VAT (Harmonized Sales Tax)

The HST (Harmonized Sales Tax) is a single sales tax that combines the federal (GST) and provincial sales taxes. Five provinces use it: Ontario, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island. Quebec does not use it; it maintains separate sales tax rates.

Brief

One single tax instead of two (federal VAT + provincial tax)
The rate varies by province: 13% in Ontario, 14% or 15% in the Atlantic provinces.
The location of the sale (where the customer or the product goes) determines the rate, not your address.
Une seule inscription à la TPS/TVH suffit pour la facturer partout au Canada

Why does this matter?

As soon as you sell outside Quebec, online or otherwise, the issue becomes very real. For example, you sell an item to a customer in Toronto. You don't charge Quebec's GST and QST, but rather 13% HST, because that's the Ontario rate. Making a tax mistake is costly for both parties: overcharging upsets the customer, while undercharging forces you to pay the difference out of pocket to the government. The good news: your VAT registration already covers the VAT, and the tax authorities handle everything for businesses here. All that remains is to properly configure your invoicing by province. Bankeo will connect you with a verified accountant/CPA free of charge to get this sorted out, and we'll be there to support you every step of the way.

Frequently asked questions

What exactly is VAT?

This is the sales tax used in five provinces: Ontario, New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island. Instead of two separate taxes like in Quebec, these provinces have combined two into one: it simplifies the bill. The total rate varies from 13% to 15% depending on the province.

Is a Quebec company required to charge VAT?

Yes, as soon as she makes a taxable sale in one of these provinces. The rule is: the location of the sale determines the tax. For a product, it's where it's delivered; for a service, the customer's address is used. No additional registration is required if you are already registered for GST.

How can I reclaim the VAT I paid on my purchases?

Just like with VAT: you recover the tax paid on your business purchases through Input Tax Credits (ITCs), which are the tax refunds you claim on your regular tax return, including the provincial portion of the VAT. Proper setup by department prevents errors. Bankeo will connect you with a free audited accountant/CPA to ensure your interstate taxes are in order, and we'll be there to support you every step of the way.