Canadian GST/HST rates and GST/HST compliance

Canada operates a Goods and Services Tax (GST) system rather than VAT. In some provinces, GST is combined with provincial sales tax into a Harmonized Sales Tax (HST). GST/HST is administered by the Canada Revenue Agency (CRA).

The standard federal GST rate is 5%. HST applies in participating provinces at higher combined rates. Canada applies a mix of standard rates, zero-rating, and exemptions.

Businesses registered for GST/HST must apply the correct tax treatment to taxable supplies and remit the tax to the CRA by filing periodic GST/HST returns.

Some supplies are exempt from GST/HST. These commonly include:

• Most financial services
• Long-term residential rental accommodation
• Many health, medical, and dental services
• Certain supplies made by charities and public sector bodies

Exempt supplies do not generate output tax and generally do not allow recovery of input tax credits (ITCs).

A GST/HST number (Business Number with a GST/HST program account) is required for businesses making taxable supplies in Canada unless a small supplier exception applies.

• Domestic businesses must register once worldwide taxable revenues exceed CAD 30,000 in a single calendar quarter or over four consecutive calendar quarters.
• Non-resident (foreign) businesses may be required to register if they make taxable supplies connected with Canada, depending on the nature of the activity and applicable rules.
• For digital services supplied to Canadian consumers, offshore suppliers and certain platforms may be required to register and charge GST/HST from the first supply, regardless of physical presence or turnover threshold.

Get more information on GST/HST registration in Canada.

GST/HST-registered businesses must file GST/HST returns on a monthly, quarterly, or annual basis, depending on turnover and the filing frequency assigned or elected at registration.

Returns include:

• Output GST/HST on taxable sales
• Deductible ITCs on eligible business purchases

Returns are generally filed electronically through the CRA’s online services.

Get more information on GST/HST returns in Canada.

Foreign businesses storing goods in Canada must consider GST/HST registration and collection obligations.

• Holding inventory in Canada for sale or distribution may indicate that the business is carrying on business in Canada, depending on the facts.
• Imports of goods into Canada are generally subject to GST at the border, usually payable by the importer of record.

Canada offers specific GST/HST relief programs for qualifying import and export activities.

• Approved programs may allow GST/HST relief or recovery on imported goods used in export-oriented or commercial activities. 
• Import GST is otherwise generally payable at customs clearance and may later be recovered through ITCs if the importer is GST/HST registered.

Participation is subject to eligibility conditions and approval by the relevant authorities.

Canada applies GST/HST to many digital and electronically supplied services. Effective 1 July 2021, Canada introduced digital-economy rules that require certain non-resident suppliers and platform operators to register, collect, and remit GST/HST on supplies made to Canadian consumers.

• The applicable GST (5%) or HST (13%–15%) rate applies based on the customer’s location.
• In many cross-border B2C scenarios, no small-supplier threshold applies. 
• Eligible non-resident suppliers may be required to register under a simplified GST/HST regime with streamlined filing requirements.

Some provinces impose separate provincial sales taxes on digital services.

Saskatchewan, for example, applies 6% Provincial Sales Tax (PST) to certain electronically delivered services supplied for use or consumption in the province, including by non-resident suppliers.

• Non-resident digital suppliers may be required to register, collect, and remit PST.
• PST applies in addition to any applicable federal GST/HST. 
• Suppliers must take reasonable steps to identify whether a customer is located in Saskatchewan.