Harmonized vs non-harmonized: why it matters
In a harmonized province (Ontario and the Atlantic provinces), the federal GST and the provincial portion are merged into one HST line, administered federally. You charge one rate, file one return, and the provincial share is handled behind the scenes. It is the simplest setup for a seller.
The non-harmonized provinces keep the provincial tax separate from the GST. That means two lines on the invoice, sometimes two registrations, and in one case two different tax authorities. Alberta and the three territories sit at the opposite extreme with no provincial tax at all, just the 5 percent GST. You can confirm any province's split in the Canadian sales tax calculator.
The PST provinces: British Columbia, Manitoba, Saskatchewan
These three charge a Provincial Sales Tax on top of the 5 percent GST. British Columbia adds 7 percent for a 12 percent total, Saskatchewan adds 6 percent for 11 percent, and Manitoba adds 7 percent, where the tax is officially the Retail Sales Tax (RST) but works exactly like a PST. In every case the provincial tax is calculated on the same pre-tax base as the GST, so there is no compounding of one tax on the other.
Each province administers its own PST with its own registration and remittance rules, separate from your federal GST/HST account. Province-specific calculators are handy here: the BC PST calculator, the Saskatchewan PST calculator, and the Manitoba PST calculator are each preset to the right combination.
Quebec's QST: the one with its own tax authority
Quebec charges the 5 percent GST plus the Quebec Sales Tax at 9.975 percent, for a 14.975 percent total. The number people remember about the QST is the 2013 change: since then the QST applies to the same pre-tax base as the GST, so it is no longer compounded on the GST-included amount. On a 100 dollar sale, GST is 5 dollars and QST is 9.975 dollars, both computed on the 100 dollars.
The structural difference is administration. Revenu Quebec[1] administers both the GST and the QST within Quebec, so Quebec businesses generally file a combined federal and provincial return rather than dealing with the federal agency for one and the province for the other. The Quebec sales tax calculator shows the GST and QST split for any amount.
The input tax credit asymmetry
This is the difference that hits your bottom line. GST and HST paid on business purchases are recoverable as input tax credits, and so is the QST through the equivalent Quebec mechanism. PST paid in British Columbia, Manitoba, or Saskatchewan generally is not recoverable.[2] It is a true cost of doing business in those provinces, not a flow-through you reclaim on a return.
For accounting, that means PST cannot be booked the same way as GST. Treating non-recoverable PST as a recoverable credit is one of the most common and most expensive setup errors when a business expands into a PST province, because it quietly overstates your credits until a review catches it.
Configuring separate provincial taxes in Odoo
Odoo's Canadian localization already defines GST, the three PSTs, and the QST as distinct taxes mapped to the correct accounts, including the non-recoverable treatment of PST. Fiscal positions then apply the right combination based on the customer's province, so a BC sale books GST plus a non-recoverable PST while a Quebec sale books GST plus QST against the Quebec filing.
The combined federal-Quebec return and the non-recoverable PST accounts are where we spend the most time validating a Canadian setup. If you sell across the non-harmonized provinces and want the books to reconcile cleanly, book a free audit and we will check the configuration.
References
- Revenu Quebec, GST/HST and QST. Basic rules for applying the GST/HST and QST, including the pre-tax base. revenuquebec.ca/.../gsthst-and-qst
- Canada Revenue Agency, charge and collect the tax: which rate to charge. Federal rate table and the relationship between GST/HST and provincial taxes. canada.ca/.../charge-collect-which-rate