If you sell goods or services in Canada, you have likely run into the alphabet soup of GST, HST, and PST. While the names sound similar, each one has its own rules, rates, and registration thresholds. Getting them wrong can lead to undercharging customers, surprise tax bills, or penalties from the CRA.

What is GST?

The Goods and Services Tax (GST) is the federal 5% sales tax administered by the Canada Revenue Agency. Most businesses that carry on commercial activity in Canada must register for GST once their worldwide taxable revenues exceed $30,000 in any four consecutive calendar quarters.

What is HST?

In several provinces, the federal GST has been blended with the provincial sales tax into a single Harmonized Sales Tax (HST). Provinces like Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island use HST. Rates range from 13% to 15%. Businesses collect and remit one tax to the CRA, which then splits the revenue with the province.

What is PST?

Provincial Sales Tax (PST) is charged separately in British Columbia, Saskatchewan, Manitoba, and Quebec (where it is called QST). In these provinces, you typically charge GST separately and remit PST/QST to the provincial tax authority. Alberta and the territories charge only the 5% GST.

Registration Thresholds

The $30,000 small supplier threshold applies to GST/HST but not always to PST. British Columbia, for example, requires PST registration for certain sales even below the federal threshold. Check each province where you sell.

Input Tax Credits

Once registered, you can generally recover the GST/HST you pay on business expenses by claiming input tax credits (ITCs). Keep detailed invoices showing the supplier’s registration number, the amount of tax charged, and what was purchased.

Common Mistakes

Charging the wrong rate for the customer’s province, missing PST registration, failing to collect tax on digital services sold to Canadian customers, and not keeping records long enough (six years is the standard).

Conclusion

Sales tax compliance does not have to be intimidating. Start by confirming where your customers are located, which taxes apply, and whether you have crossed any registration thresholds. A little planning up front can prevent costly corrections later.