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The Harmonized Sales Tax, or HST, is a combination of Canada’s federal goods and services tax (GST) and provincial sales tax (PST). It is applied in five Canadian provinces - New Brunswick, Nova Scotia, Ontario, Prince Edward Island and Newfoundland and Labrador - collectively referred to as “participating provinces”.
The concept underlying the HST is to simplify the tax system by combining the federal and provincial taxes on goods and services into one, uniform levy. In doing so, the burden of tax collection is shared between the federal and provincial governments, allowing for a reduction or elimination of “hidden” or “embedded” sales taxes.
The HST tax rates for participating provinces vary slightly, with a 15% rate for provinces other than Ontario, where it is set at a 13%. This rate applies to all goods and services purchased within a participating province by an end user. Exemptions are typically available for certain items such as food, health care and medical services, books, green energy and some housing.
Foreign purchasers of Canadian products who can demonstrate they will be solely using those goods and services outside of Canada are not required to pay HST. For example, many Canadian-owned restaurants catering to travelers can exclude the HST if their sales are made exclusively to foreign guests.
The introduction of the HST has been controversial in some circles as some Financial experts suggest it shifts the burden of taxation to consumers. Proponents of the tax argue that the shared burden of tax collection ultimately lowers costs and encourages economic competitiveness between participating provinces.
To ensure compliance, companies who are subjected to HST must register, collect and submit the tax on their sales in those participating provinces. This can be a difficult task for businesses, but there are services available - such as online accountants - that can help.
Canada’s harmonized sales tax is a legislated combination of federal and provincial sales taxes. The idea is to simplify the levy by combining the taxes into a unified system, while lowering costs by sharing the burden of collection between federal and provincial governments. The tax is applied in five participating provinces at varying rates and has been praised and criticized for its potential to shift the burden of taxation to consumers. It is up to businesses to register, collect and submit the tax, with services such as online accountants available to help.
The concept underlying the HST is to simplify the tax system by combining the federal and provincial taxes on goods and services into one, uniform levy. In doing so, the burden of tax collection is shared between the federal and provincial governments, allowing for a reduction or elimination of “hidden” or “embedded” sales taxes.
The HST tax rates for participating provinces vary slightly, with a 15% rate for provinces other than Ontario, where it is set at a 13%. This rate applies to all goods and services purchased within a participating province by an end user. Exemptions are typically available for certain items such as food, health care and medical services, books, green energy and some housing.
Foreign purchasers of Canadian products who can demonstrate they will be solely using those goods and services outside of Canada are not required to pay HST. For example, many Canadian-owned restaurants catering to travelers can exclude the HST if their sales are made exclusively to foreign guests.
The introduction of the HST has been controversial in some circles as some Financial experts suggest it shifts the burden of taxation to consumers. Proponents of the tax argue that the shared burden of tax collection ultimately lowers costs and encourages economic competitiveness between participating provinces.
To ensure compliance, companies who are subjected to HST must register, collect and submit the tax on their sales in those participating provinces. This can be a difficult task for businesses, but there are services available - such as online accountants - that can help.
Canada’s harmonized sales tax is a legislated combination of federal and provincial sales taxes. The idea is to simplify the levy by combining the taxes into a unified system, while lowering costs by sharing the burden of collection between federal and provincial governments. The tax is applied in five participating provinces at varying rates and has been praised and criticized for its potential to shift the burden of taxation to consumers. It is up to businesses to register, collect and submit the tax, with services such as online accountants available to help.