Do US Citizens Pay Sales Tax in Canada?

U.S. citizens visiting Canada must pay Canadian sales taxes on most goods and services. A person’s status as a U.S. citizen does not provide a general exemption from these taxes at the point of sale. For nearly all transactions, from hotel stays and restaurant meals to souvenirs, the price paid will include applicable local and federal sales taxes.

Understanding Canadian Sales Taxes

The amount of sales tax a U.S. visitor pays in Canada depends on the province or territory where the purchase is made. Canada has a multi-layered system with a federal tax and, in most cases, a provincial tax. The first component is the Goods and Services Tax (GST), a 5% federal tax applied to most transactions nationwide.

Some provinces then add their own Provincial Sales Tax (PST) on top of the 5% GST. For example, British Columbia adds a 7% PST for a total of 12%, while Saskatchewan adds a 6% PST for a total of 11%. This two-tax system means consumers see both amounts calculated separately on their receipts.

Other provinces have streamlined this process by combining the federal GST and their provincial tax into a single Harmonized Sales Tax (HST). Provinces like Ontario (13% HST) and others such as New Brunswick, Newfoundland and Labrador, and Prince Edward Island (15% HST) use this blended system. A few jurisdictions, like Alberta, have no provincial sales tax and only charge the 5% GST.

The Former Visitor Rebate Program

Many returning U.S. visitors may recall a time when they could recover some of the taxes paid in Canada, which often leads to confusion today. For many years, the Canadian government operated the Visitor Rebate Program, which allowed international tourists to claim a refund on the GST/HST paid for short-term accommodations and most goods they purchased to take home.

This general rebate for individual tourists was officially discontinued on April 1, 2007. The elimination of this broad-based rebate means that the price paid for most goods and services is final. The program that replaced it is highly specialized and does not apply to the average U.S. tourist’s personal shopping or accommodation expenses.

Limited Rebate and Exemption Scenarios

While the general tourist rebate is a thing of the past, a few specific and limited circumstances exist where a U.S. citizen can either receive a rebate or is exempt from paying Canadian sales tax.

The most common exemption for a tourist is to have goods shipped directly to a U.S. address by the Canadian vendor. When a seller ships an item to a location outside of Canada, the transaction is often considered an export, and the GST/HST is not applied at the point of sale. This is not a rebate but an upfront exemption. This applies to goods only and requires the vendor to handle the shipping process directly.

Another well-known exemption is for purchases made at duty-free shops. These licensed retailers, located at land border crossings or in the international departures area of airports, sell goods that are intended for immediate export. As such, these items are sold free of GST/HST and other duties. The condition is that the goods must be taken out of Canada upon purchase.

A highly specialized rebate program, the Foreign Convention and Tour Incentive Program (FCTIP), replaced the former visitor rebate. This program is not for individual tourists. It offers rebates to non-resident convention sponsors, organizers, and exhibitors for the GST/HST paid on expenses like convention facilities and related supplies. It also has provisions for non-resident tour operators who package and sell Canadian tours that include accommodation.