GST, HST, and QST Explained Across Canada

Introduction
Understanding GST, HST, and QST explained across Canada is essential for businesses, freelancers, retailers, corporations and service providers operating in multiple provinces. Canada’s sales tax system is complex because it includes three different tax structures—GST, HST and QST—each with its own legislation, registration rules, rates and reporting obligations. Whether you run an online business, a consulting practice, a construction company or a retail store, applying sales tax correctly is critical to avoiding CRA and Revenu Québec penalties. Errors in sales tax compliance are among the most common reasons for audits. This guide provides a complete overview of GST, HST, and QST explained across Canada to ensure businesses operate accurately and confidently.

Legal and Regulatory Framework
GST, HST, and QST explained across Canada involves understanding the three main tax systems:

1. GST – Goods and Services Tax (Federal)
   A 5% federal value-added tax applied across most provinces and territories. Governed by the Excise Tax Act.

2. HST – Harmonized Sales Tax (Federal + Provincial Combined)
   A combined sales tax administered by the CRA on behalf of participating provinces:
   • Ontario
   • Nova Scotia
   • New Brunswick
   • Newfoundland & Labrador
   • Prince Edward Island

HST rates vary from 13% to 15% depending on the province.

3. QST – Québec Sales Tax (Provincial)
   A separate provincial tax administered by Revenu Québec. QST functions similarly to GST but has distinct rules, filings and audit practices. The QST rate is 9.975%.

Understanding GST, HST, and QST explained across Canada requires applying the correct rates and ensuring proper registration.

When a Business Must Register
Registration is required when a business:

• exceeds the $30,000 small supplier threshold in worldwide taxable sales within the last four consecutive quarters
• expects to exceed $30,000 in the current quarter
• operates a taxi or rideshare service (mandatory registration)
• sells taxable goods or services as a non-resident carrying on business in Canada
• voluntarily registers to claim input tax credits (ITCs)

Québec-based businesses must also obtain a separate QST number.

Key Court Decisions
Court rulings provide important guidance on GST, HST, and QST explained across Canada. Themes include:

• incorrect place-of-supply rules — Courts ruled that tax must be charged based on where the supply is “deemed to occur,” not where the seller is located.
• mixed supply vs single supply — Courts decided that blended goods/services must be analyzed to determine the correct tax rate.
• missing documentation — Courts confirmed that ITCs can be denied without valid invoices.
• non-resident businesses — Courts ruled that foreign digital businesses must charge GST/HST if carrying on business in Canada.
• incorrect QST claims — Québec rulings emphasized strict documentation requirements for QST refunds.

These decisions highlight the complexity of GST, HST, and QST explained across Canada.

Why CRA and Revenu Québec Target This Issue
Sales tax audits are common because:

• businesses often charge incorrect tax rates
• GST/HST and QST are frequently collected but not remitted
• input tax credits (ITCs) are often overclaimed
• provincial and federal filings do not match
• place-of-supply errors occur with e-commerce and services
• businesses misunderstand tax rules for online or cross-provincial sales

Audit triggers include:

• mismatches between GST/HST collected and sales reported
• claiming large ITCs compared to revenue
• missing GST/QST numbers on invoices
• repeated late filings
• incorrect tax on interprovincial services or e-commerce
• QST discrepancies flagged by Revenu Québec

Understanding GST, HST, and QST explained across Canada helps businesses avoid these red flags.

Mackisen Strategy
Mackisen CPA uses a complete, compliance-focused approach to GST, HST, and QST explained across Canada:

• determining whether GST/HST/QST registration is mandatory
• applying correct place-of-supply rules for services and goods
• setting up proper invoicing systems with correct tax codes
• preparing monthly, quarterly or annual GST/HST and QST returns
• reconciling sales tax with financial statements
• correcting historical errors through voluntary disclosures
• assisting e-commerce businesses with multi-province compliance
• supporting CRA or Revenu Québec sales tax audits
• optimizing ITCs and ITRs to recover eligible tax paid

Our structured method protects businesses from penalties and ensures strong compliance.

Real Client Experience
Many businesses seek Mackisen after issues arise with GST, HST, and QST explained across Canada. One Ontario service provider charged GST only, not HST, for three years. CRA issued a large reassessment. Mackisen corrected filings and reduced penalties through a voluntary disclosure.

A Québec retailer incorrectly combined GST and QST into a single tax line. Revenu Québec denied several ITC/ITR claims until proper invoices were issued. We rebuilt the system and ensured full compliance.

An online seller charged the wrong rate for customers in Atlantic provinces. We implemented accurate place-of-supply rules and fixed past returns.

A contractor mistakenly believed that being under $30,000 exempted him from QST on his Québec services. Revenu Québec assessed retroactive tax. Mackisen corrected all filings and negotiated a payment arrangement. These cases show how critical proper sales tax compliance is.

Common Questions
Businesses often ask:

• Do I need both GST and QST numbers in Québec?
Yes—QST requires its own registration.

• Do I charge tax to clients in other provinces?
Yes—based on place-of-supply rules.

• Are digital services taxable?
Yes—platforms and non-resident suppliers must charge GST/HST.

• Can I claim ITCs without receipts?
No—documentation is required.

• What if my business sells both taxable and exempt services?
You must separate tax-eligible transactions in your bookkeeping.

These questions help clarify GST, HST, and QST explained across Canada.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you're filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency and protection from audit risk. When managing GST, HST, and QST explained across Canada, Mackisen provides full setup, compliance review, sales tax optimization and professional audit support.