If you run a small business in Canada — whether it is a one-person freelance operation or a growing company with employees — GST/HST is something you need to understand. It affects how you price your products and services, how you invoice clients, and how much cash you need to set aside for the government.
But for many small business owners, GST/HST feels like a maze of rules and exceptions. When do you need to register? What rate do you charge? How do you file? Can you get money back? Let us break it all down in plain language.
What Is GST/HST?
GST stands for Goods and Services Tax. It is a 5% federal tax that applies to most goods and services sold in Canada. HST stands for Harmonized Sales Tax, which combines the federal GST with the provincial sales tax into a single tax in participating provinces.
The current rates are:
- Alberta, British Columbia, Manitoba, Saskatchewan, Northwest Territories, Nunavut, Yukon: 5% GST (these provinces either have no provincial sales tax or charge PST separately)
- Ontario: 13% HST
- New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island: 15% HST
In provinces with separate PST (like British Columbia and Saskatchewan), the PST is a provincial matter and is handled separately from the GST/HST system. This guide focuses on the GST/HST portion, which is administered by the CRA.
When Do You Need to Register?
You must register for a GST/HST account if your total taxable revenue exceeds $30,000 in any single calendar quarter or over four consecutive calendar quarters. This is called the "small supplier threshold."
Revenue means your total income from taxable supplies before expenses. It does not matter whether you are a sole proprietor, partnership, or corporation — the $30,000 threshold applies to everyone.
Once you exceed $30,000, you are no longer a small supplier and you must register. You are required to start charging GST/HST on the day you exceed the threshold, which can be retroactive and messy if you are not paying attention. It is much better to monitor your revenue and register proactively when you see you are getting close.
Our HST registration calculator helps you determine when you need to register based on your revenue trajectory.
Should You Register Voluntarily?
Even if your revenue is under $30,000, you can choose to register voluntarily. This might sound counterintuitive — why would you want to add tax to your prices? — but there are good reasons to consider it:
- You can claim input tax credits (ITCs). Once registered, you can recover the GST/HST you pay on business purchases. If you have significant expenses (equipment, supplies, software, professional services), the ITCs can add up to real money back in your pocket.
- It looks more professional. Many larger businesses expect their suppliers and contractors to be GST/HST registered. Having a business number and charging HST signals that you are a legitimate, established business.
- You avoid a messy transition. If you are growing and expect to hit $30,000 soon, registering early lets you set up your systems, invoicing, and accounting properly rather than scrambling to do it mid-stream.
The downside is that you have to charge GST/HST to your customers, which effectively increases your prices. If your clients are mostly consumers (not businesses), this could affect your competitiveness. If your clients are businesses, they can claim back the GST/HST you charge, so it is neutral for them.
How to Register
You can register for a GST/HST account through:
- CRA Business Registration Online: The fastest method. Go to the CRA website and register through your Business Account.
- By phone: Call the CRA's business enquiries line.
- By mail: Complete Form RC1 and send it to your tax centre.
When you register, you will receive a business number (BN) with an RT extension (e.g., 123456789 RT0001). You will use this number on all your invoices and filings.
How to Charge GST/HST
Once registered, you must charge the appropriate rate of GST/HST on all taxable supplies you make. The rate you charge generally depends on where the supply is made (the "place of supply"), not where your business is located.
For most services, the place of supply is the province where the customer is located. So if you are an Ontario-based consultant doing work for a client in Alberta, you would charge 5% GST, not 13% HST.
Your invoices must show:
- Your business name and GST/HST registration number
- The date of the transaction
- The amount of GST/HST charged (either as a separate line or included in the price with a note)
- The total amount payable
Our invoice calculator can help you create properly formatted invoices with the correct GST/HST calculations.
Input Tax Credits: Getting GST/HST Back
This is the part that makes registration worthwhile for many small businesses. Input tax credits (ITCs) let you claim back the GST/HST you paid on business purchases. You collect GST/HST from your customers and pay GST/HST on your business expenses, and you only remit the difference to the CRA.
For example, if you collected $5,000 in HST from clients and paid $2,000 in HST on business expenses, you would remit $3,000 to the CRA. If you paid more in HST on purchases than you collected from clients (perhaps because you bought expensive equipment), the CRA actually refunds you the difference.
To claim ITCs, you need proper documentation — receipts or invoices that show the supplier's GST/HST registration number, the amount of tax paid, and the date. Keep all receipts for at least six years.
Use our GST/HST calculator to see how input tax credits reduce the amount you owe.
Filing Your GST/HST Return
As a registered business, you need to file GST/HST returns on a regular schedule. The filing frequency depends on your annual revenue:
- Annual (under $1.5 million in revenue): One return per year, due three months after your fiscal year end
- Quarterly ($1.5 million to $6 million): Four returns per year, due one month after each quarter
- Monthly (over $6 million): Twelve returns per year, due one month after each month
Most small businesses file annually, which keeps the paperwork to a minimum. You can choose a more frequent filing period if you prefer — for example, quarterly filing means you get your ITC refunds faster if the CRA owes you money.
Our GST/HST filing calculator helps you prepare for your filing by calculating the net amount you owe or are owed.
The Quick Method: A Simpler Alternative
If your business has annual taxable revenue of $400,000 or less (including GST/HST), you can elect to use the Quick Method of accounting. Instead of tracking all the GST/HST you paid on purchases, you simply remit a reduced percentage of your revenue to the CRA.
The Quick Method rate varies by province and business type, but it is typically between 3.6% and 8.8% of revenue including GST/HST. For many service-based businesses with low expenses, the Quick Method actually results in lower GST/HST remittances than the regular method.
For example, a consultant in Ontario using the Quick Method would remit about 8.8% of their HST-included revenue, rather than the full 13% HST collected minus ITCs. If their expenses are modest, the Quick Method saves them money.
The downside is that you cannot claim ITCs on most purchases (except for capital assets over $30,000). So if your business has high expenses relative to revenue, the regular method is usually better.
Common GST/HST Exemptions
Not everything is subject to GST/HST. Some common exemptions and zero-rated supplies include:
- Basic groceries — milk, bread, vegetables, meat (zero-rated)
- Medical and dental services — exempt
- Childcare services — exempt
- Residential rent — exempt (but short-term rentals like Airbnb are taxable)
- Most financial services — exempt
- Exports of goods and services — zero-rated
If your business only provides exempt supplies, you do not need to register and cannot claim ITCs. If you provide zero-rated supplies, you do not charge GST/HST on your sales but you can still claim ITCs on your business purchases — which is a nice advantage for exporters.
Record Keeping
The CRA requires you to keep all GST/HST records for at least six years. This includes:
- Sales invoices and receipts you issued
- Purchase invoices and receipts for expenses
- GST/HST returns filed
- Bank statements and accounting records
Good record keeping is not just a legal requirement — it makes your life so much easier at filing time and protects you in case of an audit.
The Bottom Line
GST/HST is an unavoidable part of running a business in Canada, but it does not have to be complicated. Know when to register, charge the right rate, keep good records, claim your input tax credits, and file on time. If your business is simple, the Quick Method can save you both time and money.
Our GST/HST calculator and filing calculator are free tools that take the guesswork out of your GST/HST obligations. Use them alongside our small business deduction calculator to get a complete picture of your tax situation as a business owner.