As of July 1st, 2010 Ontario and B.C. will become Harmonized Sales Tax (HST) provinces. In other words, the consumer tax structure in these provinces will change from a separate federal tax (GST) and provincial sales tax (PST) system to a single federally administered tax (HST).
The following information will help you keep track of the GST, HST and PST requirements of each Canadian province and territory and help your small business correctly charge and remit the correct GST, HST or PST.
Which Provinces Have HST and Which Don't
Ontario and B.C. will join Nova Scotia, New Brunswick, and Newfoundland and Labrador, which have had HST in effect for some time. In all of these provinces the HST rate is 13% except for B.C., where the HST rate is 12%, and Nova Scotia, where the HST rate is 15%.
Saskatchewan, Manitoba and Prince Edward Island (P.E. I.) all have GST and PST. The GST rate is 5%. The respective PST rates are:
- Manitoba: 7%
- Prince Edward Island: 10%
- Saskatchewan: 5%
In Québec, the provincial sales tax is called Québec sales tax (QST); the current rate is 8.5%.
In Alberta, Yukon, Nunavut, and the Northwest Territories only the GST applies as these provinces and territories don't have provincial sales taxes.
Transitional Rules for HST
If you do business in Ontario or B.C., where the new HST (Harmonized Sales Tax) will come into full force July 1st, as of May 1st, you need to charge GST/HST on prepayments for goods or services that will be provided on or after July 1st.
For instance, if you sell tickets to an event that will be happening after July 1st, you need to charge HST on the tickets. For details on how to apply the HST between May 1st and July 1st, see:
- General PST Transitional Rules for Transitioning to British Columbia HST
- General Transitional Rules for Ontario HST
HST Registration
You don't need to register for BC or Ontario HST if you're already a GST registrant. New businesses will need to register for HST unless they are Small Suppliers and choose not to. Even if you are a Small Supplier, however, you may voluntarily register your small business, enabling you to claim Input Tax Credits.
Charging GST
Generally, whether or not you charge HST on goods or services you provide depends on the place of supply. Specific rules apply to determine whether a supply is made in or outside of a participating province.
While no changes are proposed to the current place of supply rules for supplies of tangible personal property and real property, the current place of supply rules for supplies of intangible personal property and for services will change considerably with the introduction of HST.
Follow these links for details:
HST Exemptions & Point-of-Sale Rebates
What goods and services are HST exempt and which goods and services will require merchants to give point-of-sale HST rebates when sold differ in BC and Ontario. Refer to these articles:
HST Invoice Requirements
Just as with the GST, there are particular pieces of information you have to have on your HST invoices (and your receipts, contracts, or other business papers) to inform your customers how much tax they are being charged and so that they have the documentation they need to claim Input Tax Credits (ITCs).
You can review what information is required in my article Invoice Sample With HST or in the Canada Revenue Agency's RC4022: General Information for GST/HST Registrants.
HST Resources from the Canada Revenue Agency (CRA)
The Canada Revenue Agency's Goodsand Services Tax / Harmonized Sales Tax page is the place to visit for detailed information about the transition to HST and how it will affect your business.
You can also reach the CRA by telephone at 1-800-959-5525 (TTY 1-800-665-0354)."
