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Goods and Services Tax (GST) and Harmonized Sales Tax (HST)
Canada Revenue Agency (CRA)
Last Verified:
2006-07-28
Act: Excise Tax Act, R.S.C. 1985, c. E-15
Regulation: Not applicable.
To Whom Does This Apply?
Effective January 1, 2008, the rate of the GST and the federal component of the HST are proposed to be reduced from 6% to 5%.
The provincial component of the HST will remain at 8%. This means that the rate of HST is to be reduced from 14% to 13%. Please note that the HST applies only to purchases made in or imported into New Brunswick, Nova Scotia, and Newfoundland and Labrador (the participating provinces) and the GST applies to supplies made in the rest of Canada.
For most purchases, the rate of tax will be determined by the date the GST/HST becomes payable or is paid.
If GST/HST became payable or was paid in 2007, the old GST rate of 6%, or HST rate of 14%, applies.
Otherwise, the reduced GST rate of 5%, or HST rate of 13%, applies if the tax became payable on or after January 1, 2008, or was paid on or after January 1, 2008 without having become payable before that day.
The Canada Revenue Agency (CRA) has set up a toll-free GST/HST rate reduction line for businesses and consumers at 1-866-959-7797 (1-866-959-7798 in French), which is available from 8:15 a.m. to 8:00 p.m. (local time), Monday to Friday, across Canada. In addition, the Agency has already begun to communicate with business stakeholder groups and is in the process of mailing information to every business in Canada to update them on new tax measures, including the GST/HST rate reduction.
Most persons and organizations engaged in commercial activities in Canada, who have over four consecutive calendar quarters worldwide taxable sales of more than $30 000, must register for and collect the Goods and Services Tax / Harmonized Sales Tax (GST/HST).
All taxi operators must register for GST/HST, regardless of their revenues.
Summary
Most goods and services sold or provided in Canada are taxable at the rate of 5% (GST) or 13% (HST). The HST applies in the provinces of New Brunswick, Nova Scotia and Newfoundland and Labrador. Certain items, such as sales of basic groceries and prescription drugs are taxable at a rate of 0%. These are referred to as zero-rated goods and services. A limited number of goods and services are exempt from the GST/HST.
The GST/HST applies to most transactions throughout the production and marketing process. Businesses and organizations required to, or who voluntarily choose to, register for the GST/HST are referred to as registrants. Business must register to obtain a Business Number with a GST/HST account. Registrants can claim a credit to recover the GST/HST that is paid or payable on purchases used to provide taxable goods and services. This credit is called an input tax credit and can be claimed for the GST/HST paid or payable for goods or services acquired or imported for use, consumption or supply in their commercial (taxable) activities.
GST/HST registrants who provide taxable goods or services have to charge and collect the GST or HST on their sales. If the GST/HST collected is greater than the GST/HST paid or payable, the difference is sent to the CRA. (Registrants in Quebec send their payment to the ministère du Revenu du Québec.) If the GST/HST collected is less than the GST/HST paid or payable, a refund can be claimed.
PROVINCIAL GST/HST/PST Rates
|
Province |
GST/HST Rate (%) |
PST Rate (%) |
Combined Rate (%) |
|
Alberta |
5 |
not applicable |
5 |
|
British Columbia |
5 |
7 |
12 |
|
Manitoba |
5 |
7 |
12 |
|
New Brunswick |
13 |
not applicable |
13 |
|
Newfoundland & Labrador |
13 |
not applicable |
13 |
|
Northwest Territories |
5 |
not applicable |
5 |
|
Nova Scotia |
13 |
not applicable |
13 |
|
Nunavut |
5 |
not applicable |
5 |
|
Ontario |
5 |
8 |
13 |
|
Prince Edward Island |
5 |
10 * |
15.5 * |
|
Quebec |
5 |
7.5 * |
12.875 * |
|
Saskatchewan |
5 |
5 |
10 |
|
Yukon Territory |
5 |
not applicable |
5 |
* In Quebec and Prince Edward Island only, the GST is included in the provincial sales tax base. You are also charged PST on GST, hence the higher than expected combined rate.
Quebec
In Quebec, the GST/HST is administered by the ministère du Revenu du Québec (MRQ). Contact the MRQ by calling, toll-free, 1-800-567-4692 or by visiting the MRQ Web site.
All publications are available in paper copy by calling 1-800-959-2221.
If you require personal assistance, contact the Tax Service Office closest to you (see Related Reading: Business Window - Supplement or CRA's Web site for a listing of the Tax Service Offices and Tax Centres).
DISCLAIMER
Information contained in this section is of a general nature only and is not intended to constitute advice for any specific fact situation. For particular questions, the users are invited to contact their lawyer. For additional information, see contact(s) listed below.
Quebec Contact(s):
See National Contact.
National Contact(s):
Canada Revenue Agency
Toll-free (information): 1-800-959-5525 (Business Enquiries and Registrations)
Toll-free (publications): 1-800-959-2221 (Forms and Publications)
Web site: http://www.cra.gc.ca/menu-e.html