Ontario sales tax: What it is and how to stay compliant

Published Friday 19 September 2025

Table of contents

• Understanding sales tax in Ontario
• How much is sales tax in Ontario?
• Comparing sales tax across Canada
• When to register for GST/HST in Ontario
• GST/HST exemptions and special cases
• Common GST/HST filing errors and penalties
• Tips to stay compliant with Ontario sales tax
• Use Xero to simplify GST/HST compliance
• FAQs on Ontario sales tax

Key takeaways

• Ontario follows a Harmonized Sales Tax (HST) system that combines 5% Federal Goods and Services Tax and 8% Provincial Sales Tax for a total of 13%.
• Most businesses must register for a GST/HST number once they meet or exceed the small supplier earnings threshold of $30,000 a quarter, or more than $30,000 a year.
• For compliance, make sure your invoicing is accurate, keep good records, and file on time.
• Xero accounting software can help automate HST tracking and reporting.

Understanding sales tax in Ontario

Canada sales tax rates vary across provinces and territories. In Ontario that sales tax is known as the GST/HST or Harmonized Goods and Services Tax.

The GST/HST is a consumption tax. Unlike income tax (which is levied on earnings), a consumption tax is added to the price when you buy goods and services.

This is the same sales tax you as a small business owner or freelancer charge your customers. You must GST/HST must be collected, reported, and submitted to the Canada Revenue Association (CRA) on a regular basis.

Key facts about Ontario GST/HST

Here are some key facts to know about Ontario GST/HSTs:

• The harmonized GST/HST was introduced in Ontario as a single sales tax to replace the previous Retail Sales Tax (RST)
• Your small business reports and pays the HST to the federal government.
• The GST/HST combines the federal goods and services tax (GST) of 5% and provincial sales tax of 8% for a total of 13%.
• The government harmonized the GST/HST system to streamline the recording and collection of federal and provincial sales taxes across the country.
• The GST/HST applies to most taxable goods and services in Ontario.
• It’s administered by the Canada Revenue Agency (CRA).

How much is sales tax in Ontario?

The GST/HST rate in Ontario is 13%. That means for every bill or invoice you issue, you will charge an extra 13% to the purchase amount on your bill or invoice – that’s an extra $13 for every $100 you bill.

You’ll also be charged this same amount of 13% GST/HST on any business purchases you make from a supplier that reports and pays GST/HST. But as a small business owner, you can claim this as an input tax credit (ITC).

GST/HST calculation examples

Here are some examples of GST/HST calculations.

Comparing sales tax across Canada

While Ontario sales tax is higher than some other provinces, it’s not the highest in the country.

Here’s how Ontario sales tax stacks up against the other Canadian provinces and territories.

How to apply the GST/HST in Ontario

If you charge and collect the GST/HST sales tax in Ontario, the government requires you to inform your customers and clients that you’re applying this tax to their purchases by showing any of the following:

• The total amount paid or payable for a supply, including the GST/HST
• The amount paid or payable for the supply (and show the amount of the GST/HST payable on the supply separately)
• The GST/HST rate that applies to the supply – if HST applies to the supply, show the total HST rate (rather than separating it into federal and provincial components)

To inform your customers on how the GST/HST factors into their purchase, you can use cash register receipts, invoices, or posted signs.

Specific information to give customers who are GST/HST registered

To support your GST/HST-registered customers’ claims for input tax credits (ITCs) or GST/HST rebates, you also need to give them specific information on the invoices, receipts, contracts and other business documentation you use.

These requirements vary according to the amount of each sale, but include the:

• Supplier’s business or trading name
• Invoice date (if no invoice was issued, the date on which GST/HST is paid or payable)
• Total amount paid or payable
• Indication of the total GST/HST charged, or the amount paid or payable for each taxable supply
• Supplier’s GST/HST registration number

Sales tax systems in other provinces

Ontario is one of five Canadian provinces that follow the HST system. The others, with their HST rates are:

• Nova Scotia – 14% (reduced from 15% from April 1, 2025)
• New Brunswick – 15%
• Newfoundland/Labrador – 15%
• Prince Edward Island – 15%

These four provinces apply the provincial PST system as well as the separate federal GST:

• British Columbia – GST 5% + PST 7% = 12%
• Saskatchewan – GST 5% + PST 6% = 11%
• Manitoba – GST 5% + PST 7% = 12%
• Quebec – GST 5% + QST (Quebec Sales Tax) 9.975% = 14.975%

One province and all three territories do not have a provincial or territorial tax, and therefore collect only 5% GST.

• Alberta
• Yukon
• Northwest Territories
• Nunavut

When to register for GST/HST in Ontario

You must register and start collecting GST/HST for the federal and provincial governments once you meet or exceed the small supplier threshold of $30,000 a quarter, or more than $30,000 a year.

If you exceed the threshold during the year, your effective date of registration is the day on which your business exceeded the threshold amount. You have 29 days from that date to complete your GST/HST registration.

You don’t need to register for a GST/HST account if your business earns less than $30,000 per year.

GST/HST registration requirements

To register for a GST/HST number, you can go directly to your CRA Business Account. Here’s the information you’ll need to provide.

Registration date

This date can vary according to the type of business you’re registering. It’s usually the day you stop being a small supplier, but it can also be an earlier date.

• If you are a taxi operator or commercial ride-sharing driver, your registration date is the day you start supplying taxable passenger transportation services.
• If you are doing a voluntary registration while still a small supplier, your registration date is usually the date of your request. It may also start up to 30 days before that day (if you’ve already been billing HST/GST).

Your fiscal year

For GST/HST purposes, this is usually the same as your income tax year.

If you use a non-calendar tax year, you may want to use the same as your GST/HST fiscal year. You can use a calendar year for your GST/HST fiscal year instead, if you like.

Personal information

Here’s key personal information to include:

• Last names of business owners
• Your Social Insurance Number (SIN)
• Your Date of birth
• Postal code (where you live)

Business information

Include this information about your business:

• The legal name of your business
• Business number (BN) – if you don’t have one, get one through the CRA’s Business Registration Online (BRO). Once you have your BN, you can continue your registration for a GST/HST account online in BRO.
• Business structure – sole proprietorship, partnership, corporation, or charity, for example
• Your contact details – including physical address and mailing address (if different from physical address)
• Your estimated revenue
• A description of your major business activity

Once you’ve finished your registration, you’ll receive a 9-digit number ending with the suffix RT0001. This is your GST/HST number.

HST exemptions and special cases

You don’t need to charge or pay HST/GST on certain goods and services. These fall into two categories: zero-rated supplies and exempt supplies.

Zero-rated goods and services

Zero-rated supplies apply a rate of 0%. While you do not charge GST/HST on these items, you may be able to claim ITCs for the GST/GST you paid on property and services to provide these supplies. Zero-rated supplies include:

• Basic groceries (like milk, bread, and vegetables)
• Agricultural products (such as grain, raw wool, and dried tobacco leaves)
• Most farm livestock
• Most fishery products, such as fish for human consumption
• Prescription drugs and drug-dispensing services
• Medical and assistance devices, like hearing aids and artificial teeth
• Feminine hygiene products

Exempt supplies

Exempt supplies You do not charge GST/HST on these supplies of exempt property and services. But examples of exempt supplies are:

• Proceeds from the sale of housing that was last used as an individual’s place of residence
• Long-term residential rental accommodation (one month or more) and residential condominium fees
• Health, medical, and dental services performed by licensed physicians, dentists, nurses, optometrists, and by midwives for medical reasons
• Childcare services
• Domestic ferry services

Unlike zero-rated supplies, you generally cannot claim ITCs on any property or services you acquired to provide exempt supplies.

When retail sales tax still applies

RST still applies in two cases:

• 8% on certain insurance premiums and benefits plans such as taxable insurance contracts, group insurance, and contributions to funded plans
• 13% on private purchases of specified vehicles from people in Canada who are not HST registrants. These include automobiles, motorcycles and motor scooters, mopeds, buses, trucks, vans, motorhomes, trailers and any other vehicle that requires a permit to operate on a highway under the Highway Traffic Act.
• Off-road vehicles or motorized snow vehicles that require a permit under the Off-Road Vehicles Act or Motorized Snow Vehicles Act

The RST is a separate tax form from the HST, and it is collected when the vehicle is registered at a ServiceOntario Centre. You do not pay RST to the seller.

Common HST filing errors and penalties

Here are some common filing mistakes to avoid.

• Filing late
• Not filing electronically – electronic filing is mandatory
• Reporting inaccurate information
• Ignoring request to file
• Entering wrong amounts
• Not documenting GST/HST properly

Tips to stay compliant with Ontario sales tax

Here are some tips to help you stay compliant with Ontario sales tax.

Know your reporting periods and payment deadlines

Your filing and payment deadlines depend on your reporting period and the amount of revenue you’ve earned. Generally, the more you earn, the sooner you need to report.

Many small businesses file and remit their GST/HST quarterly, based on their calendar year, but you can also file monthly or yearly, depending on the business.

Your options and filing and payment deadlines are:

• Monthly – 1 month after the end of the reporting period
• Quarterly – 1 month after the end of the reporting period.
• Annually (except those with December 31 tax year end)– 3 months after the end of the reporting period.
• Annually (December 31 tax year end)– June 15 for filing, with payment due on April 30.

You can verify your filing due dates and reporting periods by checking your CRA account online.

Keep accurate sales tax records and accounts

Accurate, up-to-date records make it easier to file your GST/HST returns, support ITC claims, and avoid surprises at filing time. Here’s what to track and maintain:

Maintain accurate GST/HST records

• Keep invoices from suppliers to support ITC claims.
• Correct mistakes as they happen—don’t wait until the end of the reporting period to reconcile.

Keep complete sales records

• Sales and purchase invoices
• All other records related to your business operations and GST/HST
• Working copies of your returns
• Retain these records for six years from the end of the year to which they apply.

Track GST/HST portions of payments

• Record what portion of each payment is GST/HST.
• Set this money aside until your filing and payment dates.
• Avoid spending these funds to ensure you can pay in full on time.

Automate your tax process

An automated process reduces errors and helps you file and pay on time. Accounting software like Xero can calculate GST/HST, track ITCs, and generate filing reports quickly.

Set reminders for deadlines

Use your automated software to remind you to:Check your CRA accounts and emails monthly for critical notices and updates

• Note all your GST/HST filing and payment due dates for the year – Some banks and financial institutions take a day or two to process GST/HST payments, so set your internal payment deadline date a few days before the payment deadline to allow for processing time.

Use Xero to simplify GST/HST compliance

Make your GST/HST reporting easier with Xero’s accounting software. Designed for small business, Xero’s user-friendly software lets you:

• Keep everything in one place
• Calculate of Ontario sales tax on all transactions automatically
• Generate reports for CRA submissions
• Select tax periods and easily view individual transactions
• Prepare GST/HST returns in no time
• Avoid penalties by catching important flagged items

Try Xero for free

FAQs on Ontario sales tax

Here are some common questions and answers small business owners might have about sales tax in Ontario.

How should I handle cross-provincial sales tax?

Cross-provincial sales tax falls under Place of Supply rules, meaning tax is based on where the supply is made. If a BC company delivers goods to Ontario, the Ontario rate of 13% applies. Purchases from HST provinces such as New Brunswick, PEI, or Newfoundland are charged 15%.

Supplies from non-participating provinces or territories are charged 5% GST—for example, an Ontario vendor selling to Alberta applies 5%.ntario vendor, who then charges GST of 5% to the customer.

Do I need a separate HST number for Ontario?

No. If you’re already on the GST/HST system, you do not need a separate registration because the two taxes are accounted for under one return.

What’s the difference between HST and GST in other provinces?

HST provinces (Ontario, Nova Scotia, Prince Edward Island, New Brunswick, and Newfoundland) combine federal and provincial taxes into one system. GST-only provinces (BC, Saskatchewan, and Manitoba) manage the two systems separately.

What if my business currently makes under $30,000 but I expect to exceed that soon?

It’s hard to predict when you’ll meet or exceed the threshold but you want to be GST/HST-ready for when you do. You might want to register voluntarily – that way you’ll be prepared and have one less task to deal with when you reach that milestone.

Just be aware there’s no turning back – once you register to collect GST/HST, you must keep collecting it until you close your business.