WHAT’S THE DIFFERENCE BETWEEN GST, QST, AND HST IN CANADA?

Canada’s sales tax system can be confusing, especially for new business owners operating across multiple provinces or selling online. Depending on where a customer lives, you may need to charge GST, QST, HST, or a combination of these taxes. Understanding the difference between these sales taxes is essential for compliance, proper invoicing, and accurate GST/QST/HST reporting. This guide explains how each tax works, which provinces use them, and what Quebec businesses must know to stay compliant.

A clear understanding of GST, QST, and HST prevents costly tax errors, ensures correct pricing, and reduces the risk of audit exposure when selling across Canada.

LEGAL AND REGULATORY FRAMEWORK

Sales tax rules in Canada are governed by:

• Excise Tax Act — the legislation behind the federal GST and the harmonized HST
• Quebec Taxation Act — the legislation behind Quebec’s QST
• Provincial sales tax acts in PST provinces (BC, SK, MB)

Businesses must apply the correct tax based on place-of-supply rules, which determine whether GST, HST, or QST applies to a sale.

KEY COURT DECISIONS

Courts have repeatedly confirmed that:

• place-of-supply rules override a business’s physical location
• businesses must collect the correct provincial tax even without a physical presence
• sellers cannot rely on software defaults as a defense for incorrect tax
• Quebec’s QST is legally separate from GST/HST, even though both are administered by Revenu Québec within Quebec
• customers located in HST provinces must be charged HST, not GST

These decisions reinforce that businesses must understand how each tax works across Canada.

WHY BUSINESSES STRUGGLE WITH SALES TAX DIFFERENCES

Common issues include:

• charging GST only, when QST also applies
• charging HST incorrectly to out-of-province customers
• misunderstanding how digital services are taxed
• assuming taxes depend on seller location instead of customer location
• treating Quebec as an HST province (it is not)
• inconsistent tax coding in accounting or e-commerce systems

Businesses operating online or across provinces need clear tax strategies to avoid mistakes.

WHAT’S THE DIFFERENCE BETWEEN GST, QST, AND HST?

1. GST — Goods and Services Tax (Federal)

• Rate: 5%
• Applies: Across all provinces and territories
• Administered by: CRA + Revenu Québec (for Quebec residents)
• Used when: Selling to GST-only provinces (AB, BC*, SK*, MB*, NT, NU, YT)

*BC, SK, MB use PST in addition to GST.

GST is always part of the sales tax calculation, except in HST provinces where it is blended into HST.

2. QST — Quebec Sales Tax (Provincial)

• Rate: 9.975%
• Applies: Only in Quebec
• Administered by: Revenu Québec
• Used when: Selling taxable goods or services to Quebec customers

In Quebec, businesses charge both GST (5%) and QST (9.975%). QST operates similarly to GST but is a separate tax.

3. HST — Harmonized Sales Tax (Combined Federal + Provincial)

• Rates:
– 13% in Ontario
– 15% in NB, NS, NL, PEI
• Applies: Only in HST provinces
• Administered by: CRA
• Used when: Selling goods/services to customers in HST provinces

HST replaces GST + the provincial portion, streamlining collection for businesses.

WHICH TAX DO I CHARGE? — QUICK REFERENCE

The tax you charge depends on the customer’s province, not your location.

• Customer in Quebec: Charge GST + QST
• Customer in Ontario, NB, NS, NL, PEI: Charge HST
• Customer in AB, NT, NU, YT: Charge GST only
• Customer in BC, SK, MB: Charge GST + PST, but PST requires separate registration
• International customers: Usually zero-rated GST/QST, but rules vary by supply type

This is why accurate customer location settings are critical in POS and e-commerce systems.

COMMON QUESTIONS ABOUT GST, QST, AND HST

Do I need to register for multiple taxes?

Possibly. If you sell to HST or PST provinces regularly, you may need additional registrations.

Is QST the same as HST?

No. QST is a separate Quebec provincial tax.

Do digital services follow these rules?

Yes. The place-of-supply rules for digital services depend on customer location.

Do I charge tax if the customer is outside Canada?

Often zero-rated — but always verify the supply type.

Are services taxed the same way as goods?

Generally yes, but place-of-supply rules differ slightly.

MACKISEN STRATEGY

Mackisen CPA helps businesses navigate multi-province sales tax systems. We analyze customer locations, configure tax settings in accounting and e-commerce platforms, and register businesses in GST/HST/QST/PST jurisdictions as needed. Our team ensures your invoicing is compliant, your tax reporting is accurate, and your systems apply the right tax every time.

REAL CLIENT EXPERIENCE

A Quebec-based Shopify store charged only GST to Quebec customers for months. Mackisen corrected their settings, filed adjustments, and prevented penalties.

A contractor invoiced Ontario clients with GST instead of HST. Mackisen fixed past filings and set up correct interprovincial tax coding.

A digital services firm incorrectly charged QST outside Quebec. Mackisen rebuilt their tax matrix and ensured compliance.

COMMON QUESTIONS

Do I charge GST + QST for shipping outside Quebec?
You apply the tax based on the destination address.

Can I charge HST if I’m based in Quebec?
Yes — if the customer is in an HST province.

Do PST provinces require extra registration?
Yes. BC, MB, and SK require separate PST accounts.

What if my software applies the wrong tax?
You are still responsible for correcting it.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal ensures businesses apply the correct GST, QST, and HST taxes across Canada. We build multi-province tax systems that prevent mistakes, reduce audit exposure, and ensure accurate reporting.