GST, HST, PST and QST in a construction estimate in Canada

Taxes are the last line of an estimate, yet they cause mistakes that quickly add up to thousands of dollars: another province's rate, QST calculated on top of GST, taxes applied before profit. Here are the current rates, the order of the calculations and a complete example.

Rates by province

There are three ways a sale is taxed in Canada:

• GST only (5% federal tax): Alberta and the three territories;
• GST + a separate provincial tax: Quebec (QST), British Columbia and Saskatchewan (PST), Manitoba (retail sales tax, RST);
• HST (harmonized sales tax, a single line combining the federal and provincial parts): Ontario and the Atlantic provinces.

Sources, as of October 2026: CRA GST/HST calculator and rate table (including Nova Scotia's HST decrease to 14% on April 1, 2025), Revenu Québec, calculating the taxes (French page), B.C. PST, Saskatchewan PST, Manitoba retail sales tax. Rates change: check them again every year.

Where taxes go in the estimate

The order of the lines in an estimate almost always follows the same logic:

1. Subtotal of the work: materials, labour, subcontractors, general conditions.
2. Adjustments: overhead (office costs), profit, contingency.
3. Amount before taxes = subtotal + adjustments.
4. Taxes, calculated on the amount before taxes.
5. Total.

Taxes apply to the price the client pays. Profit and overhead are part of that price, so they're taxed. Calculating taxes on the subtotal and then adding profit underestimates the tax you have to collect.

Each adjustment can be calculated on the subtotal (as in the example below) or compounded (profit on subtotal + overhead). Both methods are used; what matters is being consistent from one bid to the next.

In Quebec: QST is no longer calculated on GST

Before 2013, QST was calculated on the price plus GST (a tax on a tax). Since January 1, 2013, QST is calculated on the same amount as GST, the price before taxes, at 9.975% (see Revenu Québec's Calculating the taxes page).

On $1,000: GST $50.00, QST $99.75, total $1,149.75. An old spreadsheet that still calculates QST on $1,050 gives $104.74 of QST: a few dollars on a small invoice, much more on a house.

Complete example: a $300,000 estimate

Assumptions: subtotal of the work $300,000, overhead 10% and profit 10%, each calculated on the subtotal, no contingency. These percentages are round illustrative numbers; replace them with your own.

The same amount before taxes in other provinces, if every tax applies to the contract (see below for the PST provinces):

What the two classic mistakes cost

The second mistake is the worse one: if the contract is signed "taxes included" on that total, the $8,985 you must remit comes out of your profit.

PST provinces: a special case for construction contracts

In British Columbia, Saskatchewan and Manitoba, the provincial tax doesn't follow the same rules as GST for work on real property. In British Columbia, for example, a contractor who supplies and installs improvements to real property generally pays PST on the materials they buy, and does not charge PST to the customer on the contract (B.C. Ministry of Finance bulletin PST 501, see the PST page). In that case, PST is a cost of materials, included in your unit prices, and only GST is added at the bottom of the estimate.

The rules differ by province and by type of contract. Check this point with your accountant before your first bid in one of these provinces.

Which province applies?

As a general rule, for work on real property, the taxes of the province where the site is located apply, not those of the contractor's office. A Gatineau company building in Ottawa will therefore usually charge Ontario HST, not GST and QST. Place-of-supply rules do have exceptions (services provided remotely, goods shipped to another province, registered or exempt customers): talk to your accountant as soon as a job is outside your province.

Rounding to the cent

Calculate each tax on the amount before taxes, then round each tax to the cent, separately. Don't round intermediate amounts (subtotal, adjustments) to the dollar if your contract is to the cent: the difference shows up again in the taxes.

Common mistakes

• Using the office's taxes instead of the site's.
• Keeping an old rate: Nova Scotia went from 15% to 14% on April 1, 2025; an estimate template from before still says 15%.
• Calculating QST on GST, a rule that hasn't existed since 2013.
• Taxing the subtotal instead of the amount before taxes.
• Adding PST to materials and again at the bottom in a province where the contractor already pays it as a consumer: it's counted twice.

Taxes in KOR

In KOR's estimate, taxes are calculated on the amount before taxes, after the adjustments (overhead, profit and contingency, each as a percentage of the subtotal), and each tax is rounded to the cent. The suggested taxes follow the company's province (GST + QST in Quebec, HST in Ontario and the Atlantic provinces, GST + PST or RST in the West, GST only in Alberta and the territories). Each estimate keeps its own tax lines, which you can edit: name, rate, a checkbox to turn it on or off, an extra line. If the site address in the project sheet is in a different province than the company, KOR asks whether to use that province's taxes; nothing changes without your approval. The Excel and PDF exports show one line per tax, with its formula in Excel.

Summary

1. Amount before taxes = subtotal + overhead + profit + contingency.
2. Taxes are calculated on that amount, one line per tax, rounded to the cent.
3. In Quebec: GST 5% and QST 9.975%, both on the same amount (14.975%).
4. The taxes of the site's province, as a general rule.
5. In PST provinces, check who pays the provincial tax on a construction contract.
6. Check rates every year and confirm special cases with your accountant.