If you’ve ever looked at a receipt and seen “HST” added to the total, you might wonder what it means. Or maybe you’ve just started a small business and now people are telling you to “register for HST.” It can be confusing at first, but don’t worry — it’s easier to understand than it sounds.
HST stands for Harmonized Sales Tax, and it’s a consumption tax that blends federal and provincial sales taxes into a single rate. Instead of paying separate GST (Goods and Services Tax) and PST (Provincial Sales Tax), businesses and consumers in participating provinces pay just one single tax.
Provinces that use HST include:
- Ontario
- Nova Scotia
- New Brunswick
- Newfoundland and Labrador
- Prince Edward Island
If you run a business in these provinces and make over $30,000 a year in sales, you usually have to register for HST with the CRA (Canada Revenue Agency).
How HST Works
HST is added to most things people buy — like groceries, clothes, or services. Here’s how it works for a business:
- You collect HST from your customers when they buy something from you.
- You also pay HST when you buy supplies or services for your business.
- When it’s time to file your taxes, you send the difference (what you collected minus what you paid) to the government.
Example: How to Calculate HST (Ontario – 13%)
Let’s say you own a small bakery in Ontario, where the HST rate is 13%.
💰 Base Price: $100 (for a custom cake)
✅ Step 1: Calculate HST Amount
HST = $100 × (13 / 100) = $13
✅ Step 2: Calculate Total Price
Total Price = $100 + $13 = $113
So, you charge the customer $113 — which includes $13 in HST.
✅ Step 3: Track Input vs Output HST
- You paid $26 HST on ingredients and supplies this month.
- You collected $130 HST from all your sales.
At the end of the month:
HST to remit = $130 (collected) − $26 (paid) = $104
➡️ You send $104 to the CRA as your HST return.