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

The 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 at checkout, 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, ranging from 13% to 15%.

HST works the same way as regular sales tax from a shopper's perspective — it is added to the price of most goods and services at the point of sale. The difference is in how the government collects and distributes the money. The federal government collects the full HST amount, then sends the provincial portion to each province.

Provinces that do not use HST collect GST (5%) plus their own Provincial Sales Tax (PST) separately. This means the total tax rate and how it is applied can differ significantly depending on where you live and what you are buying.

Key Takeaways

  • HST combines federal and provincial sales tax into one rate that ranges from 13% to 15% depending on the province.
  • Five provinces use HST: Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
  • Some items are exempt from HST, including basic groceries, prescription medications, and medical devices.
  • Businesses registered for HST can claim back the tax they pay on business purchases, which affects the final price consumers pay.
  • The HST rate and which items are taxed can change, so the total cost of a purchase may vary by province.

Which provinces charge HST and what the rates are

Ontario charges 13% HST, the lowest rate among HST provinces. Nova Scotia, New Brunswick, and Newfoundland and Labrador all charge 15% HST. Prince Edward Island also charges 15%. These five provinces adopted HST between 1997 and 2010 to streamline tax collection and reduce administrative costs for businesses.

The remaining provinces and territories use a different system. British Columbia, Saskatchewan, Manitoba, and Quebec charge GST plus their own PST at separate rates. Alberta charges only GST (5%) and has no provincial sales tax. The Northwest Territories, Nunavut, and Yukon charge only GST.

If you live in an HST province and buy something online from a non-HST province, the tax you pay depends on where the seller is located and whether they are registered to collect HST. Most major online retailers automatically charge the correct tax based on your shipping address.

What items are exempt from HST

Not everything you buy is subject to HST. Basic groceries are exempt, including bread, milk, eggs, vegetables, and meat. However, prepared foods, restaurant meals, and snack foods are taxed. Prescription medications and most medical devices are also exempt from HST.

Health services provided by doctors, dentists, and other regulated health professionals are exempt. Residential rent is exempt, but hotel rooms and short-term rentals are taxed. Public transportation passes and certain educational services are exempt, while tuition at private schools is taxed.

Books, newspapers, and magazines are exempt from HST. Children's clothing and footwear are exempt up to certain size limits. Financial services like banking and insurance are exempt. The list of exemptions is long and specific, so if you are unsure whether something is taxed, the Canada Revenue Agency website has a searchable database.

How HST affects what you pay in stores

When you see a price tag in an HST province, that price does not include the tax. The HST is added at checkout. A $100 item in Ontario costs $113 after HST is applied. The same item in Nova Scotia would cost $115. This is different from some countries where the displayed price includes all taxes.

Businesses that are registered for HST can claim back the tax they paid on items they bought for their business. This is called an input tax credit. Because businesses can recover the HST they pay, the tax is ultimately borne by the final consumer, not by the business. This is why HST is called a consumption tax.

Small businesses below a certain revenue threshold are not required to register for HST, though they can choose to. Unregistered businesses cannot claim back HST on their purchases, which means they absorb the cost. This can make their products more expensive than those sold by registered businesses.

How HST differs from GST plus PST

In provinces that use GST plus PST, you pay two separate taxes. For example, in British Columbia, GST is 5% and PST is 7%, for a combined rate of 12%. However, PST is only charged on certain items — groceries are exempt from PST but taxed at GST, and some services are exempt from both.

The main advantage of HST is simplicity. Businesses deal with one tax system instead of two, which reduces paperwork and compliance costs. Consumers see a single tax rate applied consistently to taxable items. The disadvantage is that the combined rate is higher than GST alone, which can make purchases more expensive in HST provinces compared to provinces with lower combined rates.

HST also treats business-to-business transactions differently than GST plus PST. Under HST, the input tax credit system is more streamlined, which can lower costs for businesses that sell to other businesses. This is one reason some provinces adopted HST — to make their business environment more competitive.

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 and 1998. Ontario and Prince Edward Island adopted HST in 2010. The shift was driven by a desire to reduce the tax burden on businesses and make the tax system more efficient.

Before HST, businesses had to track GST and PST separately, file two sets of returns, and manage two different sets of rules about what was taxable. HST consolidated this into one system. The federal government also offered transition payments to provinces that adopted HST to offset the initial costs of changing their tax systems.

Some provinces that initially adopted HST later reversed the decision. British Columbia voted to return to GST plus PST in 2011, and Saskatchewan rejected HST before it was implemented. The reversal in British Columbia was driven by public opposition to the higher combined tax rate.

How to find out the HST rate where you live

If you live in an HST province, the rate is set by the federal and provincial governments and does not change based on where you shop within that province. Ontario is always 13%, and the Atlantic provinces are always 15%. You do not need to look up the rate — it is the same everywhere in your province.

If you are shopping online and unsure what tax applies, check the retailer's tax policy or your shipping address. Most major retailers display the tax amount before you complete your purchase. The Canada Revenue Agency website lists the HST rate for each province and provides information about which items are exempt.

If you are a business owner and need to register for HST, contact the Canada Revenue Agency directly. They can tell you whether you are required to register based on your revenue and business type, and they can walk you through the registration process.

Frequently Asked Questions

Is HST charged on everything I buy?

No. Basic groceries, prescription medications, medical devices, health services, residential rent, books, and children's clothing are exempt. Prepared foods, restaurant meals, hotel rooms, and most other goods and services are taxed. The Canada Revenue Agency has a complete list of what is and is not taxed.

Why is HST higher than GST alone?

HST combines the federal GST (5%) with provincial sales tax, which ranges from 8% to 10% depending on the province. The combined rate is higher because it includes both levels of tax. Provinces that use GST plus PST separately may have a lower combined rate, but HST is simpler for businesses to administer.

Can I get HST back if I buy something and return it?

Yes. If you return an item within the store's return window, the HST is refunded along with the purchase price. If you are a business and return items you bought for your business, you can adjust your input tax credit claim accordingly.

Do I pay HST on items I buy online from outside Canada?

It depends on the seller and the item. If you order from a Canadian retailer, HST is charged based on your shipping address. If you order from a foreign retailer, HST may or may not be charged depending on whether the seller is registered to collect Canadian tax. Customs duties may also explore when the item enters Canada.

What is an input tax credit?

An input tax credit allows registered businesses to claim back the HST they paid on items they bought for their business. This means the business does not bear the cost of HST — only the final consumer does. Unregistered businesses cannot claim input tax credits, so they absorb the HST cost.