The goods on the GST/HST

The current rate of GST in the non-harmonized provinces7 is 5%. The provinces of Ontario, Newfoundland and Labrador, Nova Scotia, Prince Edward Island and New Brunswick have harmonized their provincial sales taxes with the GST resulting in a single sales tax being levied on goods and services supplied in those provinces. Quebec has also harmonized its provincial sales tax system with the federal GST. However, Quebec Sales Tax (QST) still requires separate registration and collection. Under the HST, the federal portion of the tax is 5%, but the provincial component of the tax varies by province (see Table 4 – Sales Tax).

The HST operates in the same manner and is generally applicable to the same base of goods and services as the GST. A business registered for the GST is automatically registered for the HST and both are filed in the same return.

Supplies of goods or services are taxed in three ways. Most goods and services are rated as taxable supplies and are taxed at 5% outside the HST-participating provinces and at the applicable HST rate in the harmonized provinces (refer to Table 4). With certain exceptions, all tax collected is to be remitted. Any GST/HST-registered business that makes only taxable supplies can recover as an input tax credit (ITC) all the GST/HST it pays on supplies it purchases for use in its commercial activities. Tax is not collected on zero-rated supplies, but full ITCs are claimed for the GST/HST paid on related inputs. Zero-rated supplies include most basic groceries, agricultural and fishing products, prescription drugs, medical devices and most goods and services that are exported. ITCs can offset the amount of tax collected that a business is otherwise required to remit on its return.

Exempt supplies are not subject to GST/HST, but a business making them is not entitled to claim an ITC for the GST/ HST on related costs. In effect, a business making exempt supplies bears the cost of the GST/HST and must factor it into the price of the goods and services sold. Long-term residential rents, health care services and financial services are some of the most common types of exempt supplies.


British Columbia, Alberta, Saskatchewan and Manitoba. as well as Yukon, Northwest Territories and Nunavut are not “participating provinces” (i.e. these juridictions have not harmonized provincial sales tax with the federal GST). Of these provinces, only British Columbia, Saskatchewan and Manitoba assess a provincial sales tax.