GST vs HST vs PST in Canada — What Every Business Must Know

1. What Is GST — Goods and Services Tax in Canada?

GST (Goods and Services Tax) is a federal tax of 5% charged on the supply of most goods and services in Canada. It is administered by the Canada Revenue Agency (CRA) and applies in every province and territory — regardless of whether the province also has a provincial sales tax.

GST applies to most business transactions including: sale of goods, provision of services, real property sales, digital services, and imports. Certain supplies are either zero-rated (0% GST) — such as basic groceries, prescription drugs, and most exports — or exempt — such as residential rents and most health and educational services.

GST — Key Facts:

• Rate: 5% — federal, uniform across all provinces
• Administered by: Canada Revenue Agency (CRA)
• Registration threshold: $30,000 in revenue over any four consecutive calendar quarters
• Applies to: Most goods, services, real property, and digital products
• Zero-rated supplies (0% GST): Basic groceries, prescription drugs, exports, international transport
• Exempt supplies (no GST): Residential rent, health services, educational services, most financial services
• Provinces with GST only: Alberta (5% total — no provincial tax)

2. What Is HST — Harmonized Sales Tax in Canada?

HST (Harmonized Sales Tax) is a combined federal and provincial tax that replaced separate GST and PST in participating provinces. It is collected as a single tax by CRA — making administration simpler for businesses operating in HST provinces.

Five provinces use HST: Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland & Labrador. Rates range from 13% (Ontario) to 15% (Atlantic provinces). When you collect HST in these provinces, CRA distributes the provincial portion back to the province automatically — you only deal with one registration, one return, one remittance.

HST Provinces and Rates (2026):

Province	Federal GST	Provincial Portion	Total HST	Administered by
Ontario	5%	8%	13%	CRA only
New Brunswick	5%	10%	15%	CRA only
Nova Scotia	5%	10%	15%	CRA only
Prince Edward Island (PEI)	5%	10%	15%	CRA only
Newfoundland & Labrador	5%	10%	15%	CRA only

Key Advantage of HST Provinces: One registration with CRA covers the full tax. One return. One payment. No separate provincial registration needed. This is why Ontario is popular for new businesses — HST at 13% is administratively simple.

3. What Is PST — Provincial Sales Tax in Canada?

PST (Provincial Sales Tax) is a separate provincial tax charged on top of the federal GST. PST provinces have not harmonized their provincial tax with GST — which means businesses operating in these provinces must register and file with both CRA (for GST) and the provincial government (for PST) separately.

PST applies in British Columbia, Saskatchewan, and Manitoba. Quebec has its own equivalent — the QST (Quebec Sales Tax) at 9.975%, which is also administered separately by Revenu Québec.

PST Provinces — Registration and Rates:

Province	GST Rate	PST Rate	Total Tax	PST Administered by
British Columbia (BC)	5%	7%	12% combined	BC Ministry of Finance — separate PST registration required
Saskatchewan	5%	6%	11% combined	Saskatchewan Finance — separate PST registration required
Manitoba	5%	7% (RST)	12% combined	Manitoba Finance (called Retail Sales Tax / RST) — separate registration
Quebec	5%	9.975% (QST)	~15% combined	Revenu Québec — administers both GST and QST for Quebec businesses

4. Sales Tax Rates by Province — Complete 2026 Table

Province / Territory	GST	PST / QST	HST	Total Tax	Tax Type
Alberta	5%	None ✔	—	5%	GST only
Ontario	—	—	13%	13%	HST (CRA only)
British Columbia (BC)	5%	7% PST	—	12%	GST + PST (2 reg.)
Quebec	5%	9.975% QST	—	~15%	GST + QST (Revenu QC)
Nova Scotia	—	—	15%	15%	HST (CRA only)
New Brunswick	—	—	15%	15%	HST (CRA only)
Prince Edward Island (PEI)	—	—	15%	15%	HST (CRA only)
Newfoundland & Labrador	—	—	15%	15%	HST (CRA only)
Saskatchewan	5%	6% PST	—	11%	GST + PST (2 reg.)
Manitoba	5%	7% RST	—	12%	GST + RST (2 reg.)
Northwest Territories / Nunavut / Yukon	5%	None ✔	—	5%	GST only

5. When Do You Need to Register for GST/HST in Canada?

GST/HST registration is governed by the small supplier threshold rule — you must register once your revenue crosses $30,000 in any four consecutive calendar quarters.

Mandatory vs Voluntary Registration:

Scenario	Mandatory Registration	Voluntary Registration
Revenue threshold	$30,000+ in any four consecutive quarters — must register within 29 days of crossing	Below $30,000 — can register voluntarily at any time
New business	Mandatory once threshold is reached	Recommended from day one — allows ITC claims on startup expenses
Non-resident businesses selling to Canadians	Mandatory if selling taxable supplies to Canadians exceeding $30,000 — including digital services	—
Taxi / rideshare operators	Mandatory from first dollar — no threshold exemption	N/A
Penalty for late registration	Interest + penalties calculated from the date you were required to register — backdated	No penalty for voluntary early registration

DKP Global’s Advice: Register for GST/HST voluntarily from day one — even if you are below the $30,000 threshold. This lets you claim Input Tax Credits (ITCs) on every business expense from incorporation day forward — software, equipment, office costs, professional fees. The ITC benefit almost always outweighs any complexity.

6. How to Register for GST/HST with CRA

Registering for GST/HST with the Canada Revenue Agency (CRA) is straightforward. DKP Global manages this as part of every incorporation package — but here is the process if you are registering independently:

Step 1: Get Your CRA Business Number (BN)

You cannot register for GST/HST without a CRA Business Number. If you have just incorporated, register for your BN online at canada.ca immediately after receiving your Certificate of Incorporation. The BN is instant online. It is a 9-digit number that becomes the master account for all your CRA accounts.

Step 2: Register for GST/HST Online via My Business Account

Log in to the CRA’s My Business Account portal at canada.ca/my-business-account. Under your BN, add a GST/HST account (RT account). You will need: your Business Number, incorporation date, business address in Canada, expected revenue, and the nature of your business. Processing time: 5–10 business days to receive your RT account number and registration confirmation.

Step 3: Choose Your GST/HST Reporting Period

CRA assigns a reporting period based on your annual revenue: Annual (revenue under $1.5M) | Quarterly (revenue $1.5M–$6M) | Monthly (revenue over $6M). New businesses are typically assigned quarterly or annual reporting. You can request a more frequent period if preferred — monthly filing is better for cash flow management.

Step 4: Register for PST (if operating in a PST province)

If your business operates in BC, Saskatchewan, Manitoba, or Quebec — register for PST/QST separately with the relevant provincial authority. In BC, register at gov.bc.ca/pst. In Quebec, register with Revenu Québec at revenuquebec.ca. PST registration thresholds and rules differ by province — DKP Global advises on province-specific requirements.

7. Input Tax Credits (ITCs) — What They Are and How to Claim

An Input Tax Credit (ITC) is the GST/HST you paid on business purchases that you can recover back from CRA when you file your GST/HST return. ITCs are how Canada’s GST/HST system avoids double taxation — businesses collect GST/HST from customers, pay GST/HST on their purchases, and remit only the difference to CRA.

How ITCs Work — Simple Example:

Transaction	Amount (Ontario — 13% HST)
HST collected from your customers on sales	$6,500 (on $50,000 in revenue)
HST paid on your business purchases (ITCs)	$2,600 (on $20,000 in expenses)
Net HST remitted to CRA	$3,900 (you keep $2,600 in ITC recovery)

Common ITC-Eligible Business Expenses:

• Office rent and utilities (if GST/HST was charged)
• Professional fees — accountant, lawyer, consultant fees
• Computer equipment, software, and tech hardware
• Incorporation and legal setup costs
• Advertising and marketing expenses
• Business vehicles and fuel (with restrictions for personal use)
• Business meals and entertainment (50% ITC eligible)
• Business insurance (if GST/HST applicable)

Why Register Early: If you register for GST/HST voluntarily before hitting the $30,000 threshold, you can claim ITCs on all startup costs — incorporation fees, equipment, software, office setup. For a new business spending $15,000–$20,000 on setup, this can mean recovering $1,950–$2,600 in HST (at Ontario’s 13% rate) from CRA.

8. GST/HST Filing Deadlines and Reporting Periods

Reporting Period	Annual Revenue Threshold	Filing Deadline	Payment Deadline
Annual Filer	Under $1.5 million	3 months after fiscal year end	3 months after fiscal year end
Quarterly Filer	$1.5M – $6 million	1 month after quarter end	1 month after quarter end
Monthly Filer	Over $6 million	1 month after month end	1 month after month end
New Registrants (default)	Any (new business)	Typically quarterly or annual — assigned by CRA	Same as filing deadline

Penalties for Late Filing or Payment:

• Late filing penalty: 1% of net tax owing + 25% of that 1% for each month late (up to 12 months)
• Arrears interest: CRA prescribed rate + 4% per year — compounded daily
• Gross negligence penalty: 25% of unpaid tax — applies to deliberate non-compliance
• Director’s liability: Directors of a corporation can be personally liable for unremitted HST/GST

DKP Global manages GST/HST filing for all clients on an ongoing basis — quarterly or annually depending on your reporting period. We track deadlines, prepare returns, and ensure no penalties are incurred. This is included in our compliance management package.

9. Sales Tax for Non-Residents and Indian Immigrants in Canada

If you are an Indian immigrant, newcomer, or non-resident operating a Canadian business, here is what you need to know about Canadian sales taxes:

Non-Resident Businesses Selling to Canadian Customers:

• If you are a non-resident business supplying taxable goods or services to Canadian customers and your revenue exceeds $30,000 — you must register for GST/HST with CRA, even without a physical presence in Canada
• This applies to digital services, software, consulting, e-commerce, and any supply made to Canadian customers
• Non-resident registration uses the same process as Canadian businesses — apply online via CRA My Business Account

Indian Immigrant Starting a Business in Canada — Sales Tax Checklist:

Task	Province: Ontario	Province: BC
GST/HST Registration with CRA	HST — 13% — single CRA registration	GST only — 5% — CRA registration
Provincial Sales Tax Registration	Not required — HST covers both federal + provincial	PST 7% — separate registration with BC Ministry of Finance
ITC Claims	Claim 13% HST ITCs on all business expenses	Claim 5% GST ITCs on all business expenses. PST is NOT recoverable via ITCs.
Filing Period (new business)	Typically annual or quarterly — CRA assigns	Typically annual or quarterly — CRA assigns for GST; BC PST — typically quarterly
Who Manages This	DKP Global — full GST/HST registration + ongoing filing	DKP Global — GST + BC PST registration + ongoing filing

PST Cannot Be Recovered via ITCs: In BC, Saskatchewan, and Manitoba — PST paid on business purchases is NOT recoverable as an Input Tax Credit. Only the GST portion is recoverable. This is a key difference between PST provinces and HST provinces — and one reason Ontario (HST, fully recoverable) is administratively simpler for new businesses.

Need Help with GST/HST Registration in Canada?   DKP Global handles GST/HST registration, PST registration, input tax credit claims, and ongoing tax compliance for businesses across Canada. ACCA-UK & CS certified team. 250+ businesses set up across India, Canada & USA.   📅 Book Free 30-Min Consultation → dkpglobal.org/company-registration-canada/ 📞 +1-672-833-4342  |  📧 info@dkpglobal.org  |  💬 WhatsApp

Frequently Asked Questions — GST vs HST vs PST Canada