Harmonized Sales Tax (HST)

Harmonized Sales Tax (HST) is a consumption tax that combines the federal Goods and Services Tax (GST) with a participating province's provincial sales tax. It applies to taxable supplies made in Canada, including goods, services, real property and intangible personal property.

In public procurement, HST is generally treated as an applicable tax. The supplier charges it at the legally correct rate, shows it separately where required, and remits it to the Canada Revenue Agency (CRA). The recipient pays the tax to a supplier registered for GST/HST, and the supplier is responsible for passing it on to the CRA, as described in the CanadaBuys buyer's guide on taxes and duties.

HST as one of the Applicable Taxes in federal contracts

Federal procurement documents rarely treat HST on its own. It appears alongside GST and provincial taxes under the broader term "Applicable Taxes." Government of Canada standard contract conditions define Applicable Taxes to include GST, HST and provincial taxes payable by Canada, such as the Quebec Sales Tax (QST). You can see this wording in the standard terms and conditions for higher complexity services.

The same conditions set out what the contractor must do. The contractor charges the correct rate under the legislation, specifies applicable taxes separately on invoices, identifies zero-rated or exempt items, and remits the amounts due to the appropriate tax authorities.

Federal policy on taxes in procurement contracts

The Treasury Board policy framework states that procurement contracts for goods, services and construction services, including acquisitions of real property, are subject to applicable taxes. It also places the responsibility on the vendor: the vendor registers for GST/HST and collects and remits the applicable taxes through the CRA. The wording is in the Treasury Board procurement policy instrument.

CanadaBuys buyer guidance adds a classification step. Supplies are treated as fully taxable, zero-rated or exempt, and GST/HST applies to supplies made in Canada. Canadian-based offerors are required to show GST/HST separately and to identify which of those categories applies to each item.

How solicitations treat HST in bid prices

The treatment of HST in the price differs from one solicitation to the next. Public Works and Government Services Canada and Department of National Defence solicitations show three common approaches:

• Some require prices to include applicable customs duties, GST/HST and excise taxes, while still requiring the GST/HST amount to be shown separately.
• Other contracts state that GST/HST is extra to the price and will be paid by Canada, with the tax shown separately on invoices or progress claims.
• Construction-related tender conditions may instruct bidders not to include HST in the bid price. In one Government of Canada construction tender package, HST was treated as an applicable tax. The successful contractor showed the appropriate HST separately on payment applications, and the owner paid it in addition to the contract amount.

What HST means for a supplier bidding on Canadian public contracts

Follow the pricing and invoicing instructions in each solicitation, because the same tax can be included in one bid price and excluded from the next. Before submitting, work through these points:

• Determine whether each supply is taxable, zero-rated, exempt or outside the scope of GST/HST.
• Use the legally applicable tax rate.
• State clearly whether HST is included in the bid price or payable extra.
• Show HST separately whenever the solicitation or contract requires it.
• Include the required GST/HST registration information on invoices.
• Collect and remit the tax to the CRA when required.

Registration is the supplier's own responsibility. A bid team that confirms the tax treatment of every line item at the pricing stage avoids invoice corrections after award.