⚠️ Disclaimer: VAT rates and rules change. Always verify with official government sources or a tax professional before filing. Not financial or tax advice.
Canada charges 5% federal GST. Most provinces add provincial sales tax — Ontario and Atlantic provinces use a combined Harmonized Sales Tax (HST) of 13–15%. Quebec has its own QST of 9.975% on top of 5% GST.
As a GST-registered business, you charge VAT/GST on your sales and reclaim it on your business purchases. You remit the net amount to the tax authority quarterly or monthly. Managing this correctly is critical for business cash flow.
To add 13% VAT/GST: multiply the net price by 1.13. To extract it from a gross price: divide by 1.13. Example: a net price of C$200 becomes C$226 inclusive of 13% VAT/GST — the tax amount is C$26.
Frequently Asked Questions
Canada charges 5% federal GST. Most provinces add provincial sales tax — Ontario and Atlantic provinces use a combined Harmonized Sales Tax (HST) of 13–15%. Quebec has its own QST of 9.975% on top of 5% GST.
Multiply the net (ex-tax) price by 1.13 to get the gross (inc-tax) price. To find just the tax amount, multiply by 0.130. For example: C$500 net x 0.130 = C$65 tax. Total = C$565.
Divide the gross (inc-tax) price by 1.13 to get the net price. Example: C$565 gross / 1.13 = C$500 net. The tax included was C$65.
Canadian businesses must register for GST/HST once annual revenues exceed C$30,000 in any four consecutive calendar quarters.
If you charge too little VAT, you remain liable for the correct amount — HMRC/SARS/your tax authority can assess you for underpaid VAT plus interest and penalties. If you overcharge VAT, you must remit the overcharged amount. Errors on VAT returns can be corrected on the next return if under certain thresholds, or via voluntary disclosure for larger amounts.
Yes. Sole traders are treated the same as limited companies for VAT purposes. If your turnover exceeds the registration threshold, you must register. Below the threshold, voluntary registration makes sense if your clients are VAT-registered businesses (they can reclaim the VAT you charge) and you have significant VAT-able expenses to reclaim.
