GST vs HST, and what contractors in Canada need to know

GST vs HST is a question about one tax system with two ways of charging it. GST, the goods and services tax, is the 5% federal sales tax. HST, the harmonized sales tax, is that same 5% combined with a provincial portion into one rate, used in five provinces. Both are collected under one CRA account, filed on one return, and shown on your invoice as one line.

The difference matters on every invoice you send, because the wrong rate is either money you owe the CRA out of your own pocket or an overcharge your customer will notice. For a contractor who works near a provincial border, it can change from one job to the next.

Short answer GST is the 5% federal sales tax. HST is a single combined rate of 13% to 15% that replaces GST and the provincial sales tax in Ontario, New Brunswick, Nova Scotia, Newfoundland and Labrador and Prince Edward Island. Contractors register once with the CRA for both, charge the rate of the province where the work is done, and claim back the tax they pay on business purchases.

This guide covers GST and HST for sole proprietors and small trade businesses. It doesn't cover the separate provincial sales taxes in detail, or the Quebec Sales Tax, which Revenu Québec administers on its own. For the wider picture of income tax, instalments and T5018 slips, see our contractor tax overview.

Which provinces charge GST and which charge HST

Every province and territory charges either GST alone, GST plus a separate provincial tax, or HST. Nobody charges HST and a provincial tax together. Here is how the country splits, using the rates on the CRA's rate page.

Where the work is	What you charge	Rate on the invoice
Ontario	HST	13%
New Brunswick	HST	15%
Newfoundland and Labrador	HST	15%
Prince Edward Island	HST	15%
Nova Scotia	HST	14%
Alberta, Yukon, Northwest Territories, Nunavut	GST	5%
British Columbia	GST plus PST	5% plus 7% PST
Saskatchewan	GST plus PST	5% plus 6% PST
Manitoba	GST plus RST	5% plus 7% RST
Quebec	GST plus QST	5% plus 9.975% QST

Rates change, and Nova Scotia's dropped by a point recently. Before you set up a new price list, check the current figure for each province you work in on our provincial rates table.

What the HST actually contains

An HST rate is the federal 5% plus a provincial share. In Ontario that's 5% federal and 8% provincial. You don't split the two on your invoice or your return. You charge 13%, report 13%, and remit the net to the CRA, which passes the provincial share on.

Where a separate provincial tax fits

In the GST-plus provinces, the provincial tax is a different tax with its own registration, its own return and its own rules for construction. In British Columbia, for example, contractors often pay PST on the materials they buy rather than charging it on the finished job. Those rules come from the province, so check the BC PST guidance or your own province's ministry before you add a provincial line to an invoice.

Why the job's location sets the rate

The rate you charge isn't decided by where your business is registered or where you live. For services on real property, which covers most trade work on a house, a building or a yard, the CRA's place-of-supply rules generally put the supply in the province where the property sits.

So a roofer based in Ottawa who re-roofs a house in Gatineau is making a supply in Quebec, and charges GST plus QST rather than Ontario HST. A plumber in Lloydminster who works on both sides of the Alberta and Saskatchewan border charges a different total depending on which side the house is on.

The same rule cuts both ways. A contractor from an HST province who takes a job in Alberta charges 5% GST, not their home rate. Getting this wrong in the customer's favour is an amount you owe the CRA anyway, while getting it wrong in your favour is an overcharge.

A worked example across the Nova Scotia line

Numbers make the point clearer. Take a deck builder based in Moncton, New Brunswick, who quotes two decks in the same week. One is in Moncton, and the other is across the border in Amherst, Nova Scotia. Both are priced at $12,000 before tax.

	Moncton, NB	Amherst, NS
Price before tax	$12,000	$12,000
HST rate	15%	14%
HST charged	$1,800	$1,680
Total to the customer	$13,800	$13,680

If the Amherst invoice went out at the home rate of 15%, the customer would be overcharged $120. That would have to be refunded or credited, with a credit note, once someone spotted it. The fix is to set the rate from the job's address on the quote, not from your own.

The deposit follows the same rate. A 30% deposit on the Amherst deck is $4,104 including HST, and it's taxed at 14% because the work it pays for is in Nova Scotia. Our deposit guide covers when to ask for one.

Registration, one account for both taxes

You don't register for GST and HST separately. There is one GST/HST account with the CRA, attached to your business number, and it covers every province where you charge either tax.

When registration becomes required

You stay a small supplier, and registering is optional, while your taxable revenue stays at or under 30,000 dollars in any single calendar quarter and over the last four consecutive quarters. Once you go over, you must register, and the CRA's registration rules set the date from which you have to start charging.

Why some contractors register early

Registering before you have to means charging tax on your work, which can feel like a price increase to a homeowner. The trade-off is that you can claim input tax credits on what you buy, such as a trailer, tools and materials. Starting out, those purchases can be large. An accountant can tell you whether early registration suits your start-up costs.

Input tax credits, the half of HST that comes back

The tax you charge isn't income. You hold it for the government, then subtract the GST or HST you paid on business purchases, called input tax credits, and remit the difference.

In an HST province, you claim the whole HST on a purchase, not only the federal 5%. An Ontario electrician who pays $2,260 for a panel and breakers, of which $260 is HST, claims the full $260. That's a real advantage of HST over the GST-plus-PST system, where provincial tax paid on materials is usually a cost you can't recover through the federal return.

Two habits keep input tax credits clean. Keep every supplier invoice that shows the supplier's GST/HST number, because the CRA can deny a claim without one. And keep the tax you collect separate from your operating money, so the remittance is sitting there when your return is due.

The Three-Line Tax Check before every quote

Most GST and HST mistakes happen at the quote, not at filing time. We suggest running three checks before a price goes out, in this order.

1. Where is the property? The job address, not your office, decides the province.
2. What does that province charge? HST at one combined rate, GST alone, or GST plus a provincial tax with its own rules.
3. Is your number on the document? A registered contractor shows the GST/HST number on every invoice, so a business customer can claim their own input tax credit.

If you work in a single province, the first two answers rarely change. If you cross a border even once a season, the first line is the one that saves you a refund. You can test a total quickly with our GST/HST calculator before you send it.

How StrikeHoney handles GST and HST

The Three-Line Tax Check works best when the rate is set by the job rather than typed in by hand each time. That's how StrikeHoney is built.

• Tax worked out by province. GST/HST is worked out on every quote and invoice from the province, so nobody types a rate by hand.
• Deposits carry the tax. A deposit taken at quote approval is credited on the final invoice, so the tax on the job adds up across both.
• Manual payments recorded. Cash, cheque and e-transfer can be marked paid by hand, so the tax report matches what reached your bank.
• A tax report in settings. Tax settings and a tax report sit in the app, ready for your return or for your accountant.

Quotes and invoices go to your customer as a link by text or email, with no account needed. Every feature is included on one plan at $24/mo CAD, or $19/mo CAD billed annually. You can see more on our contractor invoicing software page.

The bottom line

GST vs HST comes down to where the work is. GST is the 5% federal tax, HST is a single combined rate in five provinces, and one CRA account covers both. Set the rate from the job's address, keep the tax you collect separate from your own money, and claim back the tax you pay on materials. Handled at the quote stage, sales tax becomes one correct line on every invoice.

To set up your rates and send your first quote with the tax already worked out, start your free trial. If you're among the first 30 contractors, the first 90 days cost nothing and no card is needed.