Overview of Canadian Sales Taxes
Canadian sales taxes are levied at the federal level and the provincial level.
The Goods and Services Tax (GST) is levied in the non-participating provinces
and territories across Canada. In the participating provinces of Newfoundland,
Nova Scotia, and New Brunswick, a federal and provincial blended tax called Harmonized Sales Tax (HST) is used instead of the separate sales tax
levies. The tax recovery under either GST or HST is made through a rebate and/or
an Input Tax Credit (ITC), depending on whether the purchases are commercial.
Some goods and services are exempt from GST or HST.
Sales tax at the provincial level varies by province. The tax rates within
each province apply to the value of goods or services before GST is applied, which
is known as the side-by-side application. Quebec and Prince Edward Island are the only exceptions because
the sales tax applies to the value of goods or services after GST is applied,
which is known as the compounding application.
