What the Harmonized Sales Tax Is

The Harmonized Sales Tax (HST) is a single sales tax that combines the federal Goods and Services Tax (GST) with provincial sales tax into one rate. Instead of paying two separate taxes when you buy something, you pay one combined tax at checkout. Five Canadian provinces use HST: Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, and Prince Edward Island.

The HST rate varies by province because each province sets its own portion of the combined rate. Ontario charges 13 percent, while Nova Scotia charges 15 percent. The federal government collects the entire HST amount, then distributes the provincial share back to each province. From a shopper's perspective, you see one number on your receipt instead of two.

HST replaced the old system in participating provinces where GST and PST (Provincial Sales Tax) were charged separately. The change simplified tax collection for businesses and made prices clearer for consumers, since the tax shown is the actual total tax owed rather than a calculation of two separate rates stacked together.

Key Takeaways

  • HST combines federal and provincial sales tax into a single rate that ranges from 13 to 15 percent depending on which province you are in.
  • Five provinces currently use HST: Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
  • The federal government collects HST and then returns the provincial portion to each province that participates.
  • Most goods and services are taxed at the full HST rate, but some items like basic groceries, prescription drugs, and medical devices are exempt.

Which Provinces Charge HST

HST is used in five provinces across Atlantic Canada and Ontario. Ontario adopted HST in 2010 and charges 13 percent. The four Atlantic provinces — Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island — all charge 15 percent. These are the only places in Canada where you will see HST on your receipt.

The other provinces and territories use different tax systems. British Columbia, Saskatchewan, and Manitoba charge GST plus their own PST at separate rates. Alberta charges only GST with no provincial sales tax. Quebec uses GST plus QST (Quebec Sales Tax). If you shop in multiple provinces, you will encounter different tax rates and different tax names depending on where you are.

What Gets Taxed and What Does Not

Most items you buy are subject to HST at the full rate in HST provinces. Clothing, electronics, furniture, restaurant meals, and services like haircuts all carry the full tax. However, certain categories are either exempt or taxed at zero percent, which means no HST is charged.

Basic groceries are exempt from HST. This includes bread, milk, eggs, vegetables, fruit, meat, and other unprocessed foods you cook at home. Prepared foods, snacks, and restaurant meals are taxed. Prescription drugs and certain medical devices are also exempt. Over-the-counter medications, vitamins, and cosmetics are taxed. Home heating fuel and electricity for residential use are taxed, but some provinces offer rebates for low-income households.

Books, newspapers, and magazines are exempt from HST in most HST provinces. Children's clothing and footwear are exempt in some provinces but not others — check your province's rules if this matters to your household. Services like dental work, medical services, and legal advice are generally exempt when provided by licensed professionals.

How HST Affects Businesses

Businesses registered for HST collect the tax from customers and send it to the Canada Revenue Agency (CRA). However, businesses can claim back the HST they pay on supplies, equipment, and services they use to operate. This is called an Input Tax Credit (ITC). A bakery, for example, collects HST from customers but can claim back the HST paid on flour, sugar, and rent.

Small businesses below a certain revenue threshold do not have to register for HST. The threshold is $30,000 in annual revenue in most provinces, though some provinces set it higher. Unregistered businesses do not collect HST, but they also cannot claim back the HST they pay on business expenses. This means HST becomes a cost for small unregistered businesses rather than a tax they pass through to customers.

Businesses that sell exempt items, like a pharmacy selling prescription drugs, do not collect HST on those sales but still pay HST on their operating costs. This creates a net cost for businesses in exempt sectors unless they also sell taxed items that offset the difference.

HST on Online and Cross-Border Purchases

When you order from a Canadian online retailer in an HST province, HST is added to your bill just as it would be in a physical store. The retailer collects and remits the tax to the CRA. This applies whether you order from a local business or a national one.

Purchases from outside Canada are treated differently. If you order from a U.S. retailer or international seller, HST is not charged at checkout. However, if the package is subject to customs duty, HST is calculated and charged when the package arrives at the border. The courier or postal service collects this tax before delivering the item to you. For small purchases under $20 CAD, HST is usually waived even if duty applies.

Digital products like software, e-books, and streaming subscriptions are subject to HST if purchased from a Canadian seller. If you buy from a foreign seller, HST may or may not apply depending on the seller's registration status with the CRA. Large foreign digital retailers are now required to register for HST and charge it on sales to Canadian customers.

How HST Differs From Other Provincial Tax Systems

The main difference between HST and other systems is simplicity. In provinces with separate GST and PST, two taxes are calculated and added together. A $100 item in British Columbia with 5 percent GST and 7 percent PST costs $112.35 because the PST is calculated on the price plus GST. In Ontario with 13 percent HST, the same item costs $113 — one calculation, one tax line on the receipt.

HST also affects business administration. Businesses in HST provinces file one tax return instead of two. They track one input tax credit instead of managing GST and PST separately. This reduces paperwork and accounting costs, though it also means businesses cannot claim back provincial sales tax on some items the way they could under the old PST system.

From a consumer perspective, HST provinces tend to have slightly higher combined tax rates than some other provinces. Ontario's 13 percent HST is higher than Alberta's 5 percent GST-only rate, but lower than Quebec's combined 14.975 percent (GST plus QST). The rate you pay depends on where you live and shop, not on the tax system itself.

Frequently Asked Questions

Do I pay HST on groceries?

Basic groceries like bread, milk, eggs, meat, and fresh produce are exempt from HST. Prepared foods, restaurant meals, snacks, and items like candy and soft drinks are taxed at the full HST rate. If you are unsure whether a specific item is exempt, check the receipt — exempt items will show no tax.

Why is HST different in each province?

Each HST province sets its own provincial portion of the combined rate. Ontario chose 13 percent while Atlantic provinces chose 15 percent. The federal government sets the GST portion at 5 percent, but provinces can add their own percentage on top. This is why the total rate varies.

Can I get HST back if I am a tourist?

Canada does not have a tourist tax refund program like some countries do. Visitors to HST provinces pay the full tax on purchases and cannot claim it back. However, some provinces offer HST rebates for specific groups like low-income residents or seniors — these are not available to tourists.

What happens to HST I pay on business purchases?

If your business is registered for HST, you can claim back the HST you pay on supplies and equipment through an Input Tax Credit. You report this on your HST return to the CRA. If your business is not registered, you cannot claim the tax back and it becomes a business expense.

Is HST charged on services like haircuts or car repairs?

Yes, most services including haircuts, car repairs, plumbing, and electrical work are subject to HST at the full rate. Some professional services like dental work and medical care are exempt. Check with the service provider or your receipt to confirm whether HST applies.