HST on commercial rent: taxable at 5% to 15%, small landlords excepted

What rate applies to commercial rent in each province?

A lease, licence or similar arrangement of commercial real property is a taxable supply unless it is specifically exempted, as certain leases by public service bodies are canada.ca. The common lease exemptions in Schedule V, Part I are residential, so a store, office or warehouse lease is taxable laws-lois.justice.gc.ca. The rate is set by where the building is: the place of supply for a lease of real property is the province where the property is located during the lease interval, whatever the landlord's or tenant's home province canada.ca.

Those are the CRA's current rates, with Nova Scotia's HST cut from 15% to 14% on April 1, 2025 canada.ca. In the CRA's own example, a PEI company leasing a Newfoundland and Labrador office building to an Ontario company charges the Newfoundland and Labrador rate on each payment canada.ca. Quebec's QST is a separate regime and isn't covered here; see QST registration. The full rate history is on our HST rates by province page.

Does a small landlord have to register and charge HST on rent?

Not while it's a small supplier. A landlord making taxable leases has to register and collect unless it is a small supplier, and a small supplier that hasn't registered voluntarily collects nothing on the lease canada.ca. Section 166 is what keeps that rent out of tax, and its only real property carve out is a sale: rent isn't caught, but a small supplier selling the building still charges tax laws-lois.justice.gc.ca. The sale side is on our GST on commercial real estate page.

The gotcha is what counts toward the $30,000. Section 148 leaves out sales of capital property, goodwill and financial services, so the building's eventual sale doesn't count, but the rent it earns does, and so do the taxable supplies of every associate laws-lois.justice.gc.ca. An owner who rents a unit to a corporation it controls has to add that corporation's taxable sales to its own rent.

Worked example: your client, an individual with no other taxable supplies and no associates, starts leasing an Ontario storefront on January 1, 2026 at $2,600 a month.

No quarter reaches $30,000, so the single quarter test never applies. The four quarter total passes $30,000 with the December rent, so small supplier status ends at the end of the month after that quarter, January 31, 2027, and the effective date of registration is no later than the first supply after that canada.ca. Each month of a lease is its own supply, deemed made on the earliest of the start of the month, the due date and the payment date laws-lois.justice.gc.ca, so the February 2027 rent is the first one carrying 13% HST: $2,600 plus $338. Your client then has 29 days from the effective date to register.

Registering early often makes sense for a commercial landlord, because its tenants are usually registrants who recover the tax and the landlord gets ITCs on building costs. A voluntary registration is usually effective on the date of the request and can go back up to 30 days, and the landlord has to stay registered for at least a year before cancelling unless it stops its commercial activities canada.ca. The threshold rules are on our GST registration threshold page.

One Toronto lease costs three tenants between $0 and $10,140 a year

Take an Ontario retail unit at $5,000 a month base rent plus $1,500 a month of additional rent for property tax, common area costs and insurance. A registered landlord charges 13% HST on the whole $6,500, which is $845 a month or $10,140 a year. What that $10,140 costs depends on the tenant.

Rent is an operating expense, so the CRA's thresholds apply: 90% or more commercial use earns the full ITC, more than 10% and less than 90% earns the percentage of use, and 10% or less earns nothing, on an allocation that is fair, reasonable and used all year canada.ca. The clinic's ITC is $10,140 × 30% = $3,042. Why physiotherapy is exempt and massage is not is on our HST exempt supplies page.

Two traps on the tenant side. A tenant on the Quick Method can't claim ITCs for operating expenses canada.ca, so the HST on rent isn't claimed separately. And the claim needs paperwork: the CRA lists a written contract as a supporting document, and where the agreement sets the parties and terms while invoices set the amounts and tax, it says both are required canada.ca. What a monthly rent invoice has to show at $500 or more is on our ITC documentation page.

Which payments under a commercial lease carry GST/HST?

Most money that moves under a lease is rent for tax purposes, but not all of it. These are the CRA's positions in Memorandum 19.4.1 canada.ca, plus the deposit rule in section 168 laws-lois.justice.gc.ca.

Timing catches landlords whose tenants pay late. Tax is payable on the earlier of the day the consideration is paid and the day it becomes due laws-lois.justice.gc.ca, and each lease interval is a separate supply laws-lois.justice.gc.ca. So a registered landlord reports the HST on rent that fell due in the period, whether or not the tenant paid. If the rent is never collected, the relief is the GST/HST bad debt adjustment.

How do mixed use buildings split the rent and the landlord's ITCs?

When a supply of real property includes a residential complex and other real property, subsection 136(2) treats the two parts as separate properties and separate supplies, neither incidental to the other laws-lois.justice.gc.ca. The CRA's example is an apartment building with a shopping mall on the first floor: the stores follow the commercial rules, the apartments don't canada.ca.

The apartments are exempt under Schedule V, Part I, s. 6 when the same individual occupies the unit continuously for at least one month, or when rent is $20 a day or less. The test is occupancy as a place of residence, not zoning, so commercially zoned apartments rented long term stay exempt. Parking is exempt under s. 8.1 only when it's leased for at least a month to a resident of the complex and used incidentally to the residence laws-lois.justice.gc.ca. A space leased to a store tenant or the public is taxable. The residential side is on our HST exempt supplies page.

The landlord's ITCs follow the same split. Capital real property bought by a corporation, partnership or individual earns no ITC at 10% or less commercial use, the percentage of use from more than 10% to less than 90%, and the full ITC at 90% or more; an individual gets nothing if more than 50% is personal use canada.ca.

Worked example: an Ontario building with ground floor retail on 40% of the floor space and apartments above. A $50,000 roof replacement carries $6,500 of HST. Allocating by floor space, the landlord claims $6,500 × 40% = $2,600 and the other $3,900 is a cost of the exempt apartments. The CRA's own RC4022 example does the same with a Nova Scotia store and apartment, claiming 70% of the HST on a utility bill canada.ca.