Question 1

What is the difference between GST and HST?

Accepted Answer

GST (Goods and Services Tax) is the federal 5% value-added tax that applies everywhere in Canada. HST (Harmonized Sales Tax) is a single combined tax in five provinces - Ontario (13%), New Brunswick (15%), Newfoundland and Labrador (15%), Nova Scotia (14%, reduced from 15% on April 1, 2025), and Prince Edward Island (15%) - that bundles the federal 5% GST with the provincial portion into one tax. From a buyer's point of view, HST is one line on the receipt; behind the scenes, the Canada Revenue Agency collects HST on the province's behalf and remits the provincial share. The federal 5% portion of HST works exactly like GST elsewhere.

Question 2

Why does Quebec have its own QST instead of harmonizing?

Accepted Answer

Quebec administers its own provincial sales tax (QST / TVQ) at 9.975%, separate from the federal 5% GST, through Revenu Québec rather than the Canada Revenue Agency. The QST closely mirrors GST rules (same base, similar input tax credits) but Quebec keeps administrative control to protect provincial revenue collection and align with its broader fiscal autonomy. Quebec businesses register separately for QST. Most goods and services are subject to both GST and QST, so the effective combined rate is 14.975%, very close to HST provinces.

Question 3

When does my business need to register for GST/HST?

Accepted Answer

You must register for GST/HST once your worldwide taxable revenues exceed $30,000 in any four consecutive calendar quarters (the small-supplier threshold). Once you cross the threshold, you have 29 days to register and must charge GST/HST on taxable sales going forward. Below $30,000, registration is voluntary; voluntary registration lets you claim Input Tax Credits on business purchases but also requires you to charge tax on sales. Taxi drivers and ride-share operators must register regardless of revenue. Quebec residents register separately for QST through Revenu Québec.

Question 4

What is the GST Quick Method?

Accepted Answer

The Quick Method is a simplified GST/HST accounting option for small businesses with annual taxable sales under $400,000. Instead of tracking GST/HST collected and Input Tax Credits separately, you remit a single reduced rate (varies by province and business type, generally 3% to 11%) on tax-included gross sales, and you cannot claim most ITCs in exchange. The Quick Method usually saves time and often money for service businesses with few input purchases. You must elect into it (Form GST74) and apply at least one full fiscal year.

Question 5

What are Input Tax Credits (ITCs)?

Accepted Answer

Input Tax Credits let GST/HST-registered businesses recover the GST/HST they paid on business purchases (rent, supplies, equipment, professional fees, etc.). You subtract ITCs from the GST/HST you collected from customers and remit the difference to CRA. ITCs prevent tax cascading. For example, a consultant who pays $130 GST on a laptop and collects $1,300 GST from clients in the same quarter remits $1,170. Personal expenses, meals and entertainment (limited to 50%), and exempt supplies (residential rent, most financial services) do not qualify for ITCs. Keep receipts for six years.

Question 6

Are there items that are exempt or zero-rated?

Accepted Answer

Yes. "Zero-rated" supplies are taxable at 0% - examples include basic groceries, prescription drugs, medical devices, exports, most agricultural products, and some feminine hygiene products. Businesses selling zero-rated supplies can still claim ITCs on related expenses. "Exempt" supplies are not taxed at all and sellers cannot claim ITCs - examples include long-term residential rent, most health and dental care, education tuition, child care, and most financial services. The distinction matters: zero-rated is better for the seller because ITCs are recoverable.

Question 7

How do I calculate tax on a tax-inclusive price?

Accepted Answer

To strip tax out of a gross (tax-included) amount, divide by 1 plus the combined rate. For example, in Ontario (13% HST), a $113 tax-included price divides by 1.13 to give a $100 pre-tax amount, with $13 of HST. In Quebec, with 5% GST and 9.975% QST stacking to 14.975%, a $114.98 gross amount divides by 1.14975 for a $100 net. This calculator handles the math both ways - useful for invoicing, business expense reports, and reconciling receipts. Note that QST is calculated on the pre-GST amount (since 2013), so the rates simply add together.

Question 8

Does GST/HST apply to digital services and subscriptions?

Accepted Answer

Yes. Since July 2021, non-resident digital service providers (Netflix, Spotify, Apple, Google, Microsoft, etc.) must register and charge GST/HST when selling to Canadian consumers. The rate matches the buyer's province of residence: 5% GST in Alberta and territories, 13% HST in Ontario, 15% HST in Atlantic provinces, and 5% GST plus 9.975% QST in Quebec (where QST applies separately). Business-to-business sales between registered Canadian companies generally do not change. Canadian SaaS, app, and content businesses follow the same rules domestically.

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