{"id":5620,"date":"2024-07-29T05:37:54","date_gmt":"2024-07-29T09:37:54","guid":{"rendered":"https:\/\/clearit.ca\/canadian-customs-broker-blog\/?p=5620"},"modified":"2024-07-29T05:37:54","modified_gmt":"2024-07-29T09:37:54","slug":"difference-between-gst-hst-and-pst","status":"publish","type":"post","link":"https:\/\/clearit.ca\/canadian-customs-broker-blog\/difference-between-gst-hst-and-pst\/","title":{"rendered":"GST, HST, PST \u2013 What\u2019s the Difference?"},"content":{"rendered":"

If you\u2019re a business importing a variety of goods into Canada\u2014electronics, clothing, maybe even some specialty foods\u2014the following scenario is likely all too familiar. As your shipment arrives, you\u2019re suddenly faced with a slew of taxes. You see GST on some items, HST on others, and in certain provinces, PST comes into play too. It can be confusing to figure out which tax applies to which products and how much you need to pay for each. Without clear knowledge, this could lead to unexpected costs and delays.<\/span><\/p>\n

Selling products in Canada means dealing with these added taxes on top of prices. These affect your pricing, the customs process when importing goods from abroad, and your business\u2019s overall success. Knowing which taxes apply to your products helps you price them correctly, pass these costs to your customers, and ensure a smooth import process.<\/span><\/p>\n

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What is GST?<\/span><\/h2>\n

GST<\/span>, or Goods and Services Tax, is a federal tax applied to most goods and services sold in Canada. This tax is collected at each stage of the supply chain, from production to the point of sale. The current rate of GST is 5%, so, for example, if a shopper buys a $100 dress, the final price would be $105 with GST included.<\/span><\/p>\n

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What Is PST?<\/span><\/h2>\n

In addition to GST, PST, or Provincial Sales Tax, is a tax levied by individual provinces. Each province sets its own PST rate and application requirement. For example, British Columbia charges a 7% PST, while Saskatchewan charges 6%. Note that in Quebec, this tax is referred to as QST and is set at a rate of 9.975%.\u00a0<\/span>It\u2019s important to note that PST only applies to goods and services within the specific province that imposes it. So, if you\u2019re selling a $1,000 computer in <\/span>British Columbia<\/span><\/a>, you would charge an additional $70 in PST and $50 in GST, totaling $1,120.<\/span><\/p>\n

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What Is HST?<\/span><\/h2>\n

HST, or Harmonized Sales Tax, combines the federal GST with a provincial sales tax (PST). This tax is designed to simplify the sales tax process by merging both taxes into one. HST is applicable in five provinces: Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. The rate varies by province, with Ontario at 13% and the others at 15%. As such, if you hire a contractor in Ontario for a $10,000 home renovation, the total cost would be $11,300, including HST. But if you hire the same type of professional in Labrador, the final tally including HST would be $11,500.<\/span><\/p>\n

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What are the Differences Between GST, HST, & PST?<\/span><\/h2>\n

If all the tax acronyms and numbers seem like a lot to take in, here\u2019s a simple comparison chart to make things easier to understand:<\/span><\/p>\n\n\n\n\n\n\n
Tax Type\u00a0 \u00a0 \u00a0 \u00a0<\/strong><\/td>\nApplies Where\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0<\/strong><\/td>\nRate\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<\/strong><\/td>\nExample Application<\/strong><\/td>\n<\/tr>\n
GST<\/span><\/td>\nNationwide<\/span><\/td>\n5%<\/span><\/td>\nMost goods and services<\/span><\/td>\n<\/tr>\n
PST<\/span><\/td>\nSpecific to each province<\/span><\/td>\n5-9.975%<\/span><\/td>\nAdditional provincial tax<\/span><\/td>\n<\/tr>\n
HST<\/span><\/td>\nSelect provinces<\/span><\/td>\n13-15%<\/span><\/td>\nCombined federal and provincial tax<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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GST, HST, & PST Registration<\/span><\/h2>\n

Figuring out what taxes to charge is just the first step. Remitting those taxes is just as important. Here\u2019s a detailed guide to help you through the registration and remittance process for GST, HST, and PST.<\/span><\/p>\n

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Step 1: Determine if You Need to Collect Sales Tax<\/span><\/h3>\n

Most businesses operating in Canada are required to collect sales tax. Businesses whose global annual revenue exceeds $30,000 must register for GST\/HST. Small providers earning less than $30,000 annually are exempt but can still choose to register to benefit from GST reimbursements on imports.<\/span><\/p>\n

Certain goods and groups<\/span><\/a> are exempt from sales tax, including essential items like basic groceries, prescription drugs, and some medical devices. Indigenous Peoples, Governments, and Diplomats are also exempt from GST\/HST.<\/span><\/p>\n

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Step 2: Register for GST\/HST and PST<\/span><\/h3>\n

GST\/HST Registration<\/span><\/h4>\n