The Harmonized Sales Tax (HST) is a consumption tax in Canada that combines the federal Goods and Services Tax (GST) with the regional Provincial Sales Tax (PST) into a single value-added tax. It is applied to most goods and services in certain provinces of Canada. The purpose of the HST is to streamline the recording and collection of federal and provincial sales taxes by combining them into a single, consistent levy across the country. The tax rate of the HST varies by province, with Ontario having a rate of 13% and other participating provinces having a rate of 15% .
The HST is collected by the Canada Revenue Agency (CRA), and vendors collect the tax proceeds by adding the HST rate to the cost of goods and services. The collected tax is then remitted to the CRA, which allocates the provincial portion of the HST to the respective province’s government. Businesses in Canada need to register for and start charging the GST/HST based on certain criteria, and they are required to charge, collect, file, and remit the tax as per the regulations set by the CRA.
In summary, the HST is a significant part of the Canadian tax system, aimed at simplifying tax administration and improving the competitiveness of Canadian businesses while ensuring the collection of taxes on goods and services.
