Updated on 31 July 2024

Questions around HST in Canada are some of the most commonly received here at Accountor CPA. Navigating the HST meaning, when to register for HST as a business, and how to apply for an HST number can be confusing and intimidating.

Only some provinces in Canada use HST and each province uses its own unique set of regulations and rules around collection, credits, and remittances. If you are new to a province or recently opened your own business, it’s important that you follow the correct set of rules when it comes to HST.

Get answers to all your HST questions with Accountor CPA!

HST Definition: What Does HST Mean?

HST stands for Harmonized Sales Tax. This is a consumer tax that combines the Canadian federal goods and services tax (GST) with provincial sales tax (PST). In provinces that use HST, it is collected by the Canada Revenue Agency (CRA) which then remits the appropriate amount back to the provinces.

The HST system in Canada was designed to help businesses simplify their tax collection and government remittance with only one rate. It helps to minimize administrative processes, but also comes with tax credits and deductions that can lead to more complex administration. On the other hand, critics of the HST system in Canada claim that it shifts the tax burden away from businesses and onto consumers.

HST was first introduced in Atlantic Canada in 1997 and has not been fully adopted by all provinces and territories. Most provinces and territories in Canada still use a version of the GST/PST system.

Currently, five provinces in Canada use HST: Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland.

When Did HST Start in Ontario?

HST was launched in Ontario on July 1, 2010. It consists of a 5% federal portion and 8% provincial portion, and is listed as the total 13% HST on invoices and receipts.The HST system in Ontario seeks to reduce administrative overhead for businesses, generally speaking, as a way to lower overall business costs and pass these savings onto the consumer.

Ontario has a number of HST exemptions and point-of-sale rebates, including on items and services such as:

• Some health, medical, and dental services
• Child care
• Tutoring
• Qualifying food and beverages
• Prescription drugs
• Financial services
• Children’s clothing and footwear
• Books and newspapers
• Car seats
• Feminine hygiene products
• Air travel originating in Ontario and terminating in the U.S.

Businesses are responsible for adhering to the Ontario HST exemption rules when they charge their customers.

When Did HST Start (and End) in BC?

British Columbia presents a unique case for HST adoption in Canada. On July 1 2010, British Columbia adopted an HST rate of 12%, with 5% being the federal portion and 7% being the provincial portion.

Opposition to HST in British Columbia led to a provincial referendum by mail-in ballot. The results were 54.73% in favour of ending HST in BC, leading to its reversal.

On April 1, 2013, British Columbia ended their HST system and reverted back to 5% GST and 7% PST separately.

Provinces Without HST

As of 2021, British Columbia, Saskatchewan, Quebec, and Manitoba have a provincial tax system and a federal tax system in place. apply the provincial system in addition to the separate federal sales tax.

Alberta, Northwest Territories, Nunavut, and Yukon do not have any provincial sales taxes and only charge federal GST on applicable goods and services.

When to Register for HST

How do you know when your business needs to register for an HST number?

If your business has sold over $30 000 worth of goods or services in the past four consecutive quarters, you must request an HST account for your business. A business that sells less than $30 000 worth of goods or services in this time frame is classified as a small supplier, and legally does not need to charge or remit HST.

Some small suppliers opt to voluntarily register for an HST number because they are then able to claim input tax credits on goods and services they purchase for running their business. If you do not register for HST, you are not able to claim these credits on your own purchases when you file your taxes.

Once you register for an HST number, you must begin collecting tax, reporting it, and remitting it to the government based on your assigned period (monthly, quarterly, or annually). You must charge HST on all goods and services sold in the provinces that have adopted HST (except those goods and services that are exempt).

If you need help filing your HST return, the team at Accountor CPA can help.

How to Apply for an HST Number in 2024

You can apply for an HST number by mail, by telephone, or online directly with the CRA. An HST number is part of a business number (BN). If you do not already have a business number when you apply for an HST number, one will be provided for you.

Applying for an HST number is simple. All you need is:

• The effective date of registration (usually the date you stop qualifying as a small supplier)
• Your fiscal year for HST purposes
• Total annual revenue
• Basic business information

When you apply online, your HST number will be provided to you immediately for you to begin use.

Apply for an HST Number and More with Accountor CPA

Looking for more information about how HST applies to your business or how to register for your number? The team of tax experts at Accountor CPA can help.

We offer HST services to small businesses, SMEs, self-employed individuals, and large corporations across Canada. We are dedicated to helping you succeed with our year-round tax planning strategies.

Learn more about the input tax credits and deductions you and your business may be eligible for. Contact us today for a free consultation for HST services.

FAQ

What is the Harmonized Sales Tax (HST) in Canada?

The Harmonized Sales Tax (HST) is a consumption tax that combines the federal Goods and Services Tax (GST) with the provincial sales tax (PST) into a single tax. It is applicable in certain Canadian provinces.

Which provinces use the HST?

The provinces that use HST are Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island.

What are the current HST rates for each province?

As of 2024, the HST rates are:

• Ontario: 13%
• New Brunswick: 15%
• Newfoundland and Labrador: 15%
• Nova Scotia: 15%
• Prince Edward Island: 15%

How does HST affect small businesses in Canada?

HST affects small businesses by requiring them to charge, collect, and remit the tax to the Canada Revenue Agency (CRA). Businesses with annual taxable supplies exceeding $30,000 must register for HST.

Are there any goods or services exempt from HST?

Yes, certain goods and services are exempt from HST, including basic groceries, prescription medications, most health and dental services, and residential rent.

How do I register for an HST number in Canada?

To register for an HST number, you can apply online through the CRA website, by mail, or by phone. You will need to provide information about your business and its activities.

Can I claim input tax credits (ITCs) for HST paid on business expenses?

Yes, businesses can claim ITCs to recover the HST paid on expenses related to their commercial activities, provided they have proper documentation and the expenses are eligible.

How often do businesses need to file HST returns?

The frequency of filing HST returns depends on the business’s annual revenue. Small businesses with revenue under $1.5 million typically file annually, while larger businesses may need to file quarterly or monthly.

What is the difference between HST and GST/PST?

HST is a combined tax that merges GST (federal tax) and PST (provincial tax) into one rate. GST is a federal tax applied across Canada, while PST is a separate provincial tax applied only in certain provinces that do not use HST.

How does HST impact consumers in participating provinces?

Consumers in HST-participating provinces pay a single, harmonized rate on most goods and services, which can simplify the tax process. However, it also means that the tax rate on some items may be higher than in non-HST provinces.