GST (Goods and Services Tax)
The GST is a 5% federal value-added tax applied to most goods and services sold in Canada. It applies nationwide and is collected by businesses at every stage of the production and distribution chain. Businesses with annual revenues exceeding $30,000 must register for a GST account with the CRA.
GST-registered businesses charge GST on their sales (output tax) and can claim credits for GST paid on their business purchases (input tax credits, or ITCs). This means only the end consumer effectively bears the full tax cost. Certain items are exempt (financial services, residential rent, health care) or zero-rated (basic groceries, prescription drugs, exports).
In provinces with HST (Ontario, Nova Scotia, New Brunswick, Newfoundland & Labrador, PEI), the GST is collected as part of the harmonized tax. In Quebec, the GST is collected alongside the QST by Revenu Québec. In BC, Saskatchewan, and Manitoba, the GST is collected separately from the provincial sales tax.
Related Terms
HST (Harmonized Sales Tax)
HST combines the 5% federal GST with a provincial portion into a single harmonized tax, simplifying compliance for businesses operating in multiple provinces.
QST (Quebec Sales Tax)
The QST is Quebec's provincial sales tax at 9.
PST (Provincial Sales Tax)
PST is a provincial sales tax levied separately from the federal GST.
GST/HST Credit
The GST/HST credit is a tax-free quarterly payment from the CRA designed to help individuals and families with low and modest incomes offset the GST/HST they pay on everyday purchases.