As a Canadian business owner, understanding and managing sales taxes is a complex but crucial part of your operations. Staying up to date on the provincial sales tax (PST), goods and services tax (GST), and harmonized sales tax (HST) is key to ensuring compliance and optimizing your financial strategy.
This guide breaks down the essentials of each tax type and their application across different provinces, empowering you to navigate the fiscal year with confidence.
In 2025, Canadian business owners must navigate a complex landscape of sales taxes, which includes the provincial sales tax, Quebec sales tax (QST), goods and services tax, and harmonized sales tax.
You may notice that some provinces collect PST and GST separately, while others combine these into one tax, HST, to simplify the process.
Each tax has its specifics:
Certain provinces, like British Columbia, Manitoba, Quebec, and Saskatchewan, require businesses to collect PST and GST.
The tax rates in these regions are:
These examples highlight the need for businesses to understand special tax situations in their respective provinces.
In Alberta, the Northwest Territories, Nunavut, and Yukon, businesses must charge only the 5% GST.
It's important to note that Alberta also imposes a 4% tourism levy on lodging and hotel room fees — once again highlighting the differences in local tax laws.
In New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, HST is applicable:
Beginning April 1, 2025, the government of Nova Scotia will permanently reduce the PST rate from 10% to 9%. The new HST will be 14%, making it the lowest rate in Atlantic Canada.
If your business makes over $30,000 per year, you have to collect GST/HST. You can do this by including the correct GST/HST charge on your invoice. How much tax you charge depends on the place of supply, which is where you make your sale. For instance, if you make a sale in Ontario you will add a 13% HST charge to the subtotal.
If you have to collect taxes, you're also responsible for filing your GST/HST/PST return. There are a variety of ways to file, including electronically, through My Business Account, GST/HST Telefile, or by paper.
Note that most businesses are now required to file returns electronically.
It's also up to you to keep track of when you need to make your GST payments. Your payment deadline depends on your GST/HST filing period. There are a variety of payment and filing deadlines, which include:
When paying your GST/HST, you can use the CRA website to set up a pre-authorized debit. Alternatively, you can pay using online banking, pay in person at a financial institution, or send a cheque in the mail.
The small supplier rule, exempting businesses with less than $30,000 annual revenue from GST/HST registration, applies to federal sales tax only (GST and HST). Each province has its own rules regarding provincial sales taxes.
For instance, in Quebec, this rule applies to the Quebec sales tax (QST), but in other provinces, businesses may still need to collect PST regardless of revenue.
Generally, you don't have to charge GST/HST on goods and services that are exported. This is because many exported products and services are considered zero-rated under the GST/HST. So the rate of GST/HST is 0%, but you still may be eligible for input tax credits (ITCs).
Input tax credits allow you to recover the GST/HST paid on purchases related to business expenses. For instance, you may be able to claim ITCs on things like fuel costs, accounting fees, or business start-up costs on your GST/HST return.
If a foreign client buys your goods or services in Canada, you should charge GST/HST or PST when applicable.
From December 14, 2024, to February 15, 2025, the government of Canada implemented a tax break for all Canadians. The purpose was to help put more money back into people's pockets over the holidays.
During this time, shoppers got full relief from GST/HST on a variety of products, including groceries, restaurant meals, drinks, snacks, children's clothing, and gifts.
After February 15, 2025, businesses must resume charging GST/HST on transactions.
From December 14, 2024, to February 15, 2025, the government of Canada implemented a tax break for all Canadians. The purpose was to help put more money back into people's pockets over the holidays.
During this time, shoppers got full relief from GST/HST on a variety of products, including groceries, restaurant meals, drinks, snacks, children's clothing, and gifts.
After February 15, 2025, businesses must resume charging GST/HST on transactions.
Tracking and managing your sales tax can take a lot of effort. To simplify the process, consider using QuickBooks online solutions. With QuickBooks, you can keep track of your sales tax payments and stay up to date with the CRA.
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