How to Calculate and File HST Tax in Canada
Understand the essentials of HST compliance for Canadian businesses, from registration rules to calculating your net tax remittance using Input Tax Credits.
The Harmonized Sales Tax (HST) is a consumption tax applied to the majority of goods and services sold in certain Canadian provinces. It represents a combination of the federal Goods and Services Tax (GST) and a provincial sales tax (PST), creating a single value-added tax. This system is administered by the Canada Revenue Agency (CRA), and businesses are responsible for collecting this tax from consumers and remitting it to the CRA.
HST Rates and Participating Provinces
The Harmonized Sales Tax is not applied nationwide; it is only in effect in five “participating provinces.” These are Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. Each of these provinces has combined its provincial sales tax with the 5% federal GST, but the total rate varies because each province sets its own provincial component.
The current HST rates are 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, and Prince Edward Island. As of April 1, 2025, the HST rate in Nova Scotia is 14%. In the provinces and territories that are not part of the HST system, the 5% GST is charged separately. Some of these jurisdictions, such as British Columbia and Manitoba, also levy their own Provincial Sales Tax (PST).
| Province | HST Rate |
| — | — |
| Ontario | 13% |
| New Brunswick | 15% |
| Newfoundland and Labrador | 15% |
| Nova Scotia | 14% |
| Prince Edward Island | 15% |
Registering for an HST Account
Whether a business must register for an HST account depends on its revenue. The Canada Revenue Agency’s “small supplier” rule exempts businesses from registering if their total worldwide revenues from taxable goods and services are $30,000 or less over the last four consecutive calendar quarters. This calculation excludes revenues from the sale of goodwill or financial services.
If a business’s revenues exceed this $30,000 threshold, it is no longer considered a small supplier and registration becomes mandatory. The effective date of registration is the date the threshold was exceeded. For example, if a consultant earns $10,000 in each of the first two quarters of the year and then earns $15,000 in the third quarter, their total for the three quarters is $35,000, meaning they must register for HST.
A business that qualifies as a small supplier can register voluntarily. The primary advantage is the ability to claim Input Tax Credits (ITCs), which allow a business to recover the HST paid on business-related purchases and expenses. Without registration, a business cannot claim these credits.
To register for an HST account, a business needs a Business Number (BN) from the CRA. The application requires the business’s effective date of registration, fiscal year information, and total annual revenue. The owner’s Social Insurance Number (SIN) and date of birth are also required.
Calculating Your Net Tax
Once registered, a business must calculate its net tax for each reporting period. This calculation involves tracking the HST collected on sales and subtracting the HST paid on business expenses to determine the amount to send to the CRA.
The first part of the calculation is determining the total HST collected on taxable supplies. The specific rate of HST is governed by the “place of supply” rules, which dictate that the tax rate is based on where the customer receives the good or service. For instance, a business in Ontario selling to a customer in New Brunswick must charge the New Brunswick HST rate of 15%.
From the total HST collected, a business can subtract eligible Input Tax Credits (ITCs). ITCs are credits for the HST paid on legitimate business expenses and purchases, such as office supplies, commercial rent, and professional fees. Some expenses have limitations; you can only claim 50% of the HST paid on meals and entertainment expenses.
The net tax is found using the formula: Total HST Collected minus Total Eligible ITCs equals Net Tax. For example, if a business collected $6,500 in HST and paid $4,500 in HST on eligible expenses, its net tax payable would be $2,000. If ITCs exceed the HST collected, the business is entitled to a refund.
Filing Your HST Return
After calculating the net tax, the final step is to report these figures and remit any payment to the CRA. The CRA assigns each business a reporting period based on its annual revenue, which can be monthly, quarterly, or annually. This period dictates how frequently a return must be filed.
The primary method for filing is electronic, through the CRA’s “My Business Account” online portal. As of early 2024, electronic filing is mandatory for most businesses. Filing a paper return when required to file electronically may result in penalties.
Deadlines for filing and remitting payment depend on the assigned reporting period. For quarterly filers, the deadline is one month after the end of the reporting period. For annual filers who are sole proprietors, the filing deadline is June 15, but any payment owed is due by April 30.
Payments can be made through a Canadian financial institution, the CRA’s “My Payment” service, or a pre-authorized debit from a business bank account. Late remittances of HST can lead to penalties and interest charges.