Prices, Price Factors and 2026 Programs
GST/HST and PST on furnace and heat pump installation, province by province
How GST, HST, QST and provincial sales taxes apply to heat pump, furnace and boiler installations and rentals in Canada, including BC's heat pump PST exemption.
Installing a heat pump, furnace or boiler in an existing Canadian home is generally taxable at the GST or HST rate of your province, and in Quebec you pay GST plus QST. In the provinces with a separate provincial sales tax, the rules for contractors differ: in British Columbia and Manitoba the contractor usually pays the provincial tax on the materials and builds it into the price, while in Saskatchewan the contractor collects PST on the contract total. British Columbia is also the one province that taxes heating equipment by fuel: since 1 April 2022 heat pumps are exempt from PST and fossil fuel heating systems carry 12% PST instead of the general 7%. Rentals are taxed on every monthly payment.
This guide is part of the heat pump installation cost overview. It is general information; tax rules depend on the exact contract, so check with the Canada Revenue Agency, Revenu Québec or your provincial finance ministry, or ask a tax professional for a large or unusual job.
Sales tax rates that apply to HVAC work in 2026
| Province or territory | Federal / harmonized | Provincial | How the provincial part usually reaches you |
|---|---|---|---|
| Ontario | HST 13% | (included in HST) | On the invoice |
| Nova Scotia | HST 14% (since 1 April 2025) | (included in HST) | On the invoice |
| New Brunswick, Newfoundland and Labrador, Prince Edward Island | HST 15% | (included in HST) | On the invoice |
| Quebec | GST 5% | QST 9.975% | Both on the invoice |
| British Columbia | GST 5% | PST 7%; 12% on fossil fuel heating systems; heat pumps exempt | Usually built into the contractor's price on installed work |
| Manitoba | GST 5% | RST 7% | Contractor pays RST on materials; not charged on installation labour |
| Saskatchewan | GST 5% | PST 6% | Collected on the total contract charge, shown separately |
| Alberta, Yukon, Northwest Territories, Nunavut | GST 5% | none | GST only |
Rates are as published by the CRA and the provinces; check for any change before relying on them.
British Columbia: the fuel-based PST rule
A BC Ministry of Finance notice explains that from 1 April 2022 the PST rate on the purchase or lease price of fossil fuel combustion systems rose from 7% to 12%, and heat pumps became exempt. Fossil fuel combustion systems include gas, oil or propane central furnaces, boilers, unit heaters, fireplaces, storage and instantaneous water heaters and similar systems. Separate parts sold with the unit but not packaged by the manufacturer (ductwork, piping, generic thermostats) stay at 7%.
For an installed job, a BC contractor who supplies and installs the equipment as part of a real property contract normally pays the PST on the equipment and materials and does not charge PST to you, so the difference shows up in the price rather than as a line on the invoice. If you buy equipment yourself and hire an installer, you pay the PST at purchase. Either way, a gas furnace carries more embedded PST than a heat pump.
Worked examples
Illustrative figures only.
Ontario heat pump. Contract price $15,000. HST 13% = $1,950. Total $16,950.
Quebec heat pump. Contract price $15,000. GST 5% = $750; QST 9.975% = $1,496.25. Total $17,246.25.
Saskatchewan furnace. Contract price $7,000. GST 5% = $350; PST 6% = $420. Total $7,770.
BC gas furnace versus heat pump (embedded PST). Suppose the contractor's equipment cost is $4,000 for a gas furnace and $8,000 for a heat pump. PST built into the furnace job: $4,000 × 12% = $480. PST on the heat pump equipment: $0. GST 5% applies to the full contract price in both cases.
Nova Scotia rental water heater. Monthly rental $30 plus HST 14% = $4.20, so $34.20 a month, or $410.40 a year.
Rebates, financing and tax
Sales tax is normally calculated on the price the contractor charges. A program rebate paid to you after installation usually does not reduce the tax already charged on the invoice, so work out the after-tax cost first and then subtract the rebate, as in the 2026 rebate guide. Interest on a loan is not subject to GST/HST, but rentals and leases are taxed on each payment, which adds up over a long rental term; see rental contracts.
Small contractors and invoices
Businesses with taxable supplies under the CRA's small supplier threshold ($30,000 over four consecutive calendar quarters) do not have to register for GST/HST and therefore may not charge it. A quote that "saves you the tax" from a business that should be registered is a warning sign. Ask for the GST/HST registration number on the invoice, check it with the CRA's GST/HST registry search, and keep the invoice: rebate programs and warranty claims usually require it.
Cash deals without invoices also leave you with no record for program claims, home insurance or resale disclosures.
Common mistakes
- Comparing a pre-tax quote with a tax-included one.
- In BC, comparing a furnace quote and a heat pump quote without asking how PST is treated in each.
- Assuming a rental is untaxed because the monthly price looks small.
- Paying a contractor who refuses to issue a proper invoice.
Plug the pre-tax ranges into the heating system cost estimator and add tax afterwards, or compare quotes with the HVAC quote checklist. For gas or oil system pricing, see furnace replacement cost and boiler replacement cost; for heat pump types see cold-climate price factors and ground-source costs.
FAQ
Is there a GST/HST exemption for heat pumps?
No general federal exemption applies to homeowners buying or installing a heat pump. BC's exemption is from provincial PST only.
Do I pay tax on the rebate?
A rebate paid to a homeowner for a home retrofit is not normally treated as taxable income, but check the CRA guidance for your circumstances, especially if the home is a rental property.
Is a heat pump on a rental property deductible?
A landlord usually treats new heating equipment as a capital expense depreciated through capital cost allowance, not a one-year expense. Ask a tax professional.
Sources
- Canada Revenue Agency — GST/HST rates, registration and the registry search
- Revenu Québec — QST
- Government of British Columbia — PST on fossil fuel combustion systems and heat pumps
- Government of Manitoba — retail sales tax for contractors
- Government of Saskatchewan — PST on services to real property
