Your Ultimate Guide to Canadian Sales Tax: GST, HST, and PST

As an online seller operating outside of Canada, it’s important to stay compliant with the Canadian tax authorities and ensure you’re properly registered, calculating, and filing your GST, HST, and PST. First, let’s start with the basics. In Canada, there are three main types of sales tax: the Goods and Services Tax (GST), the Harmonized Sales Tax (HST), and the Provincial Sales Tax (PST). The GST is a federal tax applied to most goods and services in Canada, and it is currently set at a rate of 5%. The HST is a combination of the GST and a provincial sales tax, and it is applied in certain provinces. The PST, on the other hand, is a provincial tax that is only applied in certain provinces.

To complicate matters further, the rate of the HST and PST can vary depending on the province in which the sale is made. For example, the HST rate in Ontario is 13%, while the PST rate in British Columbia is 7%. As an online seller, it’s important to know the applicable tax rates in each province to ensure you’re charging the correct amount of tax on your sales.

But what sets Canada’s sales tax system apart from others? For starters, Canada has a Goods and Services Tax (GST) and a Quebec Sales Tax (QST) that are similar to Value-Added Tax (VAT) systems in other countries. This means that the tax is applied at each stage of the production and distribution process, from the manufacturer to the retailer, rather than just at the point of purchase for the consumer.

One key difference between the GST/HST and other PST systems is that the GST/HST is a tax that applies across Canada, while the PST is a provincial tax that varies by province. This means that the tax rate and rules for PST can vary depending on where the good or service is provided, adding an additional layer of complexity for online sellers.

The difference between the GST and HST is that while the GST is the federal base rate tax of 5% across all of Canada, the HST is a “harmonized” tax, meaning that it combines the federal GST with the provincial PST into a single tax. This is meant to simplify the process for businesses, but it can still be confusing for those unfamiliar with the system.

At Canadian Tax Compliance, we make sure that our clients are fully aware of these differences and have the support they need to navigate Canada’s unique GST/HST/QST/PST system. We handle the registration, calculation, and filing of your sales tax, so you can focus on growing your business.