What is GST/HST?

The GST is a tax that applies at a rate of 5% to the supply of most goods and services in Canada. Three participating provinces (Nova Scotia, New Brunswick, and Newfoundland and Labrador) harmonized their provincial sales tax (PST) with the GST to create the harmonized sales tax (HST). The HST applies to the same goods and services as the GST, but at a rate of 13%. Of this, 5% is the federal part and 8% is the provincial part.

Although the consumer ultimately pays the GST/HST, generally businesses are responsible for collecting and remitting it to the government. Businesses that must register or that register voluntarily for the GST/HST are called registrants.

Generally, registrants collect the GST/HST on their taxable supplies, and pay the GST/HST on taxable purchases they make to operate the business. Registrants can generally claim a credit, called an input tax credit (ITC), to recover the GST/HST they paid or owe on the purchases they use, consume or supply in their commercial activities. When they complete their GST/HST return, they deduct the amount of the credit from the GST/HST they collected. If they pay more than they collect, they can claim a refund.

The term commercial activity generally means any business, adventure or concern in the nature of trade carried on by certain persons, except when making exempt supplies.

Taxable goods and services means goods and services taxable at 0% (zero-rated), 5% or 13%.