# Harmonized Sales Tax (HST): Definition as Canadian Sales Tax

![Harmonized Sales Tax (HST): A federal and provincial sales tax levied on goods and services in Canada.](https://www.investopedia.com/thmb/cZLDLpx8j-i5vkXFeDnuCDLOmys=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Harmonized-sales-tax_final-94c27f30991644d6a40f3f5740ec389d.png)

*— Investopedia / Michela Buttignol*

## What Is the Harmonized Sales Tax (HST)?

Canada’s harmonized sales tax (HST) is a [consumption tax](https://www.investopedia.com/terms/c/consumption-tax.asp) paid by local consumers and businesses. It combines the federal goods and services tax (GST) and sales taxes. Five provinces use the HST as of 2025. The HST was implemented in 1997 and is administered by the federal government. Businesses collect the tax and remit it to the [Canada Revenue Agency (CRA)](https://www.investopedia.com/terms/c/ccra.asp). Proponents believe it improves competition for Canadian businesses by simplifying their administrative costs, leading to lower prices for consumers.

### Key Takeaways

*   The harmonized sales tax is a combination of federal and provincial taxes on goods and services in five Canadian provinces.
*   The HST rate is 15% in all participating provinces except Ontario, where it is 13%.
*   The HST was meant to streamline the recording and collection of federal and provincial sales taxes by combining them into a single, uniform levy across Canada.
*   Everyone, including nonresidents and travelers, must pay the HST where it is levied.  
    
*   Critics argue that the HST shifts the burden of taxation to consumers, but proponents of the tax say it lowers costs.

## Who Pays the HST in Canada?

Before being introduced in 1997, Canadian provinces collected the GST and their provincial sales tax (PST), remitting the GST to the federal government. Five provinces use the HST. It is paid by purchasers at the [point of sale (POS)](https://www.investopedia.com/terms/p/point-of-sale.asp). The vendor collects the tax and remits it to the CRA, the tax division of the federal government. The CRA then allocates the provincial portion of the HST to the respective province’s government.

The HST was designed to streamline the recording and collection of federal and provincial [sales taxes](https://www.investopedia.com/terms/s/salestax.asp) by combining them into a single tax across the country. Advocates said it would reduce business costs (and ultimately customers) since it simplifies sales-tax-related bookkeeping.

But, the process can be complicated. While the aim was to create a national sales tax, the Canadian government made the adoption of the HST optional—and many provinces opted to keep their separate systems and rates instead.

As a result, businesses operating provincially or nationally—either in physical locations or online—have to deal with disparities in tax rates, depending on whether the customer is based in an HST province or a GST/PST province.

> **Fast Fact**
>
> While the GST is 5% everywhere, the PST can range from 6% to 9.975%.

## Canadian Provinces and the HST

Five of Canada’s 13 provinces use the harmonized sales tax:

British Columbia, Saskatchewan, Québec, and Manitoba apply the provincial system in addition to the separate federal sales tax. Alberta and the territories (Northwest Territories, Nunavut, and Yukon) do not have a provincial or territorial sales tax and only collect the GST.

> **Fast Fact**
>
> British Columbia adopted the HST in 2010 but abandoned it three years later, going back to its provincial sales tax system after an estimated 55% of the province’s residents voted against the system.

## Registering and Collecting the HST

Canadian provinces (other than Alberta and the territories) established a percentage for PST collection and harmonized it with the GST when they joined the HST program. So the exact amount of the HST differs depending on the province.

Owners of Canadian businesses that earn $30,000 or more per year in [total revenue](https://www.investopedia.com/terms/r/revenue.asp) in participating provinces are responsible for collecting and remitting the tax. To apply the sales tax, the business operator must register for a GST/HST account through the CRA.  

So-called small suppliers (business owners with firms earning less than $30,000 in annual revenue) are not required to charge or remit the HST. However, they can still voluntarily register to collect the tax, since doing so allows them to claim input tax credits on the goods and services they purchase to run their operations.

## Exempted Goods and Services

While many goods and services are subject to the HST, some are [zero-rated](https://www.investopedia.com/terms/z/zero-rated-goods.asp) or tax-exempt. A zero-rated commodity or service that has an HST rate of 0%. These include products like basic groceries, books, and many agricultural and fishery goods.

Goods exported from Canada for use outside the country are zero-rated. However, [nonresidents](https://www.investopedia.com/terms/r/nonresident.asp) visiting Canada, such as tourists, are required to pay the HST. In some cases, they may qualify for an HST [rebate](https://www.investopedia.com/terms/r/rebate.asp).

## The HST’s Effect on Taxpayers

The effectiveness of the HST and how it impacts consumers and taxpayers remains. Critics claim that the HST shifts the tax burden from businesses to consumers. Proponents of the HST argue that it lowers taxes. They say that the HST system reduces the cost of doing business, which effectively lowers the prices of consumer goods and services.

## How Does Canada’s Harmonized Sales Tax Work?

The HST is paid by consumers when they purchase goods and services in Canadian provinces that collect it. Vendors collect and send the tax to the Canada Revenue Agency (CRA). The CRA allocates the provincial portion of the HST to the respective province’s government.

## What Is the Purpose of the HST?

The goal of the HST system is to streamline the recording and collection of federal and provincial sales taxes by combining them into a single, consistent levy across the country.   

## Does the United States have an HST?

No, the U.S. does not have a federal sales or value-added tax. Most states impose some version of these taxes, but the revenue generated is not nationally distributed.

## The Bottom Line

Canada's harmonized sales tax combines federal (5%) and provincial taxes on goods and services in five provinces. It was introduced in 1997 to streamline the recording and collection of federal and PSTs. Critics argue that the HST shifts the burden of taxation to consumers, but proponents claim it ultimately benefits consumers by lowering costs.

> **Article Sources**
>
> 1.  Government of Canada. "[Charge and Collect the Tax – Which Rate to Charge](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-which-rate.html)."
>     
> 2.  Government of Canada. "[The Goods and Services Tax: 10 Years Later](https://publications.gc.ca/Collection-R/LoPBdP/BP/prb0003-e.htm#:~:text=The%20HST%20went%20into%20effect,the%20federal%20government%20in%201990.)."
>     
> 3.  Retail Council of Canada. “[Sales Tax Rates by Province](https://www.retailcouncil.org/resources/quick-facts/sales-tax-rates-by-province/).”
>     
> 4.  Government of Newfoundland and Labrador. "[Harmonized Sales Tax](https://www.gov.nl.ca/fin/tax-programs-incentives/personal/hst/)."
>     
> 5.  Government of New Brunswick. "[Harmonized Sales Tax (HST)](https://www2.gnb.ca/content/gnb/en/departments/finance/taxes/hst.html)."
>     
> 6.  Nova Scotia. "[General HST Backgrounder](https://www.novascotia.ca/finance/site-finance/media/finance/taxation/Backgrounder_General_HST_June2010.pdf)," Page 2.
>     
> 7.  Nova Scotia. "[Nova Scotia's HST to Drop in 2025](https://news.novascotia.ca/en/2024/10/23/nova-scotias-hst-drop-2025)."
>     
> 8.  Government of Ontario, The Ministry of Finance. "[Harmonized Sales Tax](https://www.ontario.ca/document/harmonized-sales-tax-hst)."
>     
> 9.  Government of Prince Edward Island. "[Harmonized Sales Tax (HST)](https://www.princeedwardisland.ca/en/information/finance/harmonized-sales-tax-hst-0)."
>     
> 10.  Government of Canada. "[Elimination of the Harmonized Sales Tax (HST) in British Columbia and Reinstatement of Points-of-Sale Exemption of the Provincial Sales Tax (PST)](https://www.international.gc.ca/protocol-protocole/policies-politiques/circular-note_note-circulaire_xdc-0296.aspx?lang=eng)."
>      
> 11.  Elections BC. "[Report of the Chief Electoral Officer on the 2011 HST (Harmonized Sales Tax) Referendum](https://www.elections.bc.ca/docs/rpt/2011-CEO-HST-Referendum-Report.pdf)," Page 2.
>      
> 12.  Government of Canada. "[When to Register for and Start Charging the GST/HST](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/when-register-charge.html)."
>      
> 13.  Government of Canada. "[General Information for GST/HST Registrants](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022/general-information-gst-hst-registrants.html)."
>      
> 14.  Government of Canada. "[Doing Business in Canada – GST/HST Information for Non-Residents](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4027/doing-business-canada-gst-hst-information-non-residents.html)."
>      
> 15.  Government of Canada. "[Foreign Convention and Tour Incentive Program](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-rebates/foreign-convention-tour.html)."