your business in the province of Quebec, the GST/QST reporting and filing system that is used by Revenu Québec functions very much like that of CRA for the rest of Canada.

The reporting period you are assigned is based on the annual revenue you generate from your sales of taxable goods and services.

Annual revenue from taxable sales

Annual revenue from taxable sales:

$1.5M or less: report annually
More than $1.5M up to $6M: report quarterly
More than $6M: report monthly

If you wish to change your reporting period, perhaps because your business uses accounting periods that are not monthly or quarterly, you must notify the Canada Revenue Agency.

When filing your GST/HST returns, the amount you file is called your net tax. Your net tax for each reporting period is the difference between the GST/HST you charged on your taxable supplies and the GST/HST you paid on business purchases and expenses (input tax credits). The amount will result in either a GST/HST remittance, which occurs when you collect more GST/HST than you paid, or a GST/HST refund, which occurs when you have paid more GST/HST than you have collected.

Some small businesses qualify to use the Quick Method of accounting which simplifies the way in which you calculate GST/HST remittances.

If you are unable to use the Quick Method, you will need to file your GST/HST returns either electronically or using Form GST34, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return for Registrants, which CRA will send you if you do not file electronically. Keep in mind that most registrants are required to file their GST/HST returns electronically.

If you have a monthly or quarterly reporting period, you are required to file your GST/HST return, along with any money owing, no more than one month after your reporting period.

If you have an annual reporting period, you are required to file your GST/HST return, along with any money owing no more than three months following your fiscal year. In this case, you also have the option of paying in quarterly instalments.

To see if you qualify to use the Quick Method, visit the following Canada Revenue Agency site:

How do I file my return?

Canada Revenue Agency and Revenu Québec requires that most GST/HST/Quebec sales tax (QST) registrants to file their returns electronically. You are required to file electroniocally if:

  • Your business does $1.5 million or more in annual taxable sales
  • You are required to recapture input tax credits for the provincial portion of HST or
  • You are a builder who has been affected by HST applicable transitional housing measures in British Columbia and Ontario

If you are filing electronically with Canada Revenue Agency, you are required to use one of four methods:

Online

  • GST/HST NETFILE
  • GST/HST Internet File Transfer

Through a financial institution or third party service provider

  • Electronic Data Interchange filing and remitting

With CRA, in most cases, if you are required to file electronically, you can choose one of the four electronic filing options; however, if you are required to recapture input tax credits for the provincial portion of HST or, in some instances, if you are a builder, you must use GST/HST NETFILE to file your return.

If you are eligible to file your return through the mail, CRA will send you either a personalized return (Form GST34) or non-personalized return (Form GST62), which you will be required to complete and return to your tax centre.

For more information on filing GST/HST returns with Canada Revenue Agency, please consult the following information:

In Quebec

In Quebec, if you choose or are required to file your returns electronically, you need to be registered with Clic Revenu - Businesses. Once you are registered, you can file your return one of three ways, using:

  • Clic Revenu - Businesses online service
  • an online service offered by a participating financial institution
  • software authorized by Revenu Québec

If you choose and qualify to submit your return by mail, you must complete form FPZ-500-V, GST/HST-QST Return and mail it to Revenu Québec.

For more information on all aspects of collecting GST/HST, see:

  • Clic Revenu — Businesses
    Applies only to: Québec

    You can submit your GST/HST and Quebec sales tax returns electronically by registering for this service.

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