HST/GST & Sales Tax Glossary
Plain-language definitions of 14 key Canadian sales tax terms, including GST, HST, PST, QST, ITCs, and common QBO tax codes.
GST (Goods and Services Tax)
The federal sales tax of 5% charged on most goods and services sold in Canada. Administered by the CRA. Applies in every province and territory, either on its own or as part of HST.
HST (Harmonized Sales Tax)
A blended federal-provincial sales tax used in Ontario, New Brunswick, Nova Scotia, PEI, and Newfoundland & Labrador. Combines the 5% GST with the provincial portion into a single rate (13% or 15%). Registered businesses collect and remit HST to the CRA as a single payment.
PST (Provincial Sales Tax)
A provincial sales tax charged separately from GST in BC, Saskatchewan, and Manitoba. Each province administers its own PST and has different rules about what is taxable and who must register. Remitted to the province, not the CRA.
QST (Quebec Sales Tax)
Quebec's provincial sales tax, currently at 9.975%. Administered by Revenu Quebec, not the CRA. Combined with GST, the total rate in Quebec is approximately 14.975%.
RST (Retail Sales Tax)
Manitoba's provincial sales tax, currently at 7%. Functionally similar to PST in other provinces but referred to as RST in Manitoba.
Input Tax Credit (ITC)
The GST/HST a registered business paid on purchases made for business use, which can be claimed back against the GST/HST the business collected. Reduces the net amount remitted to the CRA.
Place of Supply
The rule that determines which province's tax rate applies to a transaction, generally based on where the customer is located, not where the seller is. Important for businesses that sell to customers in multiple provinces.
Quick Method
A simplified way for small businesses (under $400,000 in annual taxable revenues) to calculate GST/HST remittances. Instead of tracking individual ITCs, you remit a flat percentage of your sales. Can reduce paperwork but may not be beneficial for all businesses. Talk to your Mesa CPA advisor before switching.
Registrant
A business that is registered for GST/HST with the CRA. Registrants are required to collect and remit GST/HST on taxable supplies and are entitled to claim ITCs on business purchases.
Small Supplier
A business with less than $30,000 in annual taxable revenues. Small suppliers are not required to register for GST/HST, but can do so voluntarily. Once the threshold is exceeded, registration is mandatory.
Tax Code
A label in QBO that tells the system how to treat a transaction for sales tax purposes. Common codes: Taxable (standard GST/HST applies), Zero-Rated (0% tax but still a taxable supply, ITCs can be claimed), Exempt (no tax and ITCs cannot be claimed on related purchases), Out of Scope (not subject to sales tax at all).
Taxable Supply
A good or service that is subject to GST/HST. Most commercial goods and services in Canada are taxable supplies. Includes both standard-rated (5%/13%/15%) and zero-rated supplies.
Zero-Rated Supply
A taxable supply on which the rate of GST/HST is 0%. Examples include basic groceries, prescription drugs, and most exports. Zero-rated is different from exempt, sellers of zero-rated supplies can still claim ITCs on their purchases.
Exempt Supply
A good or service that is not subject to GST/HST at all. Examples include most residential rents, health care services, and educational services. Sellers of exempt supplies cannot charge GST/HST and cannot claim ITCs on related purchases.