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Harmonized Sales Tax

On April 1, 1997, the provinces of Nova Scotia, New Brunswick and Newfoundland combined their Provincial Sales Tax (PST) with the federal sales tax to form a blended, value added tax called Harmonized Sales Tax (HST). The HST operates as a single rate of 15% made of two rates:

can90000.gif 7 % represents the federal component

can90000.gif 8% the provincial component

Most tax registrants operate on a tax-excluded basis. The Canadian government, however, reserves the right to legislate tax included if more than 51% of the population agrees to adopting this blended tax rate.

Harmonized Sales Tax is similar to GST in two ways:

can90000.gif Some goods and services are exempt from HST

can90000.gif Depending on whether a purchase is considered commercial or not determines if the tax recovery is made through a rebate, an Input Tax Credit (ITC), or both

To claim an ITC, a rebate on taxes payable, or both, the purchaser must have the supplier’s HST registration number on record. If the purchases are used exclusively in commercial activities, the purchaser is eligible for a full ITC. Non-profit organizations can also apply for rebates (at prescribed rates) for purchases that do not qualify for ITC.

In addition, an organization can claim an ITC on purchased goods and services that qualify as commercial activities and a rebate on the non-commercial portion.

Note: Any references to Goods and Services Tax in the following sections also apply to Harmonized Sales Tax.

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