HST (harmonized sales tax)

• One tax instead of two (the federal GST and the provincial tax)
• The rate varies by province: 13% in Ontario, 14% or 15% in the Atlantic provinces
• The tax rate is determined by the place of sale (where the customer goes or where the product is shipped), not by your address
• A single GST registration is all you need to charge the tax anywhere in Canada
• You can recover the HST paid on your business purchases through ITCs, just as you do with the GST

As soon as you sell outside of Quebec, whether online or in person, this becomes a real issue. For example: you sell an item to a customer in Toronto. You don’t charge the GST/QST of Quebec, but rather 13% HST, because that’s the rate in Ontario. On a $1,000 sale, that’s $130 in HST, instead of the $149.75 in GST/QST you would have charged a customer in Quebec: the correct rate depends on the delivery location, not your address. Charging the wrong tax is costly for both parties: overcharging upsets the customer, while undercharging means you have to reimburse the government for the difference out of your own pocket. The good news: Your GST registration already covers the HST, and Revenu Québec handles everything for local businesses. This province-specific adjustment applies equally to the small supplier that has just registered that the business under Quick Method, and custom settings save you from having to make adjustments when tax audit. The exact rates by province are published by the Canada Revenue Agency. All that’s left is to set up your invoicing correctly for each province. Bankeo will connect you for free with a vetted accountant or CPA to get everything in order, and we’ll be there for you every step of the way.

What exactly is the HST, in simple terms?

It 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, as in Quebec, these provinces have combined them into a single tax, which makes it easier to understand on the bill. The total rate ranges from 13% to 15%, depending on the province.

Does a Quebec business have to charge HST?

Yes, as soon as a business makes a taxable sale in one of these provinces. The rule is that the location of the sale determines the tax. For a product, you look at where it’s delivered; for a service, the customer’s address matters. No additional registration is required if you’re already registered for the GST.

How can I get a refund for the HST I paid on my purchases?

Just like with the GST: you can recover the tax paid on your business purchases through input tax credits (ITCs), that is, the tax refunds you claim on your regular tax return, including the provincial portion of the HST. Proper setup by province prevents errors. Bankeo connects you for free with a vetted accountant or CPA to get your interprovincial taxes in order, and we’re here to support you every step of the way.