Learn About Harmonized Sales Tax HST

The federal component remains consistent at 5% across all HST provinces. The provincial portion varies by province, resulting in total HST rates ranging from 13% to 15%.

The Canada Revenue Agency administers HST collection and distribution, remitting the provincial share back to each participating province. This streamlined approach reduces administrative burden for businesses operating in multiple provinces.

HST Rates by Province in 2026

Five Canadian provinces currently participate in the HST system. Each sets its own provincial component, which combines with the 5% federal GST.

Rates are set by tax legislation. Nova Scotia reduced HST from 15% to 14% on April 1, 2025; consulting the rate in October 2026 does not change its effective date.

HST vs GST vs PST Explained

Canada uses three distinct sales tax structures depending on the province. Understanding these differences helps you anticipate costs when shopping or doing business across provincial borders.

Goods and Services Tax (GST)

GST is the federal consumption tax applied at 5% across all Canadian provinces and territories. Every region charges this base rate, though some combine it with provincial taxes.

Provincial Sales Tax (PST)

British Columbia, Saskatchewan and Manitoba apply provincial taxes separate from GST. Quebec applies QST, whose recovery mechanism differs from PST. Registration depends on each tax’s rules.

PST is generally not recovered through input tax credits. QST differs: registrants can claim input tax refunds under the applicable conditions. In Quebec, Revenu Québec generally administers GST and QST and permits a combined return. Separate rules apply notably to certain financial institutions; do not assume two agencies and two separate returns in every case.

Key Structural Differences

For businesses, HST provinces offer administrative simplicity. For consumers, the total tax burden depends more on the combined rate than the collection method.

Which Provinces Use HST?

Five provinces have harmonized their provincial sales taxes with the federal GST system. All participating provinces are located in Central and Atlantic Canada.

The remaining provinces and territories use either GST alone (Alberta, Northwest Territories, Nunavut, Yukon) or GST plus separate provincial sales tax (British Columbia, Saskatchewan, Manitoba, Quebec).

HST Exempt Items and Services

Not all goods and services are subject to HST. Canada’s tax system includes both zero-rated supplies (taxed at 0%) and exempt supplies (outside the tax system entirely).

Zero-Rated Supplies

These items are technically taxable but charged at 0%. Businesses can still claim input tax credits on related expenses.

• Basic groceries: qualifying products such as milk, bread and vegetables are zero-rated at 0%.
• Drugs and medical devices: qualifying products are zero-rated under the applicable conditions.
• Exports and international transportation: certain supplies are zero-rated when the statutory conditions are met.

Exempt Supplies

Exempt supplies are not taxed, and businesses cannot claim input tax credits on related expenses.

• Residential rent: generally exempt for periods of one month or more, subject to conditions.
• Healthcare and education: certain qualifying services are exempt.
• Financial services: many services, such as interest and certain insurance, are exempt. Advisory and asset-management services are not automatically exempt financial services.

If you’re uncertain whether a specific purchase includes HST, check your receipt or ask the vendor. Most retailers clearly indicate taxable versus tax-exempt items.

How HST Works for Businesses

General small-supplier rule: taxable supply revenue, including zero-rated sales, above $30,000 in a single calendar quarter triggers collection on the sale that crosses the threshold; register within 29 days. If the threshold is exceeded over up to four consecutive quarters without exceeding $30,000 in one quarter, small-supplier status ends at the end of the following month; collect from the first subsequent taxable supply and register within 29 days of that supply. The calculation includes associates and statutory exclusions, including capital-property sales and financial services. CRA rules.

Collection and Remittance

Registered businesses charge HST on taxable sales and collect it from customers. The amount charged depends on the customer’s location (place of supply), not the business’s location.

For example, a British Columbia business shipping goods to an Ontario customer must charge 13% HST, not BC’s 12% combined GST and PST.

Input Tax Credits

Registrants can claim ITCs for HST paid or payable on expenses used in commercial activities, subject to eligibility, qualifying use and restrictions. A business expense does not automatically allow 100% recovery.

Businesses subtract the input tax credits from the HST they’ve collected, remitting only the net difference to the Canada Revenue Agency.

Filing Requirements

Based on the relevant annual taxable supplies, the assigned period is generally annual at $1.5 million or less, quarterly above $1.5 million up to and including $6 million, and monthly above $6 million. More frequent elections and exceptions apply.

When Did HST Begin in Canada?

The HST framework was introduced in phases as individual provinces chose to participate. The first three provinces adopted HST in 1997, with others joining over the following decades.

British Columbia also implemented HST on July 1, 2010, but reverted to the GST plus PST system on April 1, 2013, following a provincial referendum.

The federal GST itself was introduced on January 1, 1991, replacing the previous Manufacturers’ Sales Tax. The GST rate started at 7%, was reduced to 6% in 2006, and dropped to its current 5% in 2008.

Recent HST Changes in 2026

Provincial HST rates remain relatively stable, though provinces retain the authority to adjust their provincial components. Nova Scotia reduced its HST from 15% to 14% on April 1, 2025.

No major structural changes to HST have been announced for 2026. However, businesses should monitor provincial budgets, as rate adjustments typically occur during annual budget announcements between February and April.

Since July 1, 2021, the cross-border digital regime generally has a CAD $30,000 applicable-revenue threshold over any 12-month period, with supplier- and platform-specific rules. It does not mean every foreign digital supplier must register without a threshold. CRA digital rules.

Bottom Line

HST combines federal and provincial components in five provinces. It simplifies some administration, but ITCs remain subject to eligibility rules and expense-specific restrictions.

HST is 13% in Ontario, 14% in Nova Scotia and 15% in the other participating provinces. Qualifying basic groceries, prescription drugs and medical devices are zero-rated; eligible residential rent and certain healthcare services are exempt, subject to the applicable conditions.

If you operate a business across multiple provinces, understanding place-of-supply rules ensures you charge the correct rate based on where your customer receives the goods or services. Consider comparing business credit cards that help you track expenses and manage cash flow more effectively.

Stay informed about the latest financial strategies and tax updates by signing up for our newsletter.

Harmonized Sales Tax – FAQ