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Canada GST/HST/Sales Tax Guide for Digital Businesses

Canada-GSTHSTSales-Tax-Guide-for-Digital-Businesses

It is really difficult to understand GST/HST/PST in Canada. I have just tried out to sort it out in an easy manner. Canadian GST is managed and governed by the Federal Government which has a rate of 5%. GST of 5% paid on the purchase of goods/services can be claimed as ITC (Input Tax Credit) against GST on sales. It will be applicable on all the sales made in Canada except certain exemptions as well which can be referred to from the link – https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022/general-information-gst-hst-registrants.html

PST(Provincial Sales Tax) is applicable on the sales made in the respective province where HST is not applicable. British Columbia, Manitoba, Quebec, and Saskatchewan follow the PST model where GST of 5% and respective PST as mentioned in the low table are applied. There are certain provinces(Alberta, Northwest Territories, Nuvanut, and Yukon) where only the GST of Federal 5% is more applicable and PST or HST is not applied to it.

HST(Harmonized Sales Tax) is a more refined version of GST in Canada. Basically, it includes the GST of the Federal and PST of the Province but the taxpayer does not require to maintain it separately. Also, taxpayers can claim the ITC (Input Tax Credit) paid on purchase against HST on sales. The registration for GST and PST does not require to take as the single registration number works for both items. The province where HST applies has single registration if one taxpayer sells goods/services in the provinces where HST applies (New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, and Ontario).

Retail Sales Exemption is an exemption provided to the buyer when a buyer wants to resell the goods. The exemption is available in some of the provinces which can be found out in the below table. The exemption can be available against PST only and not on GST/HST as GST/HST provides the ITC on purchase. You can check the overall details relating to GST in Canada.

Province Type PST/QST Federal GST HST Total Tax Rate ITC Claim Retail Sale Exemption
● Alberta

● Northwest Territories

● Nunavut

● Yukon

Federal GST 5% 5% Yes No
● British Columbia

● Manitoba

Federal GST + PST 7% 5% 12% Yes for Federal GST Yes
● Saskatchewan Federal GST + PST 6% 5% 11% Yes for Federal GST Yes
● Quebec Federal GST + QST 9.975% 5% 14.975% Yes for both No
● New Brunswick

● Newfoundland and Labrador

● Nova Scotia

● Prince Edward Island

HST 15% 15% Yes No
● Ontario HST 13% 13% Yes No

Overall knowledge of the GST/HST in Canada covers most of the question but still you can ask for any specific query to us in the email for the support. We are the advisor, consultant and filer of all the GST services through Canada.

Disclaimer – The Information shared here are for knowledge only. Please take the opinion of the tax advisor.

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