GST, HST, QST – What’s the Difference? – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Understanding the difference between GST, HST, and QST is essential for every Canadian business—whether you’re self-employed, incorporated, a freelancer, or an online seller. Canada’s sales tax system is uniquely complex because it is split between federal and provincial governments. Some provinces use the harmonized HST system, others charge GST plus their own PST or QST, and the rules vary drastically for interprovincial sales, online products, and digital services. Many new business owners accidentally charge the wrong tax rate, register for the wrong tax type, or miss their obligations entirely—leading to CRA or Revenu Québec audits, penalties, and uncollected tax. This guide explains the difference between GST, HST, and QST, when each applies, and how business owners can remain compliant across all provinces.

Legal and Regulatory Framework

Sales taxes in Canada fall under two main laws:
• the Excise Tax Act (federal GST/HST), and
• the Tax Administration Act (Québec) for QST.

1. GST – Goods and Services Tax (Federal)

• Rate: 5% across Canada.
• Applies in every province unless replaced by HST.
• Administered by the CRA.
• Businesses must register once they exceed $30,000 in taxable revenue in a 12-month period (or voluntarily register earlier).

2. HST – Harmonized Sales Tax

• Rate: 13–15%, depending on the province.
• Combines GST + provincial sales tax into one tax.
• Administered federally by the CRA.
• HST applies in:
– Ontario
– New Brunswick
– Nova Scotia
– Prince Edward Island
– Newfoundland & Labrador

3. QST – Québec Sales Tax

• Rate: 9.975%, charged in addition to the 5% GST.
• Administered by Revenu Québec, not the CRA.
• Businesses operating in Québec must register for a separate QST number.
• Out-of-province and non-Canadian businesses selling to Québec consumers may need to register under the Specified QST System.

4. Other Provinces with their Own PST

British Columbia, Saskatchewan, and Manitoba have independent PST systems, each with its own rules.

These laws create the framework for understanding sales tax obligations in Canada.

Key Court Decisions

Several court rulings illustrate how strictly governments enforce GST/HST/QST compliance.

In Air Canada v. Canada, the Supreme Court emphasized that GST/HST is a strict liability tax—errors in collection still result in tax owing.

In Movies Plus Ltd. v. Canada, CRA reassessed a business for charging GST instead of HST; the court upheld the reassessment based on place-of-supply rules.

In Revenu Québec v. Homeaway, the court confirmed that out-of-province companies must collect QST when selling to Québec consumers—a major precedent for digital platforms.

In Cornwallis Financial Corp. v. Canada, the court ruled that misclassifying exempt vs taxable supplies leads to reassessment, even if done unintentionally.

These cases show that businesses must follow sales tax rules precisely.

Why CRA and Revenu Québec Target This Issue

CRA and Revenu Québec closely monitor GST/HST/QST compliance because mistakes are common and financially significant. They target businesses that:

• charge the wrong rate (GST instead of HST, or vice versa)
• fail to register when exceeding the $30,000 small supplier threshold
• operate in Québec but never register for QST
• sell digital services without collecting the required tax
• claim improper ITCs (input tax credits)
• misapply place-of-supply rules for interprovincial sales
• confuse zero-rated and exempt supplies

They also cross-check e-commerce data, POS records, payment processor info (PayPal, Stripe), and out-of-province operations to ensure compliance.

Mackisen Strategy

At Mackisen CPA Montreal, we help businesses navigate Canada’s complex multi-jurisdiction sales tax system. Our approach includes:

• determining whether your business must register for GST, HST, QST, or PST
• registering tax accounts with CRA and Revenu Québec
• applying the correct tax rate for each province using place-of-supply rules
• teaching clients how to apply sales tax to online, digital, or cross-border sales
• reviewing invoices and receipts for compliance
• calculating GST/HST/QST rebates and input tax credits
• managing provincial tax registrations for remote sellers
• preparing GST/HST/QST returns accurately and on time
• defending clients during CRA or Revenu Québec audits

Our structured method ensures total compliance and prevents costly reassessments.

Real Client Experience

A digital marketing consultant in Montréal charged only GST, believing QST didn’t apply. Revenu Québec audited and assessed two years of uncollected QST. We registered her properly, corrected filings, and negotiated a manageable repayment plan.

Another client operating an online store shipped to multiple provinces but charged the same tax everywhere. CRA flagged incorrect place-of-supply rules. We implemented a multi-province tax matrix and corrected all returns.

A U.S.-based company selling digital subscriptions to Québec customers ignored QST obligations. Revenu Québec intervened. We registered them under the Specified QST System and resolved the compliance issue.

Common Questions

Business owners often ask whether GST/HST and QST apply to all services. Most do—unless exempt by law.
Others ask whether they must register in Québec if they don’t live there. Yes—if they sell to Québec consumers.
Some ask why their Ontario clients require HST. Because Ontario is an HST province.
Another question: How do I know which tax to charge for online sales? Place-of-supply rules determine the rate.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps freelancers, e-commerce stores, and corporations stay fully compliant with Canada’s complex sales tax system. Whether you sell locally, nationally, or digitally across multiple provinces, our expert team ensures accuracy, transparency, and absolute CRA/Revenu Québec protection.