Taxes & Tips in North America

Upon arriving in North America, life could seem cheaper than it is really. Beware: prices are displayed exclusive of tax.

When you buy your winter coat (or your bathing suit), you will pay more than what is displayed. You have to count the Sales Tax (ST) in the USA, and the GST (Goods and Services Tax) and PST (Provincial Sales Tax) in Canada.

ST varies between 0% and 7% according to the state in the USA.

In Canada, GST is 5% and is applied on all transactions except on basic food products (milk, bread…).

For the PST, it’s a wee bit more complicated. The rate differs according to the Province:

  • Alberta (Edmonton, Calgary): 0% (nothing more to pay!)
  • British Columbia (Vancouver): 7%
  • Ontario (Toronto, Ottawa) : 8%
  • Quebec (Montreal) : 9.975%
  • Nova Scotia (Halifax) : 10%

The total of taxes thus amounts to between 5% and 15%.

But it’s not over!

If you are in a bar or a restaurant, you will also have to leave a tip (not applicable to fast-foods). A minimum 15% of the bill is considered normal for this additional “tax”. Here is a basic online tip calculator. In Quebec, no need for it: check the total amount for taxes, and add it again to leave the minimum 15% tip.

But why do you have to pay it when it’s not even on the bill?

The reason is simple: minimum wages for waiters and waitresses are lower than those of other kinds of employees, to take into account the amounts they are supposed to receive in tips. They pay income tax on tips!

So, if you don’t want to deprive a waiter of his salary, be generous with the tip!

Photo Credit: The tax collector’s office, Pieter Brueghel the Younger, 1640

About the Author:

I founded ARIANNE Relocation Canada in 1997 in order to assist families relocating to Montreal, and then all over Canada. I have a lot of advice and stories to share about how to successfully move and relocate to Canada! If I can be of help please contact me at manon@ariannerelocation.com

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