Harmonized Sales Tax | Toronto Tax Lawyer

What is HST

Defining the Harmonized Sales Tax (HST)

The harmonized sales tax is a form of consumption tax used in Canada. It is found and charged in provinces in which the regional provincial sales tax and the federal goods and services tax have been combined together for one value-added sales tax. This tax came about due to pressure from the federal government for individual Canadian provinces to eliminate their own sales tax systems.

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The HST is collected by the Canada Revenue Agency and then remitted to the participating provinces. The government also issues a GST/HST tax credit that is intended to offset all or some of the taxes paid under this program for low income individuals. This credit eligibility is determine by a person’s previous tax return.

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Business operators who work in any of the provinces with HST have a responsibility to charge and remit the HST. There are some small supplier exceptions for those businesses making less than $30,000 annually. These companies are not required to register for GST/HST. However, some of these businesses still opt to register voluntarily to tap into the Input Tax Credits on the services and goods consumed in the typical course of doing business.

Selling goods and services in and of itself can be difficult for Canadian businesses due to the complex rules, but those doing business with other provinces often opt to hire an experienced tax attorney because of the challenges of accurate tax collection and remission under the HST and GST. Understanding these rules often requires the insight of a knowledgeable HST tax lawyer.

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FAQs

The HST is made up of two components: an 8% provincial sales tax and a 5% federal sales tax. These replaced the 8% Retail Sales Tax (RST) and 5% federal Goods and Services Tax (GST) respectively.
Generally, you are not required to pay the Ontario portion (8%) of the HST on items such as books, children's clothing and footwear, children's car seats and car booster seats, diapers, qualifying food and beverages, and newspapers.