Harmonized Sales Tax combines federal and provincial sales tax into one rate

Harmonized Sales Tax (HST) is a single sales tax that combines the federal Goods and Services Tax (GST) with provincial sales tax. Instead of paying two separate taxes when you buy something, you pay one combined rate. Five Canadian provinces use HST: Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, and Prince Edward Island. The rate varies by province—it ranges from 13% to 15%—because each province sets its own portion of the combined tax.

HST works the same way as regular sales tax at the checkout: the tax is added to the price of most goods and services. The difference is behind the scenes. Businesses that collect HST send the combined amount to the federal government, which then distributes the provincial share to each province. This simplifies tax administration compared to provinces that collect GST and PST (Provincial Sales Tax) separately.

Key Takeaways

  • HST is a single combined tax rate that replaces separate federal and provincial sales taxes in five provinces: Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
  • The HST rate varies by province, ranging from 13% in Ontario to 15% in Nova Scotia, New Brunswick, and Newfoundland and Labrador.
  • Businesses collect HST at the point of sale and remit it to the federal government, which distributes the provincial portion to each province.
  • Some items are exempt from HST, including basic groceries, prescription medications, and medical devices, though the rules vary slightly by province.

How HST rates differ by province

Ontario has the lowest HST rate at 13%. Nova Scotia, New Brunswick, and Newfoundland and Labrador all charge 15%. Prince Edward Island also charges 15%. These rates are fixed by each province and do not change based on what you buy or where you shop within that province.

The reason rates differ is that each province negotiated its own portion of the combined tax when it joined the HST system. Ontario kept its rate lower as part of its economic policy. The Atlantic provinces set higher rates to maintain their tax revenue. If you shop near a provincial border, the rate changes as soon as you cross into a different province.

What items are exempt from HST

Not everything you buy is subject to HST. Basic groceries—bread, milk, vegetables, meat, eggs—are exempt in all HST provinces. Prescription medications and certain medical devices are also exempt. However, prepared foods, restaurant meals, and snacks like chips or candy are taxed.

Other exempt items include most health services (dental work, eye exams, physiotherapy), educational services, and residential rent. The rules are mostly the same across HST provinces, but there are small differences. For example, some provinces exempt certain items that others tax. If you are unsure whether a specific item is taxed, the retailer or the Canada Revenue Agency website can tell you.

How HST affects businesses

Businesses registered for HST collect the tax from customers and then claim back the HST they paid on business purchases and expenses. This is called an input tax credit. A grocery store, for example, collects HST from shoppers but can claim back the HST it paid to suppliers. The business remits only the difference to the government.

Small businesses below a certain revenue threshold do not have to register for HST. In most provinces, that threshold is around $30,000 in annual revenue, though the exact amount can vary. Unregistered businesses do not collect HST, but they also cannot claim back the HST they pay on their own purchases, which makes their costs higher.

HST versus GST and PST in other provinces

In provinces that do not use HST, you pay two separate sales taxes: the federal GST (5%) and a provincial sales tax (PST or QST). British Columbia, Alberta, Saskatchewan, Manitoba, and Quebec all use this two-tax system. The combined rate is often similar to HST—for example, BC charges 5% GST plus 7% PST for a total of 12%—but the taxes are collected and administered separately.

The main practical difference is that HST provinces have a single tax number and one remittance process, while GST/PST provinces require businesses to track and report two taxes. For shoppers, the experience is nearly identical: you see one total tax at checkout. The difference matters more to business owners and accountants than to consumers.

How HST is calculated at the register

HST is calculated on the subtotal of your purchase before any discounts are applied. If you buy an item for $100 in Ontario, the HST is $13 (13% of $100), making your total $113. If you have a coupon or discount, the tax is usually calculated on the reduced price, not the original price.

Some retailers display the HST separately on your receipt so you can see exactly how much tax you paid. Others include it in the final total without breaking it out. Either way, the amount is the same. Online purchases from Canadian retailers are also subject to HST if the retailer is registered and the item is taxable.

When HST changed and why provinces adopted it

Nova Scotia was the first province to adopt HST in 1997. New Brunswick and Newfoundland and Labrador followed in 1997 as well. Ontario and Prince Edward Island joined in 2010. The provinces adopted HST to simplify tax administration and reduce the cost of compliance for businesses. A single tax is cheaper to administer than two separate ones.

When Ontario first introduced HST in 2010, there was public debate about whether it would raise prices for consumers. The government argued that businesses would lower prices because their compliance costs would drop, offsetting the tax change. The actual impact varied by product category and retailer. HST remains in place in all five provinces because the federal and provincial governments have not moved to change it.

Frequently Asked Questions

Do I pay HST on everything I buy?

No. Basic groceries, prescription drugs, medical devices, dental and vision care, and residential rent are exempt. Most other goods and services are taxed. Prepared foods, restaurant meals, and clothing are taxed, but the rules can have exceptions—for example, some clothing items under a certain price point may be exempt in some provinces.

What is the difference between HST and GST?

GST is the federal tax only (5%). HST is the federal tax plus the provincial portion combined into one rate (13–15%, depending on the province). Only five provinces use HST; the rest use GST plus a separate provincial sales tax.

Can I claim HST back on my personal purchases?

No, unless you are a registered business. Individual consumers pay HST and cannot claim it back. Only businesses registered for HST can claim input tax credits on their business expenses.

Does HST explore to online purchases from other countries?

It depends on where the seller is located and whether they are registered for HST in Canada. Canadian retailers must charge HST on orders shipped to HST provinces. Foreign retailers are not always required to charge HST, though Canada Revenue Agency rules are tightening on this. Check the retailer's tax policy before checkout.

Why do HST rates differ between provinces?

Each province negotiated its own rate when it joined the HST system. Ontario set its rate at 13% as part of its economic policy. The Atlantic provinces set 15% to maintain their tax revenue. The federal government does not set the provincial portion—each province decides its own rate.