Canadian Sales Tax Recovery: FAQ

  • By Gary Kisiel, CPA, CA
    • Apr 11, 2023
    • read
  • Twitter
  • Linkedin
Canadian Sales Tax FAQ

The Canadian Sales Tax system can be a real headache.

For this reason, our experts have compiled and answered your most frequently asked questions on Canadian Sales Tax.

1. What are the different sales taxes you pay in Canada? 

Sales taxes or consumption taxes are government fees levied on taxable goods and services. The different sales taxes you may encounter in Canada include Goods and Services Tax (GST), Harmonized Sales Tax (HST), and Provincial Sales Tax (PST).

2. What is GST, HST, and PST?

Taxes levied depend on the province or territory. All of Canada is susceptible to the Goods and Services Tax (GST). GST is a federal sales tax that is set at a rate of 5%

In addition to the GST, some provinces and territories (with the exception of Alberta, Nunavut, Northwest Territories, and Yukon) also have a provincial sales tax (PST/RST/QST), which is added on top of the GST:

  • British Columbia: Provincial Sales Tax (PST) at a rate of 7% + GST = 12%
  • Manitoba: Retail Sales Tax (RST) at a rate of 7% + GST = 12%
  • Quebec: Quebec Sales Tax (QST) at a rate of 9.975% + GST = 14.975%
  • Saskatchewan: Provincial Sales Tax (PST) at a rate of 6% + GST = 11%

Some provinces combine the GST with their PST creating a single tax known as the harmonized sales tax or HST, that is administered by the Federal government:

  • Ontario: Harmonized Sales Tax (HST) at a rate of 13%
  • New Brunswick: Harmonized Sales Tax (HST) at a rate of 15%
  • Newfoundland and Labrador: Harmonized Sales Tax (HST) at a rate of 15%
  • Nova Scotia: Harmonized Sales Tax (HST) at a rate of 15%
  • Prince Edward Island: Harmonized Sales Tax (HST) at a rate of 15%

3. What’s the simplest explanation of a Canadian tax return/refund?

A registered business/individual must file a sales tax return with the Canada Revenue Agency (CRA ) and/or with the respective governing tax body in their province on a monthly, quarterly, or annual basis.

A tax return is a document where revenues, deductions, and credits are reported to determine if one will receive a refund or if one will have to remit money to the government. A tax refund will occur if the taxpayer has paid more in taxes on their purchases than the taxes they owe or have collected on their sales. The government will then remit the excess amount to them

4. What is sales tax recovery?

Sales tax recovery is the process of recovering the sales tax paid on purchases made in Canada. The recovery is done through a refund of the GST or HST paid on eligible purchases that were determined through a detailed analysis as having not been refunded previously.

5. Who is eligible for sales tax recovery?

Both Canadian and foreign companies of all sizes, who are registered for the respective sales taxes and who make taxable purchases of goods and services within Canada, can participate in a sales tax recovery.

6. How to get help with sales tax recovery in Canada? 

Due to the complexity and multi-level integration of the Canadian sales tax system, determining the amounts to recover may require the help of a Canadian Sales tax expert. With the help of an expert, businesses of all sizes gain access to funds that may have otherwise been missed and are able to generate growth while remaining focused on their business.

Want to learn more about funding opportunities for your project?

Get in touch with our experts!

    Author

    gary
    Gary Kisiel, CPA, CA

    Head of Sales Tax Consulting Team

    Explore our latest insights

    More arrow_forward
    vet pharmaceutical
    Veterinary pharmacology

    Veterinary pharmacology is a branch of veterinary medicine that studies the use of drugs in anima...

    plastic recycling
    Plastic Recycling –  The Next Environmental Frontier

    Plastic recycling is a known challenge in the fight towards a more sustainable planet. With many ...

    Quebec Business Grants
    5 Quebec Business Grants You Can Apply to Right Now

    From innovative startups to established enterprises, securing funding can be a game-changer for y...

    SR&ED updates
    SR&ED Updates in Canada’s Federal Budget 2024

    Have you heard about the SR&ED updates proposed in the Federal budget 2024? Learn how these u...