Canadian tax explained

What is GST and HST on a Canadian Invoice?

What is GST and HST. Infographic with Canadian styling: GST and harmonized HST, sample rates, and a clear subtotal, tax, and total layout.

GST is the 5% federal goods and services tax on many taxable supplies in Canada. HST is a single harmonized sales tax in participating provinces that includes the federal 5% part and a provincial part in one rate you show on the invoice. The rate you charge usually follows the place of supply, not your home address. Registrants remit the net tax they collect after input tax credits, using the rules on Canada.ca.

Quick reference

GST, HST, and input tax credits

Use these plain-language definitions with bookkeepers, clients, and your own templates so everyone means the same thing by GST, HST, and ITCs.

What is GST in Canada?

GST is a federal value-added tax of 5% on taxable supplies. In provinces and territories that do not use HST, you often show a separate GST line at 5% on taxable sales. In HST provinces, the same federal component is built into the HST rate you display as one amount on the bill.

  • Standard federal rate of 5% for the GST part of a taxable sale
  • Applies to many goods and services with limited exceptions
  • Remitted to the CRA on your GST or HST return for your reporting period
  • Registered businesses may claim input tax credits on eligible business costs

Example

You sell a $1,000 taxable service to an Alberta client. You are a registrant. You add $50 GST (5% of $1,000) and show a total of $1,050 in Canadian dollars.

What is HST and how is it different from GST?

HST is a combined tax in five participating provinces. It rolls the 5% federal part and a provincial part into one rate, such as 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, and Prince Edward Island, with Nova Scotia at 14% (rates as published on the Government of Canada GST and HST rates page). On the invoice, you show HST as a single line at the full harmonized rate, not as two separate federal and provincial lines for that HST amount.

  • One combined rate on the invoice in participating provinces
  • Rate depends on the place of supply for the supply type
  • Reported to the CRA on the same return as your other GST and HST
  • Still allows input tax credits for eligible business expenses when you are a registrant

Example

You bill an Ontario business $2,000 plus HST. You show HST at 13% ($260) and a total of $2,260. The customer sees one harmonized tax line, not a split between federal and Ontario parts on that line.

What are input tax credits (ITCs)?

Input tax credits let GST and HST registrants recover the GST or HST they pay on reasonable business expenses that relate to commercial activity. You claim ITCs on your return, within the rules and time limits the CRA sets. This is not the same as a personal income tax deduction; it is a credit against the tax you collected.

  • Reduces the net tax you remit when you have eligible expenses
  • Requires valid documentation such as invoices that show the supplier, tax, and your business use
  • Exempt activities and mixed supplies can limit what you can claim
  • If you are unsure, your accountant or the CRA can confirm your fact pattern

Example

You pay $105 for software that includes $5 GST. You use the software only for taxable work. You may include that $5 in your ITC calculation for the period, subject to CRA rules and your documentation.

Side-by-side

GST-Only (5%) vs HST (Harmonized) at a Glance

GST and HST both use the same federal 5% base in their design, but the invoice must show 5% GST in non-harmonized areas and the full HST rate in HST provinces. The Government of Canada publishes the current list of HST and GST rates for each province and territory.

What the customer usually sees on the tax line

GST (5% without harmonization on the same line)A line for GST at 5%, often labelled GST
HST (harmonized, single line)A line for HST at the full rate (for example 13% or 15%)

Where this pattern is common

GST (5% without harmonization on the same line)Alberta, Northwest Territories, Nunavut, Yukon, and any supply where only 5% federal GST applies on that line
HST (harmonized, single line)Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, when place of supply is in that province

PST, RST, or QST

GST (5% without harmonization on the same line)British Columbia, Manitoba, and Saskatchewan may add provincial sales tax with another registration. Quebec uses QST and Revenu Quebec in addition to GST for many supplies
HST (harmonized, single line)Not blended into HST outside the harmonized model; separate provincial returns may still apply for non-harmonized tax

What you use to pick the total rate

GST (5% without harmonization on the same line)Place of supply plus whether only GST or GST plus a provincial tax applies for that customer
HST (harmonized, single line)Place of supply for the harmonized province that applies to the sale, using the published HST rate

How remittance fits your return

GST (5% without harmonization on the same line)You report 5% GST and any other federal amounts your account requires in the right boxes
HST (harmonized, single line)You report the full HST collected at the correct rate in your GST or HST return, following CRA line instructions for your form

Practical guidance

When you show GST, HST, or zero tax on a bill

The mix depends on the place of supply, your registration status, and whether the good or service is taxable, zero-rated, or exempt. The CRA explains each category in its general guides and memoranda. When in doubt, get advice before you promise a client a rate in writing.

GST in GST-only or federal-only line situations

Use a clear 5% GST line when the supply is taxable, you are registered, and the place of supply calls for 5% GST on that line. Many invoices to Alberta, Nunavut, the Northwest Territories, and Yukon follow this pattern when no HST and no additional provincial line applies on that sale.

  • You sell a taxable good or service and the place of supply is in a 5% GST area for that supply
  • You already confirmed you must charge tax for that client under your registration and the Excise Tax Act
  • Your software or template labels the line "GST" and the math matches 5% of the taxable base

If another provincial tax applies, add the correct extra line and registration, not a second "GST" label for the provincial part.

HST in harmonized provinces

Charge the published HST rate for the place of supply in Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, or Prince Edward Island. Show the combined HST amount once. Do not split the HST line into separate federal and provincial parts on a standard client invoice for that sale.

  • Your customer receives the supply in an HST province under the place-of-supply rules
  • You are a registrant and the supply is not zero-rated or exempt in your fact pattern
  • You have the correct HST rate loaded for the province, including any announced rate change from government sources

Keep a link to the current Government of Canada rate table in your internal wiki so the team does not use an outdated percentage.

Zero-rated and exempt supplies

Some supplies are zero-rated, which means 0% charged but still in the GST and HST system, such as many exports. Others are exempt, with no GST or HST to the end customer. Your registration, invoice lines, and ITC rules can differ for these categories, so use the right CRA guidance for the supply type.

  • You sell internationally and the sale qualifies for zero-rating with proper documentation
  • You only supply exempt services, where registration may not be available in the normal way
  • You have a mix of taxable, zero-rated, and exempt work and need a chart of accounts that separates them

A tax professional helps when more than one category appears on the same project.

What sets them apart

What sets GST, HST, and invoice labels apart

The words on the page change how a buyer reads the bill. "GST" and "HST" are not interchangeable labels when the law expects one of them, and "tax included" is different from a line that adds tax to a subtotal.

GST line vs HST line

A GST line at 5% is the usual label when you only charge the 5% federal part on that line. An HST line states the full harmonized percentage for a participating province. Using the wrong label can confuse a customer even when the math is right.

Place of supply vs your business address

The tax rate for many supplies follows where the supply is made or where the customer is located, depending on the type of good or service. The CRA place-of-supply rules include tables for tangible goods, services, and mobile resources. Your own province is only one part of the story.

Quebec and the QST

Quebec combines federal GST and Quebec sales tax in its own system for many businesses. Invoices in Quebec can show a different mix of lines than a simple 5% GST or one HST line. Revenu Quebec and the CRA each publish the steps that apply to your account types.

ITCs and your remittance

ITCs lower the amount you send to the CRA. They are not a discount to the client. The net tax on your return is generally tax collected minus eligible ITCs, with adjustments the CRA allows for your situation.

Workflow

How to line up GST and HST on a customer invoice

Start with registration and place of supply, then pick a rate, then build the subtotal, tax, and total in Canadian dollars. Match your accounting system and your return so the same numbers flow from invoice to remittance

  1. 1

    Confirm you are a registrant and your effective date

    If you are not required to be registered, you do not add GST or HST as a collecting registrant. If you are registered, your invoice must support the tax you collect, including your business number and the time window that applies to each supply

    Tip: Keep a PDF of your notice of registration with your year-end files.

  2. 2

    Identify the place of supply for the sale

    Map the job to a province or territory, or the export rules, using the place-of-supply information on Canada.ca. The rate follows those rules, not a guess from the mailing label alone when the service is delivered elsewhere

    Tip: Store the customer’s service address in your CRM so the billing team can see it without opening email threads.

  3. 3

    Choose GST at 5%, the correct HST rate, or 0% when rules allow

    For taxable sales, apply the 5% GST, the published HST rate, or the right combined federal and provincial pattern when a separate provincial tax applies. For zero-rated exports, use 0% and keep export evidence as the rules require

    Tip: Load rates from a maintained tax table, not a sticky note in a spreadsheet cell.

  4. 4

    Show subtotal, tax, and total in clear order

    Present the amount before tax, the GST or HST (or other tax lines), and the amount payable. When tax is included in a price, say so. When early payment discounts affect tax, follow CRA guidance for how the discount and tax work together on the invoice

    Tip: Round in the way your accounting system expects, usually to the cent, and be consistent on every line.

  5. 5

    List your business identity and the client details you need

    Include the legal and trade name, business number, invoice date, invoice number, and a plain description of what you sold. Bigger businesses may need more fields; the CRA lists invoice requirements for your registration type in its public guidance

    Tip: A missing business number is one of the first items an accounts payable team will flag.

  6. 6

    File, remit, and keep your records for the retention period

    File your GST or HST return on time, use electronic services when the CRA makes them mandatory for you, and keep your books long enough to support a review. This is general information, not legal or tax advice; ask a professional when your facts are unusual

    Tip: Set calendar alerts for the filing and payment day so you are not a day late on a remittance

Pitfalls

Mistakes that make GST and HST harder than they need to be

Most errors are fixable. They start with the wrong place of supply, the wrong label for the tax, or a missing business number. Fix those first before you fine-tune wording.

Charging the rate for your own province for every job

Problem

Service businesses often work across provinces. If the place of supply is the customer’s province, the HST or GST you show may be different from your own office address.

Fix

Run the place-of-supply test on Canada.ca for the good or service type, then set the client profile in your billing tool to that jurisdiction.

Labeling a harmonized line as "GST" when HST is required

Problem

A buyer in Halifax may look for "HST" on the line at 14% or 15% depending on the current Nova Scotia and federal rules. A 5% line alone can be wrong for that HST sale.

Fix

Use the HST label and the full HST amount that matches the place of supply.

Forgetting separate PST or QST when those programs apply

Problem

A BC or Manitoba job may need GST and PST, each on its own terms. A Quebec job may need GST and QST through Revenu Quebec. One generic "tax" line can be unclear.

Fix

Set up a province-specific template for any province where you often bill, and get training when a new channel opens

Skipping ITC documentation to save time at month end

Problem

The CRA can deny or limit ITCs if invoices from suppliers are missing, unclear, or unrelated to commercial activity. You can pay more remittance than you needed to.

Fix

Attach PDFs of supplier invoices to the expense in your system the week they arrive, not the week before a review.

Guessing the rate on cross-border or digital work

Problem

These supplies have detailed rules, including zero-rating, platform rules, and place of supply for digital services.

Fix

When the flow of work crosses a border, pause and read the CRA or Revenu Quebec page for that scenario, or ask a Canadian indirect tax specialist.

Checklists

Checklists: GST, HST, and client-ready invoices

Run these before you send a new template to a client, open a new province, or change your registration status.

On the invoice face

  • Your legal name and, if you use one, a trade name that matches your registration
  • Your GST or HST registration number in the right format for your return type
  • Invoice number, date, and the customer name and address when practical
  • A clear description of the taxable amount before tax, in Canadian dollars
  • GST at 5%, or HST at the correct harmonized rate, or other required tax lines
  • The total the customer must pay, with payment method or instructions that match your policy

Before you set the rate

  • The supply is classified as taxable, zero-rated, or exempt for your case
  • The place of supply is identified with the right province, territory, or country rule
  • The rate in your system matches the Government of Canada or Revenu Quebec at the date of the supply
  • You are allowed to add tax to that client under your registration, not just your marketing copy

In your back office

  • Supplier invoices and expense receipts are stored with ITC information where you claim it
  • Filing and payment due dates for GST or HST are on a shared team calendar
  • Electronic access to the CRA, and Revenu Quebec if needed, is active before the due date
  • You can produce an audit trail from quote to remittance for any large job

Sources

What official sources say about GST, HST, and compliance

These points come from the Government of Canada and the CRA. They are not a substitute for advice on your own books.

  • The CRA requires almost every registrant (other than charities and selected financial institutions) to file GST and HST returns for reporting periods that begin in 2024 in an electronic format, and sets penalties of one hundred dollars for a first return on paper and two hundred and fifty dollars for every later return filed on paper when e-filing is required (Canada Revenue Agency, 2024).

    Canada Revenue Agency (2024). View source

  • The Government of Canada explains that the tax rate to charge on taxable supplies and benefits depends on the type of supply and the place of supply, and that businesses must also charge any applicable provincial or territorial tax (Government of Canada, charge and collect the GST/HST).

    Government of Canada, charge and collect the GST/HST (2025). View source

  • The Canada Revenue Agency publishes public GST and HST statistics, including overviews and tables that describe how the tax base behaves across time and by industry, as part of its program reporting (Canada Revenue Agency, GST and HST statistics and publications).

    Canada Revenue Agency, GST and HST statistics (2024). View source

Related document types

Exports, platforms, and mixed sales

GST and HST are broad. Edge cases are normal for growing businesses. Document the facts, then apply the right CRA or Revenu Quebec page, not a general blog summary.

Zero-rated sales outside Canada

Many exports are GST and HST at 0% when the conditions in the law are met. You still use correct paperwork and may still register and claim ITCs. Do not call an export "exempt" when the law says "zero-rated" unless your advisor confirms the label.

Digital services and e-commerce

Platforms, short-term rental rules, and digital supplies have dedicated CRA guidance, including for non-residents. Your invoice in Canada may be different from the document a platform issues on your behalf. Match roles before you both bill the end customer.

Real property and construction

Land, construction, and substantial renovation have extra tests and sometimes self-assessment. Your standard service invoice may not be enough on its own. Use the memoranda in the GST and HST series for those industries.

Frequently asked questions

Common questions from Canadian business owners about GST, HST, and billing.

What is the difference between GST and HST on an invoice?

GST is 5% federal tax that appears on its own when only the 5% rate applies on a line. HST is a single combined rate in participating provinces that already includes the federal 5% part. You show HST with one percentage and one tax amount, not as two lines for the federal and provincial share of the same HST.

Do I use my province or the client’s province for the rate?

Often you use the place of supply, which may be the client’s province for many services, not the province where you sit. The CRA and Revenu Quebec publish the tests for each supply type. Your contract should still be clear, but the law picks the place of supply.

What is an input tax credit in plain language?

It is a credit that lowers the tax you remit when you have paid GST or HST on business costs that qualify. You need valid invoices and a commercial connection. Your income tax return is a different process.

Is GST the same as PST?

No. GST is federal. PST, RST, and QST are provincial. In some places you may show more than one line, each with its own rate and return.

Can I write "HST" when I only charge 5% GST?

Only when the law and the place of supply make 5% GST the right tax on that line. HST is a different label and rate in harmonized provinces. The wrong label can make accounts payable ask for a revised bill.

What currency should the invoice use?

The usual practice is to bill Canadian customers in Canadian dollars, with a clear subtotal, tax, and total. If you and the customer agree to another currency, document that agreement and the exchange approach with your bookkeeper.

How long should I keep GST and HST records?

The CRA often refers to a six year retention period for most records unless a notice requires longer. Keep both sales invoices and purchase invoices in a way you can find them by period and by customer.

If I have no tax on a line, can I still be a registrant?

If you have zero rated sales, you may still be a registrant and you still follow reporting rules. If you only have exempt sales, you may not need the same type of account. A professional can help you test your revenue mix.

Does e-filing apply to my return?

Most registrants with reporting periods that begin in 2024 or later need electronic filing, with a few exceptions. Read the CRA notice and use My Business Account or a certified method before you file on paper by habit.

Keep learning

Related guides and resources

Deeper playbooks and templates that pair with this glossary term.

What is an input tax credit?

How registrants recover GST or HST on eligible business purchases and claim ITCs on the GST/HST return.

Read glossary entry

What is QST in Quebec?

9.975% QST (TVQ) with 5% GST on Quebec invoices, Revenu Québec, and how the lines differ from HST.

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What is a business number (Canada)?

Nine-digit CRA BN, GST/HST and payroll program accounts, and how they fit on invoices.

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Start from a clear layout, then add GST or HST lines the way you bill today.

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