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TL;DR – GST/HST for Canadian Business Owners

• GST is federal – Charged at 5% across Canada
  
  
• HST is combined – Applies in some provinces at a higher rate (like 13% in Ontario)
  
  
• Registration is required – Once your taxable sales hit $30,000 in a 12-month period
  
  
• You can recover GST/HST paid on expenses – by claiming input tax credits (ITCs) when filing your return
  
  
• Tax rate depends on the place of supply – Usually based on where your customer receives the goods or services
  
  
• Filing is required – Monthly, quarterly, or annually depending on your revenue

What GST and HST Mean and Where They Apply

Let’s start with the basics. What exactly is GST and HST?

In Canada, GST stands for Goods and Services Tax. It’s a federal tax that applies across the country.

HST stands for Harmonized Sales Tax. It’s used in some provinces where the federal GST and the provincial sales tax are combined into one tax at a single rate.

The rules for how GST and HST work are basically the same, but the rate you charge depends on where your customer is located.

Here’s how it breaks down:

• In provinces like Alberta, there’s no provincial sales tax, so you just charge 5% GST
  
  
• In provinces like Ontario and Nova Scotia, HST applies at a higher combined rate
  
  
• In provinces like BC and Saskatchewan, you charge GST, and then provincial sales tax may apply separately depending on what you're selling
  
  

We’ll go over how to figure out what rate to charge a bit later. For now, just know that GST and HST are both forms of sales tax that you may need to collect and send to the CRA.

How GST/HST Works

Let’s take a closer look at how GST and HST actually work.

When you make sales, you’ll charge GST or HST to your customers. That tax isn’t actually your money; you’re collecting it on behalf of the government.

At the same time, you’ll probably be paying GST or HST on your business expenses. The good news is that you can recover that tax by claiming something called input tax credits, or ITCs for short.

Here’s the general formula:

1. GST or HST collected on your sales
   
   minus
   ‍
2. GST or HST paid on business expenses (also known as input tax credits or ITCs)
   ‍
   equals
   ‍
3. The amount that you send to the CRA

GST/HST Example

Let’s say you collect $1,400 in GST or HST from your customers. During the same period, you pay $500 in GST/HST on business expenses.

You subtract the $500 from the $1,400, and that leaves you with $900 owing to the CRA.

If the situation is flipped where you paid more GST or HST on expenses than you collected on sales, you would get a refund.

When Do You Need to Register for GST/HST?

So now that we know what GST and HST are and how they work, the next big question is: when do you actually need to register to start charging it?

Most businesses in Canada don’t have to register for GST/HST right away. There’s a small supplier threshold that gives you a bit of breathing room.

GST/HST Small Supplier Threshold

If your total worldwide taxable sales are $30,000 or less over the last four consecutive calendar quarters, you’re considered a small supplier. That means registration is optional.

But once your taxable sales go over that $30,000 mark in a 12-month period, registration becomes mandatory.

What Counts as Taxable Sales for GST/HST Purposes?

Taxable sales include pretty much everything a typical business earns, unless it’s specifically exempt.

That includes things like:

• Selling products
  
  
• Providing services
  
  
• Collecting rent from commercial tenants
  

Exempt sales are things like residential rent, certain medical or dental services, and some financial or educational services. These are the exceptions, not the rule.

So for most businesses, your regular sales count toward that $30,000 threshold.

GST/HST Registration Threshold Example

Let’s say your sales look like this:

• Q1: $5,000
  
  
• Q2: $5,000
  
  
• Q3: $10,000
  
  
• Q4: $10,000
  
  

That adds up to $30,000 over four quarters. If you make another sale after that, you’re now required to register and start charging GST or HST on that next sale.

Voluntary GST/HST Registration

Now, even if you’re under the threshold for GST/HST, you can choose to register early.

Why would you do that?

One big reason is that once you’re registered, you can start claiming back the GST or HST you pay on business expenses. These are called input tax credits, and we’ll talk more about those in the next section.

Voluntary registration can be helpful for startups or growing businesses that are spending more than they’re earning early on.

How to Register for GST/HST

Alright, so you know when you need to register and how GST and HST actually work. Now let’s go over how to get registered.

The easiest way to register is through the CRA’s . It’s quick, straightforward, and can be done in just a few minutes.

You can also register by mail or by phone if you prefer, but online is usually the way to go for most business owners.

What You’ll Need to Register for GST/HST

Before you start, make sure you have a few key details ready:

• Your business name and address
  
  
• Your contact information
  
  
• A short description of what your business does
  
  
• Your expected annual revenue
  
  
• Your fiscal year-end
  
  
• Your Social Insurance Number if you're a sole proprietor, or your business number if you’ve already registered a corporation
  
  

Once you’ve submitted the application, you’ll get a GST/HST account number, and you’re officially registered.

From that point on, you’ll need to charge GST or HST on your taxable sales and file regular GST/HST returns based on your filing frequency.

How Much GST/HST Should You Charge?

Once you're registered for GST or HST, the next step is figuring out how much tax to charge your customers. This depends on what's called the place of supply.

"Place of supply" is just the CRA’s way of saying where your customer is located or where they’re receiving the goods or services.

The place of supply determines whether you charge GST at 5 percent or HST at a higher combined rate, depending on the province.

GST/HST Place of Supply Examples

Let’s look at how it works using a few simple examples.

In Alberta, selling to a customer in Alberta

Let’s say you run a business in Alberta and you're selling something to a customer in Alberta. Alberta doesn’t have a provincial sales tax, so you would just charge 5 percent GST.

In Ontario, selling to a customer in Ontario

Now let’s say you're based in Ontario and your customer is also in Ontario. Ontario is a participating province, so you would charge 13 percent HST on the sale.

In Ontario, selling to a customer in Alberta

What if you're still in Ontario, but your customer is located in Alberta?

Since the customer is in a non-participating province (AKA, they don’t have HST), you would charge 5 percent GST, even though YOUR business is located in Ontario.

In each of these cases, the tax rate is based on where the customer is located, not where you are as the business owner.

What if you sell digital products or services online?

For online sales, the same rule applies. You charge tax based on the customer’s location.

This is especially important for things like digital downloads, virtual services, or ecommerce sales. Even though the transaction happens online, you're still responsible for charging the correct rate based on where the buyer lives.

What if your customer is outside of Canada?

If you're selling to a customer who is outside Canada, you usually don’t charge GST or HST.

These are called zero-rated supplies, which means they are taxable, but the rate you charge is zero percent. You still get to claim input tax credits on related expenses, but you don’t collect tax from the customer.

This typically applies to:

• Goods that are shipped outside of Canada
  
  
• Services provided to non-residents
  
  
• Digital products or subscriptions sold to customers in other countries

You can find more details and a .

How to Charge GST/HST

Once you're registered and ready to charge GST or HST, there are a few key things to make sure you're doing correctly.

It’s not just about adding tax to the total. You also need to issue proper invoices and keep records that meet CRA requirements.

Include Your GST/HST Number on Invoices

This one is important. If you're charging GST or HST, you need to include your GST/HST registration number on every invoice you issue. This lets your customer, especially if they’re a business, claim input tax credits on the tax you’ve charged.

The registration number should be easy to find and clearly labeled. You’ll usually see it written as “GST/HST #” followed by your 9-digit business number and the account extension, which is usually RT0001.

Show the Amount of Tax Charged

Your invoice should break out the GST or HST you’ve charged, separate from the price of the product or service.

For example, let’s say you’re in Alberta:

• And your sales subtotal is $1,000
  
  
• Your next line would show GST at 5% broken out, so add $50 of GST
  
  
• Then you would show the total at the bottom of the invoice for $1,050
  
  

If you're charging HST, you can just show it as a single amount and label it clearly as opposed to splitting it up into federal and provincial portions.  

If the above example was sales in Ontario, it would show a subtotal of $1,000, HST at 13% of $130 and a total of $1,130.

Keep Good Records

You also need to keep a copy of every invoice you send out. CRA requires that you retain these records for at least six years in case of an audit.

Whether you use accounting software or a manual system, make sure you're tracking:

• Date of the sale
  
  
• Customer name
  
  
• Description of what was sold
  
  
• Amounts charged
  
  
• GST or HST collected
  
  
• Your GST/HST number
  
  

These details will help you stay organized and make your life easier when it's time to file your return.

‍

How to File a GST/HST Return

Once you're registered and collecting GST or HST, you'll need to file a return to let the CRA know how much tax you collected and how much you paid on expenses.

Your return shows two main things:

• How much GST or HST you collected from customers
  
  
• How much GST or HST you paid on business expenses (also known as input tax credits)
  
  

The difference between those two amounts is either what you owe to the CRA, or what the CRA owes you as a refund.

How to File Your GST/HST Return

There are a few ways to file your GST/HST return:

• The easiest option is through CRA My Business Account
  
  
• You can also use NETFILE if you’ve been given a four-digit access code
  
  
• Some accounting software will let you file directly through the app
  
  

Once you’re logged in or set up, the return itself is pretty simple. You’ll be asked for:

• Total sales during the reporting period (excluding tax)
  
  
• Total GST or HST collected
  
  
• Total input tax credits (ITCs) you’re claiming
  
  
• Net tax which is the difference between what you collected and what you’re claiming
  
  

If you collected more than you paid, you’ll pay the difference to the CRA. If you paid more than you collected, you’ll get a refund.

How to Pay the CRA

If you owe money after filing your return, you have a few ways to pay:

• Online banking (just like paying a bill)
  
  
• CRA’s My Payment service
  
  
• Pre-authorized debit
  
  
• Or by mailing a cheque, though that takes longer
  
  

If you're getting a refund, you can have it deposited directly into your business bank account, or the CRA will send you a cheque.

GST/HST Filing Frequencies and Deadlines

How often you file your GST/HST returns depends on how much revenue your business brings in each year.

There are three options: monthly, quarterly, or annually. And the CRA assigns your minimum filing frequency based on your total taxable revenue.

Here’s how it breaks down:

• If your annual revenue is $1.5 million or less, you can file annually
  
  
• If your revenue is over $1.5 million but less than $6 million, you’ll need to file quarterly
  
  
• If your revenue is over $6 million, you’ll have to file monthly
  
  

That’s your default, but if you’d rather file more frequently than required, you can. For example, some annual filers choose to file quarterly or monthly to stay on top of cash flow.

When Your GST/HST Return is Due

Now let’s talk about due dates, because they’re not the same for everyone.

• Monthly and quarterly filers have to file their return and pay any balance owing one month after the end of the reporting period.  For example, if your period ends June 30, your return and payment are due by July 31
  
  
• Annual corporate and partnership filers have three months after the end of the fiscal year to file and pay. So if your annual filing period ends on June 30, the due date is September 30
  
  
• Annual sole proprietors follow different rules. Your GST/HST return is due June 15th, but any amount owing has to be paid by April 30th
  
  

Keeping track of your deadlines will help you avoid late filing penalties and interest charges from the CRA.

What About the Quick Method?

Before we wrap up, I wanted to give you a quick message on the GST/HST Quick Method.

The Quick Method is an alternative way to calculate how much GST or HST you owe. Instead of tracking the exact amount of tax you pay on every business expense, you just apply a fixed percentage to your total sales and remit that amount.

It’s designed to save time and reduce paperwork for service-based businesses that don’t have a lot of expenses with GST or HST on them.

This method isn’t right for everyone, but it can be a great fit for some small businesses. We’ve also written a full breakdown on the GST/HST Quick Method linked here.

Final Thoughts

Alright, that covers the basics of GST and HST for Canadian business owners.

We looked at what GST and HST are, how they work, when and how to register, how to charge and file, and a quick look at the Quick Method.

It might feel like a lot at first, but once you understand the flow of collecting the tax, tracking your expenses, and filing your return, it becomes a regular part of running your business.

If you would rather not worry about sales tax, you can and we would be happy to help you stay on top of it.

Frequently Asked Questions

What’s the difference between GST and HST?

GST is a 5% federal sales tax that applies across Canada. HST is a combined federal and provincial tax that applies in certain provinces. The rate you charge depends on where the sale is considered to take place.

When do I have to register for GST/HST?

You must register once your total taxable sales exceed $30,000 over four consecutive calendar quarters. Before that, registration is optional.

Can I register voluntarily before hitting $30,000?

Yes, and it can be beneficial. Once registered, you can claim back the GST or HST you pay on eligible business expenses.

How do I know how much GST/HST to charge?

You apply tax based on the place of supply, which usually means where your customer physically receives the product or service. The exact rules depend on what you’re selling and how it’s delivered, so the correct rate could vary depending on the situation.

What needs to be on my invoice?

Your GST/HST registration number, the amount of tax charged, and a clear breakdown of the sale. Keep copies of all invoices for at least six years.

How do I file and pay my GST/HST?

You can file online using CRA My Business Account, NETFILE, or accounting software. Payments can be made through online banking, pre-authorized debit, or by cheque.

What’s the GST/HST Quick Method?

It’s a simplified way to calculate how much GST or HST you owe. Instead of tracking input tax credits, you apply a flat rate to your gross sales. It’s best for service businesses with low expenses. More on that here.