Small Business Guide to Canadian Sales Tax Rates

It’s rewarding to be an entrepreneur: realizing your dream, being your own boss, flexible hours, etc. However, entrepreneurship also comes with responsibilities, including charging correct sales tax for your goods and services. 

Which one should you charge your customers, GST, PST, QST, RST, or HST?  Pretty confusing, isn’t it? Don’t worry. We’ll explain them all: the types of sales tax in Canada, the rates for each province, general rules and exemptions, how to register for a sales tax account, as well as filing and paying your sales tax.  

We encourage you to speak to a tax professional, but this guide helps you prepare yourself with some foundational knowledge.

Types of sales tax in Canada

There are two tiers of sales tax in Canada: federal and provincial. Let’s understand what they all mean: 

• GST (Goods and Sales Tax): This is a federal tax charged on the supply of most goods, other property and services in Canada. Businesses must register and charge GST/HST on all taxable goods, other property, and services unless you qualify as a small supplier. A small supplier is defined as a person whose total taxable revenue is $30,000 or less in the last four consecutive calendar quarters.  A small supplier can elect to register in which case it must collect GST.

• PST (Provincial Sales Tax): This is a sales tax levied on goods and taxable  services provinces that have not harmonized their PST with the federal GST. Rates are set by each province and do vary, as not all provinces charge PST.  

• RST (Retail Sales Tax): The provincial sales tax in Manitoba is called retail sales tax (RST).

• QST (Quebec Sales Tax): Businesses registered in Quebec are required to charge customers Quebec sales tax (QST) instead of PST. QST is collected on the supply of most goods, other property and services. 

• HST (Harmonized Sales Tax): Some provinces have merged their provincial sales tax with GST. Simply put, harmonized sales tax (HST) is a combination of GST and PST. 

Sales tax and rates by province

Businesses may be required to collect one or more of the sales taxes mentioned in the above section. 

To make it easier for you, we’ve listed the type of sales tax and combined rates applicable to each province/territory: 

Canadian sales tax