In Canada, the Harmonized Sales Tax (HST) plays a crucial role in how goods and services are taxed. It is a consumption tax. This tax combines the federal Goods and Services Tax (GST). It also combines the Provincial Sales Tax (PST) of participating provinces into a single, streamlined tax. Not all provinces use HST. Understanding what it is, how it works, and who needs to register is vital for any business operating in Canada.
What is HST?
The HST is a value-added tax. It applies to most goods and services sold in certain provinces. These provinces have harmonized their provincial sales tax with the federal GST. As of 2025, the HST is in effect in the subsequent five provinces: Ontario (13%), New Brunswick (15%), Nova Scotia (15%), Prince Edward Island (15%), Newfoundland and Labrador (15%)
In these provinces, instead of charging separate federal and provincial taxes, businesses charge a single HST rate on taxable sales. In contrast, provinces like British Columbia, Alberta, Saskatchewan, Manitoba, and Quebec keep separate systems. They use GST + PST or GST + QST. Therefore, businesses there follow different tax rules.
Who Needs to Register for HST?
Whether or not a business needs to register for HST depends largely on its revenue and type of activity. The Canada Revenue Agency (CRA) requires registration for the GST/HST under specific conditions:
1. Small Supplier Threshold
Businesses and individuals must register for HST (or GST) once their worldwide taxable revenues exceed $30,000 in a single calendar quarter or over four consecutive calendar quarters. This includes revenues from all associated businesses. If the business makes less than $30,000 in taxable revenue, it is considered a small supplier and not required to register. However, voluntary registration is allowed, and often encouraged, because it allows a business to claim Input Tax Credits (ITCs) on business expenses.
2. Types of Businesses That Must Register
The business must register for GST/HST if they are:
– A sole proprietor, partnership, or corporation in Canada selling worldwide taxable goods or services
and earning over $30,000.
– A ride-sharing driver, such as for Uber or Lyft (regardless of income).
– A taxi business, which must register even if earnings are under $30,000.
– A public service body, such as a charity or non-profit organization, with revenue exceeding $50,000 in
taxable supplies.
– Long term rentals are exempt from GST/HST. However, short-term rentals that have exceeded the small supplier threshold of $30,000 are not exempt.
Moreover, non-residents who carry on a business in Canada must register for GST/HST. This is required if they are making taxable supplies and are not small suppliers.
What is a Taxable Supply?
Understanding “taxable supplies” is key. These include:
– Sales of goods and services (e.g., retail products, consulting)
– Leasing property or equipment
– Online services and digital products (streaming, downloads, subscriptions)
-Certain types of memberships and admissions
Taxable supplies can be either standard-rated (subject to HST) or zero-rated (taxed at 0%). Common zero-rated supplies include basic groceries and certain medical devices.
If the business only provides exempt supplies (e.g., residential rent, financial services, health and education services), they generally do not register for GST/HST, even if the revenue exceeds the small supplier threshold.
Benefits of Registering
Even if it is not mandatory, registering for HST offers advantages:
-Input Tax Credits (ITCs): Registered businesses can claim credits for the HST paid on business purchases, reducing overall tax liability.
-Credibility: Registration adds legitimacy and professionalism in the eyes of customers and suppliers.
-Future-proofing: If the business is growing, registering early avoids potential penalties or missed
opportunities for tax recovery.
How to Register
The business can register:
-Online through the CRA’s Business Registration Online (BRO) portal
-By mail or fax using Form RC1 (Request for a Business Number)
-By phone at 1-800-959-5525 (for businesses)
The business will receive a Business Number (BN) with a GST/HST program account extension (e.g., 123456789RT0001), which will be used when filing returns or claiming ITCs.
Filing and Collecting HST
Once registered, the business must:
-Charge HST on taxable supplies made in participating provinces
-File GST/HST returns regularly (monthly, quarterly, or annually depending on revenue)
-Remit the collected HST to the CRA by the filing deadline
-Keep proper records for at least six years
Failure to comply may result in penalties, interest, or audits.
Navigating the HST system in Canada is essential for businesses aiming to stay compliant and financially efficient. While not every business is required to register, those that do benefit from input tax credits and a smoother relationship with the CRA. Knowing the rules about registration thresholds, taxable supplies, and filing obligations can save time, money, and stress down the line. If unsure whether you need to register, consult a tax advisor or the CRA directly.