Ontario sales tax: 13% HST rates, registration, and compliance guide

Published Tuesday 6 October 2026

Table of contents

• Understanding sales tax in Ontario
• How much is sales tax in Ontario?
• Comparing sales tax across Canada
• The Retail Sales Tax (RST) in Ontario
• When to register for GST/HST in Ontario
• GST/HST registration requirements
• HST exemptions and special cases
• Input tax credits (ITCs): reclaiming HST on business purchases
• Common 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 charges a 13% Harmonised Sales Tax (HST) that combines the 5% federal Goods and Services Tax (GST) with an 8% provincial component.
• Most businesses must register for a GST/HST number once they exceed $30,000 in a single calendar quarter or over four consecutive calendar quarters.
• Accurate invoicing, organized records, and on-time filing are the foundations of staying compliant with the Canada Revenue Agency (CRA).
• Xero accounting software can help you automate HST tracking, manage input tax credits, and generate filing reports.

Understanding sales tax in Ontario

Sales tax in Ontario works as a single harmonised tax applied at the point of sale. If you run a business in the province, understanding how this tax works is one of the first steps toward staying compliant.

The Harmonised Sales Tax (HST) is a consumption tax. Unlike income tax, which is based on your earnings, the HST is added to the price of goods and services when your customers buy them.

As a small business owner or freelancer, you charge this tax on your sales. You must collect, report, and submit the GST/HST to the Canada Revenue Agency (CRA) on a regular basis.

You're far from alone in navigating this. Canada has 3.7 million business tax filers, according to Queen's University research.

Key facts about Ontario GST/HST

Here are the essentials about how HST works in Ontario.

• The harmonised 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 the provincial sales tax of 8% for a total of 13%.
• The government harmonised the system to streamline the recording and collection of federal and provincial sales taxes.
• The GST/HST applies to most taxable goods and services in Ontario.
• The CRA administers the tax on behalf of both the federal and Ontario provincial governments.

Because other provinces use different systems, it helps to know how the HST compares with the other sales taxes in Canada.

What's the difference between GST, HST, and PST?

These three acronyms come up often, and each refers to a different type of sales tax in Canada.

The GST (Goods and Services Tax) is a 5% federal tax that applies across the entire country. Every province and territory charges it.

The HST (Harmonised Sales Tax) combines the federal GST with a provincial component into a single tax. Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island all use the HST system. In Ontario, the HST rate is 13% (5% federal + 8% provincial).

The PST (Provincial Sales Tax) is a separate provincial tax collected on top of the GST. British Columbia, Saskatchewan, Manitoba, and Quebec each set their own PST or QST rates. Ontario does not use the PST system because it switched to the HST in 2010.

How much is sales tax in Ontario?

The GST/HST rate in Ontario is 13%. For every invoice you issue, you charge an extra 13% on the purchase amount. That works out to an extra $13 for every $100 you bill.

The rate is unchanged for 2026. If you build or buy new homes, the 2026 Ontario budget proposed an enhanced HST new housing rebate, according to Baker Tilly's budget summary. It covers agreements signed between April 1, 2026 and March 31, 2027, still needs legislation, and leaves the rate most businesses charge as is.

You also pay 13% HST on business purchases you make from GST/HST-registered suppliers. As a registered business, you can claim back the HST you paid on those purchases through an input tax credit (ITC).

How to calculate HST step by step

Calculating HST on a sale or purchase takes just a few steps.

1. Start with the price before tax. For example, if your product or service costs $200, that is your base amount.
2. Multiply the base amount by 0.13 (the Ontario HST rate). In this example: $200 x 0.13 = $26.
3. Add the HST to the base amount to get the total. In this example: $200 + $26 = $226.

If you need to work backwards from a total that already includes HST, divide the total by 1.13. For example, $226 / 1.13 = $200. This reverse formula is useful when a receipt shows only the final price.

Using an HST calculator

If you prefer not to do the arithmetic yourself, online HST calculators can handle it instantly. The CRA's rate page lists current rates, and Xero's sales tax feature calculates the correct HST automatically on every invoice you create.

Comparing sales tax across Canada

Ontario's 13% HST is not the highest sales tax rate in the country. Where your customers are located affects which rate you charge, so it helps to understand the full picture.

How to apply the GST/HST in Ontario

If you charge and collect HST in Ontario, the government requires you to inform your customers that you're applying this tax to their purchases. You can do this by showing any of the following on your invoices, receipts, or posted signs.

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

Customers who are registered for GST/HST need more detail from you so they can claim credits.

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 need to give them specific information on your invoices, receipts, and contracts. These requirements vary by sale amount, but include the following.

• Supplier's business or trading name
• Invoice date (or the date GST/HST is paid or payable, if no invoice was issued)
• 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

Having the right details on every invoice protects both you and your customers. For more guidance on structuring your invoices, see the Xero freelance invoice guide.

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 listed below.

• Nova Scotia: 14%
• New Brunswick: 15%
• Newfoundland and Labrador: 15%
• Prince Edward Island: 15%

The following provinces charge both a federal GST and a separate provincial PST.

• 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 collect only 5% GST.

• Alberta
• Yukon
• Northwest Territories
• Nunavut

Alongside the HST, Ontario still charges one older provincial tax in a few situations.

The Retail Sales Tax (RST) in Ontario

Although Ontario replaced its Retail Sales Tax with the HST in 2010, the RST still applies to a small number of specific transactions. If your business touches any of these areas, you need to know how the RST works.

RST vs. HST: key differences

The HST is a harmonised federal-provincial tax that applies to most goods and services and is administered by the CRA. The RST, by contrast, is a provincial-only tax that Ontario charges on a handful of specific items. You file and pay the RST separately from the HST, and input tax credits do not apply to RST amounts.

While the HST covers most transactions, the RST remains in force for a specific set of situations you should be aware of.

When RST still applies

The RST currently applies in two main situations in Ontario.

• 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 individuals who are not HST registrants, including automobiles, motorcycles, motor scooters, mopeds, buses, trucks, vans, motorhomes, and trailers that require a permit to operate on a highway
• 13% on off-road vehicles or motorised snow vehicles that require a permit under the Off-Road Vehicles Act or Motorised Snow Vehicles Act

The RST on vehicles is collected when the vehicle is registered at a ServiceOntario centre. You do not pay the RST to the seller.

When to register for GST/HST in Ontario

You must register and start collecting GST/HST once you exceed $30,000 in a single calendar quarter or over four consecutive calendar quarters. This is known as the small supplier threshold.

According to Innovation, Science and Economic Development Canada (ISED), Ontario has 410,154 small employer businesses, more than any other province. Across Canada, 98.2% of all employer businesses have fewer than 100 employees. That means the registration threshold directly affects almost every business in the country.

For a broader look at how Canadian taxes apply to your business, see the guide to small business tax rates in Canada.

Your effective date of registration depends on which test you exceed. If you go over $30,000 in a single calendar quarter, it's the day of the sale that took you over. You also charge GST/HST on that sale.

If you exceed $30,000 over four consecutive calendar quarters, you stay a small supplier for the rest of that quarter and the following month. Your effective date is the day of your first taxable sale after that period.

Either way, you have 29 days from your effective date to complete your GST/HST registration, according to the CRA's guidance on when to register.

Registration is only required once your business exceeds the $30,000 threshold. Below that amount, you can register voluntarily to claim input tax credits on your business purchases.

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 depending on 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, though it may also start up to 30 days before that day if you've already been billing GST/HST.

You will also need to confirm your fiscal year for GST/HST reporting purposes.

Your fiscal year

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

If you use a non-calendar tax year, you may want to align your GST/HST fiscal year with it. You can also choose a calendar year for your GST/HST fiscal year instead.

Along with your business details, the CRA requires some personal information to verify your identity.

Personal information

You'll need to provide the following personal details during registration.

• Last names of business owners
• Your Social Insurance Number (SIN)
• Your date of birth
• Your postal code

Once your personal details are in, the CRA asks about the business itself.

Business information

You'll also need to supply information about your business.

• The legal name of your business
• Business number (BN); if you don't have one, you can get one through the CRA's Business Registration Online (BRO)
• Business structure, such as sole proprietorship, partnership, corporation, or charity
• Your contact details, including physical address and mailing address if different
• 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

Not everything you sell or buy attracts HST. Certain goods and services fall into special categories that affect how much tax you charge, and whether you can claim credits.

Zero-rated goods and services

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

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

A second category of non-taxable items is exempt supplies, which are treated differently from zero-rated goods.

Exempt supplies

You do not charge GST/HST on supplies of exempt property and services. Examples of exempt supplies include the following.

• 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 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.

There is also a distinct exemption category that applies when you sell to First Nations individuals or bands.

First Nations HST exemption and rebate

If you sell to First Nations customers in Ontario, two separate types of HST relief may apply. Eligible First Nations people, bands and band councils of an Ontario reserve can claim a rebate of the 8% provincial portion on qualifying off-reserve purchases. You can give this rebate at the point of sale by crediting the 8% and charging only the 5% federal portion. The Ontario government's First Nations HST rebate guidance explains who qualifies and which purchases count.

The section 87 Indian Act exemption is separate from this rebate and generally applies to certain purchases made on a reserve. Where it applies, it can remove the entire HST, including the 5% federal portion. When you give the Ontario rebate at the point of sale, keep a record for audit purposes. Note the customer's name, card number and band registry number, plus the date and items sold.

Input tax credits (ITCs): reclaiming HST on business purchases

When you pay HST on purchases you make for your business, you can usually get that money back. Input tax credits allow you to recover the GST/HST paid on expenses directly related to your commercial activities.

To claim ITCs, you must be registered for GST/HST and include the credits on your regular GST/HST return. You'll need supporting documentation for each claim, including the supplier's name, their GST/HST registration number, the date, and the amount of tax paid.

Not all purchases qualify. You cannot claim ITCs on personal expenses, exempt supplies, or expenses that are not related to your business. Keeping your receipts organized and matching them to business expenses is the simplest way to make sure you claim everything you're entitled to. For full details on eligibility, see the CRA's input tax credit page.

Make sure every invoice you receive from suppliers includes their GST/HST registration number and a clear breakdown of the tax charged. Without this information, the CRA may disallow the ITC claim.

Common HST filing errors and penalties

Research from Queen's University estimates that GST/HST compliance costs the average small business around $924 per year. The researchers also cite EU survey data showing that data collection and form preparation make up about 77% of value-added tax (VAT) compliance costs. When those tasks are rushed or disorganized, errors are more likely. Here are the most common filing mistakes to watch out for.

• Filing late
• Not filing electronically; electronic filing is mandatory for all registrants except charities and selected listed financial institutions
• Reporting inaccurate information
• Ignoring a CRA request to file
• Entering wrong amounts
• Not documenting GST/HST properly

Penalties for late filing start at 1% of the amount owing, plus 0.25% for each full month late, up to 12 months. Repeated late filings can result in higher penalties, and the CRA can also charge a penalty for filing on paper. The simplest way to avoid these costs is to file on time and double-check your figures before submitting.

Tips to stay compliant with Ontario sales tax

Staying on top of your GST/HST obligations doesn't have to be complicated. A few consistent habits can save you time, money, and stress at filing time.

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.

The CRA assigns your default reporting period based on your annual taxable supplies:

• annual, if your supplies are $1.5 million or less
• quarterly, if they're more than $1.5 million, up to $6 million
• monthly, if they're more than $6 million

You can also choose to file more often, depending on your business. Your options and deadlines are listed below.

• Monthly: one month after the end of the reporting period
• Quarterly: one month after the end of the reporting period
• Annually (December 31 fiscal year end and business income for the year, such as sole proprietors): June 15 for filing, with payment due April 30
• Annually (all other annual filers): three months after the end of your fiscal year for filing and payment

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

Good record-keeping is the foundation of smooth GST/HST compliance and helps you avoid issues at filing time.

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.

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

Maintain complete sales records, including sales and purchase invoices, all other records related to your business operations and GST/HST, and working copies of your returns. Retain these records for six years from the end of the year to which they apply.

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

Technology can take much of the manual effort out of GST/HST compliance and reduce the risk of errors.

Automate your tax process

An automated process reduces errors and helps you file and pay on time. Invoicing software and accounting tools like Xero handle much of the data gathering and form filling for you, so less of your GST/HST work is manual.

Managing your deadlines proactively is one of the simplest ways to avoid late-filing penalties.

Set reminders for deadlines

Use your accounting software to remind you of upcoming filing dates. A few minutes of setup can prevent late-filing penalties down the road.

• Check your CRA account and emails monthly for critical notices and updates.
• Note all your GST/HST filing and payment due dates for the year.
• Set your internal payment deadline a few days before the actual due date to allow for bank processing time.

The right software can take on much of this routine work for you.

Use Xero to simplify GST/HST compliance

Filing GST/HST returns doesn't have to eat into your week. Xero accounting software is designed for small businesses and gives you the tools to stay on top of your obligations without the manual work.

With Xero, you can keep everything in one place, calculate Ontario sales tax on all transactions automatically, and generate reports ready for CRA submissions. You can also select tax periods and view individual transactions, prepare GST/HST returns quickly, and avoid penalties by catching flagged items before you file.

If you're ready to spend less time on tax admin and more time running your business, get one month free.

FAQs on Ontario sales tax

Below are some frequently asked questions about Ontario sales tax and GST/HST compliance for small businesses.

How should I handle cross-provincial sales tax?

Cross-provincial sales tax is governed by place of supply rules, so the rate depends on where the supply is delivered. Apply 13% for Ontario, 15% for New Brunswick, PEI, or Newfoundland, 14% for Nova Scotia, and 5% GST for non-HST provinces and territories such as Alberta.

Do I need a separate HST number for Ontario?

No; if you're already registered for GST/HST, you do not need a separate Ontario registration because the federal and provincial 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 and Labrador) combine federal and provincial taxes into one system. Provinces that use GST plus PST (British Columbia, Saskatchewan, and Manitoba) manage the two taxes separately, which means businesses in those provinces file two returns instead of one.

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

You might want to register voluntarily so you're prepared when you reach the threshold and can start claiming input tax credits right away. Be aware that once you register, you must keep collecting GST/HST until you close your business or deregister.

What items are HST-exempt in Ontario?

Zero-rated supplies (such as basic groceries and prescription drugs) are taxed at 0% and still allow ITC claims, while exempt supplies (such as residential rent and childcare) carry no tax and do not allow ITC claims. The distinction affects how you report these sales on your GST/HST return.

What are input tax credits and how do I claim them?

ITCs let you recover the GST/HST you pay on eligible business expenses by claiming them on your regular GST/HST return. Keep records showing the supplier's name, their GST/HST number, the purchase date, and the tax amount, as only expenses directly related to your commercial activities qualify.