Canadian sales tax is divided into two different parts: the federal general sales tax (GST), and the provincial sales tax, usually referred to as PST. The GST remains at a flat 5% rate across Canada, whereas the PST varies per province.
Four provinces have their own separate sales tax from the GST: British Columbia, Saskatchewan, Manitoba, which refers to it as Retail Sales Tax, and Quebec, which calls it Quebec Sales Tax. Goods and services for sale in these provinces are subject to both GST and PST.
| Provincial sales tax rates | |
| British Columbia | 7% |
| Manitoba | 7% |
| Quebec | 9.975% |
| Saskatchewan | 6% |
Five provinces have a more streamlined approach to sales tax called the Harmonized Sales Tax. This tax is at a higher rate than either the GST or PST because it covers both aspects of the sales tax in one rate. New Brunswick, Newfoundland and Labrador, Ontario, Nova Scotia, and Prince Edward Island all use the Harmonized Sales Tax. If you need to know how much of the HST is allocated to the province, you simply have to subtract the 5% GST rate from the total HST rate to see how much of it is provincial tax under another name.
| Harmonized sales tax rates | |
| New Brunswick | 15% |
| Newfoundland and Labrador | 15% |
| Nova Scotia | 15% |
| Ontario | 13% |
| Prince Edward Island | 15% |
Now we haven’t covered all the provinces of Canada. If you’ve been reading closely, you’ve realized we’ve left out the Northwest Territories, Yukon, Nunavut, and Alberta. These provinces and territories do not have any form of provincial tax at all and are only subjected to the federal 5% GST, leading to the lowest overall tax rates in Canada.
To sum up, a harmonized sales tax is a combination of the general and provincial sales tax rates into one streamlined package. When tax time comes around, you do not need to worry about dividing your HST collected into the GST and provincial parts. You simply have to remit the entire amount to the Canada Revenue Agency (CRA) and they will calculate the portion due to the province and return it to the provincial government.
Make sales tax compliance a breeze with TwinkleTax. Simplify your sales tax accounting and simplify your filings with our cutting-edge software that makes it easy to calculate, process, and report tax obligations.
We’re excited to help you make the most of your time. If you have any questions, please feel free to contact us. We’ll be more than happy to help!
