HST is a single sales tax that combines federal and provincial tax into one rate

HST stands for Harmonized Sales Tax. It is a single tax applied at the point of sale in Canada, combining what used to be two separate taxes — the federal Goods and Services Tax (GST) and provincial sales tax — into one rate. Five 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%.

When you buy something in an HST province, the tax you see on your receipt is the full HST amount. You do not pay GST and then provincial tax separately. The merchant collects HST and sends it to the Canada Revenue Agency (CRA), which then distributes the provincial portion to the province.

HST applies to most goods and services you purchase, but some items are exempt or taxed at 0%. Food you cook at home, prescription medications, and medical devices are typically exempt. Restaurant meals, alcohol, and tobacco are taxed at the full HST rate.

Key Takeaways

  • HST combines federal and provincial sales tax into a single rate that ranges from 13% to 15% depending on which province you are in.
  • Five Canadian provinces use HST: Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island.
  • Most goods and services are subject to HST, but groceries, prescription drugs, and certain medical devices are exempt or zero-rated.
  • Businesses registered for HST can claim input tax credits to recover the tax they pay on business purchases.

Which provinces charge HST and at what rate

HST is not used across all of Canada. The provinces that have adopted it are Ontario (15%), Nova Scotia (15%), New Brunswick (15%), Newfoundland and Labrador (15%), and Prince Edward Island (15%). The remaining provinces and territories use either GST plus their own provincial sales tax (PST) or GST alone.

The rate is the same within each province — you pay 15% whether you are buying groceries in Toronto or St. John's. However, if you cross a provincial border, the rate changes. For example, if you live in Ontario and buy something in Quebec, you pay Quebec's rate (5% GST plus 9.975% QST), not Ontario's 15% HST.

The federal government sets the GST portion of HST at 5%. Provinces decide their own portion, which is why the total rate differs. Ontario and the Atlantic provinces all chose 10% as their provincial portion, making their combined HST 15%.

What items are taxed at HST and what items are exempt

Most things you buy are subject to HST at the full rate. Clothing, electronics, furniture, gasoline, and restaurant meals all carry the full HST. Services like haircuts, car repairs, and plumbing also charge HST.

Some items are exempt from HST entirely. This means no tax is charged at any stage of production or sale. Basic groceries — bread, milk, vegetables, meat, eggs — are exempt. Prescription medications and certain medical devices, including hearing aids and wheelchairs, are also exempt. Dental and medical services performed by licensed professionals are exempt.

A smaller group of items is zero-rated. This means the tax rate is 0%, but businesses can still claim input tax credits on what they paid to produce or purchase those items. Most exported goods and services are zero-rated, as are certain medical devices and some disability aids.

The difference matters mainly to businesses. For consumers, both exempt and zero-rated items mean you pay no tax. The distinction affects how much tax a business can recover on its own purchases.

How HST affects what you pay at checkout

When you see a price tag in an HST province, that price usually does not include tax. A shirt marked $50 will cost you $57.50 in Ontario (with 15% HST added). Some retailers display the price with tax included, but this is less common. Always check whether the displayed price is before or after tax.

Online purchases follow the same rule. If you order from a Canadian retailer in an HST province, HST is added to your total. If you order from outside Canada, HST is not charged, though customs duties and import taxes may explore when the package arrives.

HST is collected by the merchant at the time of purchase. You do not file anything or pay HST separately — it is included in your final bill. The merchant is responsible for remitting what they collected to the CRA.

How businesses use HST and input tax credits

If you own a business registered for HST, you collect tax from your customers and send it to the CRA. However, you also pay HST on things you buy for your business — supplies, equipment, rent, utilities. The system allows you to claim input tax credits (ITCs) to recover the HST you paid on business purchases.

For example, a plumber collects 15% HST on invoices to customers. That plumber also pays 15% HST on tools, a work van, and office supplies. The plumber can claim ITCs for all that HST paid, reducing what they owe to the CRA. If ITCs exceed HST collected, the CRA sends the business a refund.

Businesses must register for HST if their revenue exceeds a threshold set by the CRA (currently $30,000 in a four-quarter period). Once registered, they must track HST collected and paid, file HST returns (usually quarterly or annually), and keep receipts to support their ITC claims.

Not all businesses can claim ITCs. Non-profit organizations, charities, and certain other entities are exempt from collecting HST and cannot claim credits. This is why some services from these organizations do not include tax.

HST on services and digital purchases

Services are taxed the same way as goods. When you pay for a haircut, car repair, accounting information, or home renovation, HST is added to the bill. The service provider collects it and remits it to the CRA, just as a retailer does.

Digital purchases — software, e-books, streaming subscriptions, online courses — are also subject to HST in Canada. If you subscribe to a service from a Canadian company, HST is charged. If you subscribe to a service from outside Canada, the rules depend on where the company is based and how the CRA classifies the transaction, but HST is often not applied to foreign digital services.

Telecommunications services like cell phone plans and internet are subject to HST. Insurance premiums, financial services, and legal fees are generally exempt, though some specific services within these categories may be taxed.

Frequently Asked Questions

Do I pay HST on groceries?

Most basic groceries are exempt from HST. Bread, milk, fresh vegetables, meat, eggs, and cheese are not taxed. However, prepared foods, restaurant meals, snack foods, and alcohol are subject to the full HST rate. If you are unsure about a specific item, check the receipt — exempt items will show no tax.

Is HST charged on online orders from the United States?

HST is not charged by the US retailer, but you may owe duty and tax when the package arrives in Canada. Canada Border Services Agency (CBSA) may assess GST/HST and customs duties on the shipment. The amount depends on the item's value and classification. Small packages under $20 are often exempt from duty and tax.

Can I claim HST back on personal purchases?

No. HST is a sales tax paid by consumers at the point of purchase. Only registered businesses can claim input tax credits to recover HST paid on business expenses. Personal purchases are final — you cannot reclaim the tax you paid.

Why is HST 15% in some provinces but not all?

The federal government sets the GST portion at 5%. Each province that adopted HST chose its own provincial portion. Ontario and the Atlantic provinces all set theirs at 10%, making the total 15%. Provinces that did not harmonize kept their own separate provincial sales tax rates, which is why other provinces have different totals.

What happens if a business does not charge HST when they should?

The CRA can audit a business and assess unpaid HST plus interest and penalties. Consumers are not responsible for ensuring a business charges the correct tax — that is the business's obligation. If you suspect a business is not charging HST correctly, you can report it to the CRA.