What is GST and Why Does It Matter?
GST stands for Goods and Services Tax, a 5% federal tax that applies to most products and services sold in Canada. Every business that earns more than CAD 30,000 in gross revenue over four consecutive quarters must register for a GST/HST number with the Canada Revenue Agency (CRA) and charge tax on its invoices.
If you're a freelancer, contractor, or small business owner sending invoices to Canadian clients, you need to know exactly how to calculate and display this tax. Charging the wrong rate is one of the most common reasons CRA flags a return for review.
GST, HST, and PST — What's the Difference?
Canada has three sales tax types, and which one applies depends on your province:
- GST (Goods and Services Tax) — the federal 5% tax that applies in every province and territory.
- HST (Harmonized Sales Tax) — a combined federal-provincial tax used in five provinces (Ontario, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island). HST replaces GST and PST with one rate.
- PST (Provincial Sales Tax) — charged on top of GST in British Columbia, Saskatchewan, Manitoba (where it's called RST), and Quebec (called QST).
Three provinces and territories charge only the 5% GST with no provincial component: Alberta, Yukon, Northwest Territories, and Nunavut.
2026 Sales Tax Rates by Province
| Province / Territory | Tax Type | Rate | Total |
|---|---|---|---|
| Alberta | GST only | 5% | 5% |
| British Columbia | GST + PST | 5% + 7% | 12% |
| Manitoba | GST + RST | 5% + 7% | 12% |
| New Brunswick | HST | 15% | 15% |
| Newfoundland and Labrador | HST | 15% | 15% |
| Northwest Territories | GST only | 5% | 5% |
| Nova Scotia | HST | 15% | 15% |
| Nunavut | GST only | 5% | 5% |
| Ontario | HST | 13% | 13% |
| Prince Edward Island | HST | 15% | 15% |
| Quebec | GST + QST | 5% + 9.975% | 14.975% |
| Saskatchewan | GST + PST | 5% + 6% | 11% |
| Yukon | GST only | 5% | 5% |
Step-by-Step: How to Calculate GST on an Invoice
Here's the exact 4-step process every Canadian business uses:
Step 1 — Calculate your subtotal
Add up the cost of all goods or services on the invoice before any tax. This is your subtotal (also called the "pre-tax amount"). Make sure you're using the price before tax, not the displayed retail price (some prices include tax).
Step 2 — Identify the correct tax rate for the province
Use the table above. The rate depends on where the goods or services are delivered, not where your business is registered. Selling from Alberta to a client in Ontario? You charge Ontario's 13% HST.
Step 3 — Multiply subtotal by the tax rate
Example: $1,000 × (5 ÷ 100) = $50 GST
Step 4 — Add tax to subtotal for the invoice total
Example: $1,000 + $50 = $1,050 invoice total
Real Examples by Province
Example 1 — Ontario (13% HST) on a $2,500 invoice
- Subtotal: $2,500.00
- HST = $2,500 × 0.13 = $325.00
- Total Due = $2,500 + $325 = $2,825.00
Example 2 — British Columbia (5% GST + 7% PST) on a $1,500 invoice
- Subtotal: $1,500.00
- GST = $1,500 × 0.05 = $75.00
- PST = $1,500 × 0.07 = $105.00
- Total Due = $1,500 + $75 + $105 = $1,680.00
Example 3 — Quebec (5% GST + 9.975% QST) on a $4,000 invoice
- Subtotal: $4,000.00
- GST = $4,000 × 0.05 = $200.00
- QST = $4,000 × 0.09975 = $399.00
- Total Due = $4,000 + $200 + $399 = $4,599.00
What Must Appear on a Canadian Invoice?
The CRA requires all GST/HST registered businesses to include the following on every invoice:
- Your business name and address
- Your GST/HST registration number (mandatory)
- Invoice date
- The buyer's name (or business name)
- A description of the goods or services
- The amount paid (subtotal before tax)
- The tax rate applied and the tax amount
- The total amount due
Missing the GST/HST number is the most common compliance failure. Without it, your client cannot claim Input Tax Credits on their own return, and they may refuse to pay until you fix the invoice.
Calculating GST in Reverse (When the Total Includes Tax)
Sometimes you have an after-tax total and need to find the pre-tax amount and the tax. The formula is:
Tax = Total - Subtotal
Example: $1,050 ÷ 1.05 = $1,000 subtotal, $50 GST
This is useful when a client gives you a single all-in number and you need to break it apart for accounting.
Common Mistakes to Avoid
- Using the wrong rate — always use the destination province, not your home province.
- Charging GST when you shouldn't — if your annual revenue is below $30,000, GST registration is optional. Don't collect tax you can't remit.
- Forgetting your GST number — without it, the invoice is not CRA-compliant.
- Mixing up HST and GST — provinces with HST do not also charge GST separately. It's one combined rate.
- Rounding errors — calculate to two decimal places only when finalizing the total.
Generate a Canadian Invoice in 60 Seconds
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Open the Canadian Invoice Generator →Frequently Asked Questions
What is GST in Canada? +
GST (Goods and Services Tax) is a 5% federal tax applied to most goods and services in Canada. It is collected by businesses registered with the Canada Revenue Agency.
Do I need to charge GST on my invoices? +
If your business earns more than CAD 30,000 in gross revenue over four consecutive quarters, you must register for GST/HST and charge it on your invoices. Below that threshold, registration is voluntary.
What is the difference between GST and HST? +
GST is the federal 5% tax. HST (Harmonized Sales Tax) combines federal and provincial taxes into one rate, used in Ontario (13%), New Brunswick, Nova Scotia, PEI, and Newfoundland (15%).
How do I calculate GST on a $1000 invoice? +
Multiply $1000 by 0.05 (5%) to get $50 in GST. The final invoice total is $1050. If you're in an HST province like Ontario, multiply by 0.13 instead, giving $130 tax and $1130 total.
What province has the highest sales tax? +
Quebec has the highest combined sales tax at 14.975% (5% GST + 9.975% QST). The HST provinces (NB, NS, PEI, NL) follow at 15%.
Does Alberta have PST? +
No. Alberta only charges 5% GST. There is no provincial sales tax in Alberta, Northwest Territories, Nunavut, or Yukon.
Do I charge GST to clients outside Canada? +
Generally no. Exports of goods and most services to clients outside Canada are zero-rated, meaning you charge 0% GST but can still claim Input Tax Credits. Always confirm with a Canadian accountant for your specific case.
Can I use this calculator for my actual invoice? +
Yes. Use the calculator above to verify your numbers, then click "Generate a Free Canadian Invoice" to create a professional PDF invoice with the correct GST/HST automatically applied.