Canada has sales tax, but it works differently than in the United States
Canada collects sales tax at the point of purchase, but the system is simpler than the American one. There is no federal sales tax rate that varies by state. Instead, Canada uses a Goods and Services Tax (GST) set at 5 percent nationwide, and most provinces layer on a Provincial Sales Tax (PST) or Harmonized Sales Tax (HST) on top of it. The total you pay depends on which province you are in, not which city or county.
The key difference from the US: the tax is almost always included in the price you see on the shelf or online. When a Canadian store shows $10.99, that is usually the final amount you pay at the register. American stores show the pre-tax price and add tax at checkout. This makes Canadian prices look higher in the sticker price but means no surprises at the till.
Key Takeaways
- Canada charges a 5 percent federal GST on most goods and services, and most provinces add their own sales tax on top, for a combined rate between 5 and 15 percent.
- The tax rate you pay depends on the province where you make the purchase, not the city or store chain.
- Prices shown in stores and online typically include all sales tax, so the amount you see is what you pay.
- Some items like basic groceries, prescription drugs, and medical devices are exempt from GST and PST, so you pay no sales tax on them.
- When you cross a provincial border, the sales tax rate changes, which is why the same item costs different amounts in different provinces.
The five percent federal GST applies everywhere
The Goods and Services Tax is a 5 percent federal tax collected on nearly all goods and most services sold in Canada. It applies the same way whether you are in British Columbia, Ontario, or Newfoundland. Businesses collect it at the point of sale and send it to the Canada Revenue Agency.
The GST replaced the old Manufacturers' Sales Tax in 1991. It is a value-added tax, which means it is collected at each stage of production and sale, but the end consumer (you) only pay it once, on the final purchase. You do not see this complexity at the register — the store shows you one number that includes the GST.
Provincial sales tax rates range from zero to 10 percent
On top of the 5 percent GST, most provinces add their own sales tax. The amount varies by province and is added to the GST, not replacing it. Alberta is the only province with no provincial sales tax, so the total rate there is 5 percent. In other provinces, the combined rate ranges from 10 to 15 percent.
Five provinces — Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, and Prince Edward Island — use the Harmonized Sales Tax (HST), which combines the federal and provincial tax into one rate. HST rates are 13, 14, or 15 percent depending on the province. The remaining provinces use a separate Provincial Sales Tax (PST) that sits on top of the 5 percent GST. British Columbia, Saskatchewan, Manitoba, and Quebec each have their own PST rate.
| Province | GST | Provincial Tax | Total Rate |
|---|---|---|---|
| Alberta | 5% | None | 5% |
| British Columbia | 5% | PST 7% | 12% |
| Saskatchewan | 5% | PST 6% | 11% |
| Manitoba | 5% | PST 8% | 13% |
| Ontario | Combined HST | — | 13% |
| Quebec | 5% | PST 9.975% | 14.975% |
| Nova Scotia | Combined HST | — | 15% |
| New Brunswick | Combined HST | — | 15% |
| Newfoundland and Labrador | Combined HST | — | 15% |
| Prince Edward Island | Combined HST | — | 14% |
Some items are exempt from sales tax
Not everything you buy in Canada is subject to GST and PST. Basic groceries — bread, milk, eggs, vegetables, meat, and other unprocessed foods — are exempt from both taxes. Restaurant meals and prepared foods are taxed, but raw ingredients you cook at home are not. This is why a loaf of bread costs less than a sandwich with the same bread.
Prescription medications, medical devices like hearing aids and wheelchairs, and certain health services are also exempt. Dental and vision care are not covered by the exemption, so you pay tax on those services. Books, newspapers, and magazines are exempt in most provinces. Children's clothing and footwear are exempt from GST but may be subject to PST depending on the province.
Prices shown in stores include the tax
When you see a price tag in a Canadian store or on a Canadian website, that number includes all applicable GST and PST or HST. If the tag says $19.99, you pay $19.99 at the checkout. There are no surprises at the till. This is the opposite of most American stores, where the displayed price does not include sales tax.
The exception is when you are shopping online from a seller outside Canada or when a business has not yet calculated the tax. In those cases, the tax may be added at checkout. But for the vast majority of in-store and major online shopping in Canada, the price you see is the price you pay.
Sales tax changes when you cross a provincial border
Because the tax rate depends on the province where the purchase happens, the same item costs different amounts in different provinces. A book that costs $15 in Alberta (5 percent tax) costs more in Ontario (13 percent tax). If you live near a provincial border, you may notice people crossing over to shop in the lower-tax province.
Online purchases are taxed based on where the seller is located or where the item is shipped to, depending on the seller's business rules. Large retailers usually charge the tax rate of the province you are shipping to. Small businesses may charge the rate where they are based. If you are unsure, check the website's tax policy or contact the seller before you buy.
Frequently Asked Questions
Why is the price in Canada higher than the same item in the US?
Canadian prices include all sales tax, while US prices do not. A $20 item in Canada includes tax and is the final price. A $20 item in the US will cost more at checkout once tax is added. Additionally, Canadian prices are in Canadian dollars, which are worth less than US dollars, so the number looks higher even when the actual value is similar.
Do I pay sales tax on groceries?
Basic groceries like bread, milk, eggs, meat, and fresh vegetables are exempt from GST and PST. However, prepared foods, snacks, candy, and restaurant meals are taxed. If you are unsure whether a specific item is exempt, check the receipt — exempt items will show zero tax.
Can I get a refund of the GST I paid?
Most consumers cannot. GST refunds are available only to certain groups, including non-resident visitors (through the Visitor Rebate Program) and registered charities and non-profit organizations. If you are a visitor, you may be able to recover GST on goods you take out of Canada, but not on services or meals.
What is the difference between HST and PST?
HST combines the federal GST and provincial tax into one rate, while PST is a separate provincial tax added on top of the 5 percent GST. From a shopper's perspective, there is no difference — you pay one combined rate either way. The difference matters to businesses for accounting purposes.
Do I pay sales tax on services like haircuts or car repairs?
Yes, most services are subject to GST and provincial sales tax. Haircuts, car repairs, plumbing, and most professional services are taxed. Some services are exempt, including medical services provided by doctors and dentists, and certain financial services. Check your receipt to see if tax was charged.