HST stands for Harmonized Sales Tax, and in Ontario it’s a single 13% tax applied to most goods and services you buy. It combines the federal Goods and Services Tax (GST) of 5% with Ontario’s provincial sales tax of 8% into one charge. Rather than seeing two separate tax lines on your receipt, you see one 13% line. Whether you’re a consumer wondering why your bill is higher than expected or a business owner figuring out what to charge, here’s how HST works in Ontario.
How the 13% Rate Works
Every time you buy a taxable product or service in Ontario, the seller adds 13% to the price. On a $100 purchase, that’s $13 in HST, bringing your total to $113. The federal portion (5%) and the provincial portion (8%) are collected together and remitted to the Canada Revenue Agency, which then distributes Ontario’s share to the province. Businesses are not supposed to break these two components out separately on receipts or invoices. You’ll just see “HST” as a single amount.
What Gets Taxed and What Doesn’t
Not everything you buy carries the full 13%. The CRA divides goods and services into three categories: fully taxable, zero-rated, and exempt.
Most things you purchase fall into the fully taxable category: electronics, clothing, restaurant meals, haircuts, professional services, streaming subscriptions, and so on. These all carry the standard 13%.
Zero-rated items are technically taxable but at a rate of 0%, so you pay no HST on them. The most common examples are basic groceries like milk, bread, and vegetables. Certain medical devices such as hearing aids and artificial teeth are also zero-rated, as are agricultural products like grain and raw wool. The distinction between zero-rated and exempt matters mainly for businesses (a business selling zero-rated goods can still claim back the HST it paid on its own expenses), but for you as a consumer the result is the same: no tax at the register.
Exempt supplies are not subject to HST at all. These include resale housing (a home that was previously someone’s residence), child care services for children 14 and under, many municipal services like public transit, and certain services provided by non-profit organizations and governments. Rent on a residential apartment is also exempt, which is why your landlord doesn’t add HST to your monthly payment.
The Ontario Sales Tax Credit
Because HST is the same rate for everyone regardless of income, the province offsets its impact on lower-income residents through the Ontario Sales Tax Credit. This credit is one component of the Ontario Trillium Benefit (OTB), which also includes energy and property tax credits.
You don’t need to apply separately. The CRA automatically determines your eligibility and payment amount based on the income tax return you file each year. If you qualify, payments are issued monthly as part of the OTB. You must file a return every year to keep receiving the credit, even if you had no income to report. In families, the credit is typically paid to whichever spouse has their return assessed first, unless one spouse is 64 or older, in which case that spouse receives it.
HST on New Housing
New homes in Ontario are subject to the full 13% HST, which on a $500,000 home would add $65,000 to the price. To soften that hit, the province offers a New Housing Rebate that returns a portion of the provincial component to buyers.
Ontario has also announced a temporary expanded rebate for new homes valued up to $1 million, offering maximum relief of up to $130,000. To qualify for this enhanced rebate on a home purchased from a builder, the agreement of purchase and sale must be entered into between April 1, 2026, and March 31, 2027, with construction beginning by December 31, 2028, and the home substantially completed by December 31, 2031. Owner-built homes have a tighter timeline: construction must start between April 1, 2026, and March 31, 2027, and be substantially completed by December 31, 2029.
The expanded rebate also covers new long-term rental properties, though the construction timelines differ depending on when building begins. In all cases, the home must serve as someone’s primary residence, whether the buyer’s own or a tenant’s.
When Businesses Must Register and Charge HST
If you run a business in Ontario, you’re required to register for an HST account and charge the tax once you’re no longer considered a “small supplier.” The threshold is $30,000 in worldwide taxable revenue ($50,000 for public service bodies) over either a single calendar quarter or the previous four consecutive calendar quarters.
Here’s how the threshold works in practice. If your total taxable sales stay at or below $30,000 over four consecutive quarters, you’re a small supplier and registration is optional. If you cross $30,000 within a single quarter, you must start charging HST on the very sale that pushed you over the limit and register promptly. If you cross $30,000 over the course of four quarters (but never in a single quarter), you become obligated to register by the end of the month following the quarter in which you exceeded the threshold.
Once registered, you charge 13% HST on your taxable sales and remit it to the CRA. The upside is that you can also claim input tax credits to recover the HST you paid on business expenses, supplies, and equipment. Many small businesses choose to register voluntarily before hitting the threshold specifically to reclaim those credits.
If you’re a sole proprietor with multiple business activities, you combine the revenue from all of them when calculating whether you’ve crossed the $30,000 mark. Revenue from any associated persons or entities also counts toward the threshold.
How HST Shows Up in Daily Life
For most Ontario residents, HST is simply the 13% added at checkout. A few patterns are worth knowing. Prepared food and restaurant meals are fully taxable, but the basic groceries you cook at home (produce, dairy, bread, meat) are zero-rated. A bag of coffee beans from the grocery store has no HST, but a latte from a café does. Prescription drugs are zero-rated, while over-the-counter medications are taxable. Children’s clothing and footwear, diapers, and car seats are zero-rated, but adult clothing is not.
Services like legal fees, accounting, home repairs, and gym memberships all carry the full 13%. So do digital subscriptions, ride-hailing services, and most things you buy online from Canadian retailers. When you shop from foreign online sellers, the HST rules still apply if the seller is registered or required to register in Canada.