You’re busy running your business, landing clients, and watching your revenue grow. Then someone mentions GST/HST registration, and suddenly you’re drowning in questions.
Do I need to register for a GST/HST number? When do I actually start charging tax? Is that $30,000 threshold calculated by the year or the quarter?
We talk to Canadian small business owners every day who are worried about CRA compliance or feel flat-out terrified of getting a “request for information” letter. The good news? Once you understand how the system actually works, GST/HST becomes a manageable part of your business growth rather than a mystery.
This detailed guide breaks down the latest CRA GST/HST rules, from the basic concepts to advanced strategies, in plain language, no tax jargon.
Understanding GST/HST: What It Actually Is and Why It Matters
Let’s start with the fundamental misunderstanding that costs business owners thousands: GST/HST is not an extra tax on your income. It’s a sales tax you collect from customers on behalf of the government.
Think of yourself as the middleperson. You charge GST/HST on your sales, set that money aside because it belongs to the CRA, then remit it to the government minus the GST/HST you paid on business expenses. The tax doesn’t reduce your profit, it just passes through your business.
GST Versus HST: The Provincial Difference
Goods and Services Tax (GST), which is a five percent tax applied to most taxable items and services in all provinces and territories, represents the federal component that applies across Canada. Harmonized sales tax (HST) is when the GST is collected together with the Provincial Sales Taxes, creating a single combined rate in participating provinces.
Current GST/HST Rates Across Canada:
| Province / Territory | Tax Type | Rate | Notes |
|---|---|---|---|
| Alberta | GST Only | 5% | No provincial sales tax |
| BC, Manitoba, Saskatchewan | GST + PST | 5% + PST | Separate provincial sales tax |
| Quebec | GST + QST | 5% + QST | Quebec Sales Tax applies |
| Yukon, NWT, Nunavut | GST Only | 5% | No provincial sales tax |
| Nova Scotia, NL, NB, PEI | HST | 15% | Combined federal & provincial |
| Ontario | HST | 13% | Combined federal & provincial |
When GST/HST Registration Becomes Mandatory: The $30,000 Threshold
This is where most Canadian business owners get confused and make expensive mistakes. The $30,000 threshold determines whether you’re a small supplier exempt from registration or required to register and charge GST/HST.
How the Small Supplier Threshold Actually Works
For most businesses, the requirement to register for the GST/HST applies when you’re no longer a small supplier, which happens when your sales before expenses is more than $30,000 in a single calendar quarter, or thirty thousand dollars within the previous four consecutive calendar quarters.
This isn’t about calendar years. Four consecutive quarters means any rolling twelve-month period regardless of when your fiscal year starts or ends.
| Reporting Period | Sales Amount (CAD) |
|---|---|
| April – June 2025 | $5,000 |
| July – September 2025 | $5,000 |
| October – December 2025 | $15,000 |
| January – March 2026 | $10,000 |
| Total (12-month period) | $35,000 |
| GST/HST Registration | Required |
If you make a major $15,000 sale in December and another $15,000 in January, you have just crossed the threshold even though each individual calendar year shows less than $30,000.
What Counts Toward the CRA $30,000 Threshold
Understanding what revenue counts toward your threshold is crucial for compliance timing.
Revenue That Counts: All taxable supplies including goods and services you sell domestically, zero-rated supplies like exports that are taxable at zero percent, worldwide revenue from all your business activities and associated businesses, and sales from multiple businesses you operate even if tracked separately.
Revenue That Doesn’t Count: Exempt supplies like childcare services or medical services, capital asset sales like selling your business vehicle, and real property sales outside normal business operations.
All worldwide self-employment income counts toward the $30,000 threshold, so if you’re working with US clients or international customers, those sales still push you toward registration requirements.
Three Types of Supplies: Understanding What Gets Taxed
The type of supplies you sell determines not just whether you charge GST/HST, but also whether those sales count toward your $30,000 threshold and whether you can claim input tax credits on related expenses.
Taxable Supplies
Most goods and services fall into the taxable supply category. Taxable supplies are goods and services subject to GST/HST when sold from a business to its customers. You charge the appropriate rate, collect it from customers, and remit it to CRA.
Common Taxable Supplies: Professional services including consulting, accounting, legal, marketing, retail goods and merchandise, construction and renovation services, commercial real estate rentals, restaurant meals and catering, automotive repairs and services, technology services and software, most entertainment and recreation services.
Taxable supplies count toward your $30,000 threshold, you can claim input tax credits on expenses related to providing these supplies, and you charge full GST or HST rates based on customer location.
Zero-Rated Supplies
Zero-rated supplies means GST/HST is not charged, collected, or remitted, but as a registrant, you can claim ITCs for GST/HST paid to produce the goods or services. This category creates significant advantages for certain businesses.
Common Zero-Rated Supplies: Basic groceries and food items, prescription drugs and medical devices, agricultural products and livestock, exports of goods and services to non-residents, most books, newspapers, and educational materials, international transportation services.
The difference in practical terms is that if you have a zero-rated sale, you can still get those input tax credits back for GST/HST you paid on your expenses. While exempt goods and services do not allow you to claim input tax credits.
Example: If you sell software services to US companies, those sales are zero-rated exports. You don’t charge GST/HST to the US client, but you can still claim back the GST/HST you paid on your office rent, computer equipment, and other business expenses.
Exempt Supplies:
Exempt supplies represent the least advantageous category from a GST/HST perspective. You don’t charge tax, but you also can’t recover GST/HST paid on related expenses.
Common Exempt Supplies: Healthcare services provided by doctors, dentists, and certain practitioners, childcare and daycare services, most educational services including music lessons and tutoring, residential rental property, most financial services including lending and insurance, legal aid services.
In many cases, if you provide an exempt supply, you wouldn’t even register since you do not collect nor can you claim sales tax paid on expenses.
When You Must Register for GST/HST in Canada
Understanding the mandatory registration triggers protects you from CRA penalties and backdating nightmares that financially devastate unprepared business owners.
Mandatory GST/HST Registration Situations
Once you cross the small supplier threshold, you must get a GST/HST number and start charging your customers and clients immediately, not at some convenient future date you choose.
You Must Register When: Your revenue exceeds $30,000 in any single calendar quarter, your revenue exceeds$30,000 over any four consecutive calendar quarters, you operate a taxi or ride-share business regardless of income level, you import taxable goods into Canada for resale, or you’re no longer eligible for small supplier status.
Registration Timeline Requirements: Once your sales hit $30,000 in a single quarter, you’ve crossed the small supplier line. From that point, you need to start charging GST/HST on each sale. Make sure you officially register for GST/HST within 29 days after you start collecting it.
Voluntary GST/HST Registration Benefits and Considerations
Considering registering for GST/HST voluntarily is a tax planning opportunity that may or may not be a good fit for your business situation. Many businesses benefit from early registration even when not required.
Advantages of Voluntary GST/HST Registration: Only registered businesses can claim ITCs, which is another reason voluntary registration may be beneficial even if you’re under the $30,000 threshold. You can recover GST/HST paid on startup costs and equipment purchases, appear more credible and professional to corporate clients who expect GST/HST numbers, improve cash flow by offsetting taxes paid on purchases, and avoid monitoring stress about when you’ll cross the threshold.
When Voluntary GST/HST Registration Makes Sense: Your business has high expenses relative to income, you’re selling primarily to GST/HST registered businesses who can claim the tax back, you’re approaching the $30,000 threshold and want to avoid mid-year registration hassles, you have significant startup costs with GST/HST that you want to recover, or you’re in industries where clients expect registered vendors.
When to Stay Unregistered: You’re selling primarily to consumers who care about the final price including tax; your expenses are minimal, so input tax credits provide little benefit; your revenue is comfortably under $30,000 with no growth plans, or the administrative burden outweighs the financial benefits.
How to Register for GST/HST in Canada
You can get a business number or register for GST/HST online, even if you have a SIN that starts with nine, making the registration process accessible for all business owners, including recent immigrants and temporary residents.
GST/HST Registration Methods and Process
Online Registration Through CRA: Use the Business Registration Online service on the CRA website, complete the RC1 form for business number and GST/HST account, provide business structure details, including sole proprietorship versus incorporated status, estimate your annual taxable sales, and choose your filing frequency based on expected revenue.
Alternative Registration Methods: Register by phone through CRA’s business enquiries line at 1-800-959-5525, mail or fax completed RC1 forms available from CRA website, or register in person at selected Service Canada locations.
Information You’ll Need to Register for GST/HST
- Personal identification (Social Insurance Number or Individual Tax Number)
- Business legal name and operating name (if different)
- Business address and mailing address (if different)
- Estimated date GST/HST registration is required
- Estimated annual revenue and preferred filing frequency
- Banking information for direct deposit of refunds
Understanding Your GST/HST Number
Once registered, you’ll receive a 15 character business number structured as nine digits for your business number, plus two letters for account type, plus four digits for reference number. The GST/HST account identifier uses RT as the account type letters.
Example: 123456789 RT 0001, where 123456789 is your business number, RT indicates GST/HST account, and 0001 is the reference number for this specific account.
Which GST/HST Rate Do You Charge
This question causes more confusion than almost anything else about GST/HST compliance. The answer depends on the place of supply rules that determine where your product or service is considered delivered or performed.
Place of Supply Rules for Different Business Types
The GST/HST rate you charge depends on where the supply is made, with goods typically taxed where delivered, services generally where performed, and intangible property where used.
Goods and Physical Products: The place of supply for goods is where the goods are delivered or made available to the purchaser. If you’re an Ontario business shipping clothing to a customer in Saskatchewan, you charge Saskatchewan rates, not Ontario rates.
Services: The place of supply for services is generally where the services are performed. If you’re a British Columbia web designer building a website for a Nova Scotia client, the place of supply depends on where the service is performed and consumed.
Intangible Property and Digital Products: Software, digital downloads, online courses, and intellectual property are supplied where the property is used or consumed by the purchaser.
Cross-Border Sales: Services provided to non-Canadian customers are typically zero-rated exports. If you’re a Canadian IT consultant providing services to a US company, you don’t charge GST/HST but can still claim input tax credits on your Canadian business expenses.
Understanding and Claiming Input Tax Credits (ITCs)
Input Tax Credits represent one of the most valuable benefits of GST/HST registration, yet many registered businesses leave thousands of dollars unclaimed because they don’t understand how ITCs work.
What Are Input Tax Credits
Input Tax Credits (ITCs) allow your business to recover GST/HST paid on business-related purchases and expenses, making these taxes a flow-through rather than a cost. Every time you pay GST/HST on a business expense, you’re entitled to claim that amount back from the CRA when you file your return.
How ITCs Work in Practice: You collect $2,000 GST from sales in a quarter, you paid $600 GST on eligible business expenses like equipment and supplies, you claim $600 as input tax credits when filing your return, and you remit only $1400 to CRA because you recovered the $600 paid on expenses.
Eligible Expenses for Input Tax Credits
Only registered businesses can claim ITCs, with documentation requirements including receipts, invoices, contracts, and proof of payment for every claimed expense, and CRA requires documents clearly show supplier GST/HST registration numbers.
Common Eligible Expenses: Office supplies and equipment including furniture, computers, and technology, software subscriptions and cloud services, professional services like accounting, legal, and consulting fees, rent for business premises or commercial property, utilities for business locations, vehicle expenses at business-use percentage, travel expenses for business purposes, advertising and marketing costs, business insurance premiums, and equipment and machinery purchases.
Important Restrictions: You can only claim ITCs on the business portion of mixed-use expenses, meals and entertainment are subject to the fifty percent rule even when fully business-related, and you need proper documentation, including supplier GST/HST numbers, to support claims.
Documentation Requirements for ITCs Claims
Keep these records for six years from the end of the tax year they relate to, as CRA audits can request documentation for any return filed within this period.
Required Documentation Elements:
- Include your supplier name and GST/HST registration number
- Add the invoice date and payment date
- Provide a clear description of the goods or services purchased
- Show the total amount paid, listing GST/HST separately
- Include payment terms if the invoice is not paid immediately
Simplified Requirements for Small Purchases: For purchases under thirty dollars, you need receipts showing supplier name, date, total including GST/HST, and either GST/HST registration number or notation that GST/HST is included. For purchases between thirty and one hundred forty-nine dollars, you need receipts showing supplier name and either GST/HST number or business number, date and total and GST/HST amount or statement that it’s included in price.
GST/HST Filing Frequency and Deadlines
Your GST/HST filing frequency depends on annual taxable sales, with different deadlines for different business sizes creating a tiered system that balances CRA’s administrative needs against small business compliance burden.
Determining Your Filing Frequency
Businesses with sales under one point five million file annually, sales between $1.5 million and $6 million require quarterly filings, and sales over six million require monthly filings.
| Filing Frequency | Annual Taxable Sales | Filing & Payment Deadline |
|---|---|---|
| Annual | Under $1.5 million | 3 months after fiscal year-end (March 31 for Dec 31 year-end) |
| Quarterly | $1.5 million – $6 million | 1 month after each quarter (Apr 30, Jul 31, Oct 31, Jan 31) |
| Monthly | Over $6 million | 1 month after each month (12 filings per year) |
Special Filing Deadlines for Self-Employed Individuals
If you have a reporting period that begins in 2024 or later, you must file your GST/HST returns electronically, eliminating paper filing options for virtually all businesses.
Self-Employed Annual Filers: If you’re self-employed filing annually, your GST/HST return is due June 15, but payment is due April 30, the same as income taxes. This creates potential confusion because the filing and payment deadlines don’t match.
Understanding the Split Deadline: You have until June 15 to file the actual return paperwork, but any GST/HST you owe must be paid by April 30 to avoid interest charges. This split deadline catches many self-employed individuals who assume everything is due June 15.
How to Track and Set Aside GST/HST You Collect
Spoiler alert: GST/HST is not yours to keep. This is probably the biggest mistake I see clients making. You are collecting it on behalf of the Government, and treating it as your money creates cash flow disasters when filing deadlines arrive.
Setting Up Separate GST/HST Tracking
Separate Savings Account Method: Open a dedicated savings account specifically for GST/HST collected, transfer GST/HST from every customer payment immediately upon receipt, never touch this account for business expenses or personal use, and treat the balance as money belonging to CRA, not your business.
Accounting Software Integration: Use accounting platforms like QuickBooks, Wave, or Zoombooks that automatically separate GST/HST from sale amounts, track GST/HST collected and paid in separate accounts, calculate net amounts owing for each filing period, and generate filing-ready reports with one click.
Manual Tracking Systems: If using spreadsheets or manual systems, create separate columns for sale amount versus GST/HST collected, track every business expense with GST/HST paid shown separately, maintain running totals of collected versus paid amounts, and reconcile monthly to ensure accuracy.
Common GST/HST Tracking Mistakes to Avoid
Mixing GST/HST with Revenue: Many business owners treat total customer payments as revenue without separating the tax component. If a customer pays you $1,130, including HST in Ontario, your actual revenue is only $1,000 dollars. The $130 is CRA’s money passing through your account.
Spending Collected GST/HST: You may want to set aside the GST/HST portion of every income payment you receive, with most banks offering low or no-cost savings accounts. This is a smart business practice to begin early to avoid the common see it spend it habit.
Not Tracking ITCs: Failing to track GST/HST paid on expenses means you can’t claim input tax credits, essentially paying tax twice on those business purchases.
Take Control of Your GST/HST Obligations
GST/HST compliance doesn’t have to be the overwhelming nightmare most business owners fear. With proper systems for tracking, setting aside collected amounts, claiming input tax credits, and meeting filing deadlines, you can handle these obligations efficiently while avoiding the costly mistakes that destroy profitable businesses.
Remember that GST/HST is money passing through your business, not revenue you earn. Set it aside immediately, track it separately, claim every legitimate input tax credit and remit on time. These simple practices transform GST/HST from a source of stress into a manageable administrative task that doesn’t derail your business success.
Use this guide as your reference, implement the tracking systems that work for your business and approach GST/HST with confidence instead of fear.
FAQs
- Do I Need to Charge GST/HST If I’m Just Starting Out
If the personal trainer is self-employed and is a small supplier billing less than thirty thousand dollars per year, they could choose not to register for the GST/HST, and in that case wouldn’t collect GST/HST on services. However, you must start charging immediately upon exceeding the thirty thousand dollar threshold. - Can I Claim ITCs for Expenses Incurred Before Registration
The CRA may audit you after filing your first GST/HST Return with a Refund Balance and participate in their Liaison Officer Visit Program as part of verifying the existence of your business and the associated start-up costs. Yes, you can claim ITCs for eligible expenses incurred in the year before registration, provided you have proper documentation. - What Happens If I Don’t Register When Required
CRA routinely reviews self-employed business income reported on personal tax returns and checks to see if the individual is registered for GST/HST, and if not, CRA will typically contact the person and ask why. They can retroactively register you, assess you for uncollected GST/HST, charge penalties, and add daily compound interest. - Do International Sales Count Toward the Thirty-Thousand-Dollar Threshold
All worldwide self-employment income counts toward the thirty thousand dollar threshold, so export sales to the US or international clients do push you toward registration requirements even though you don’t charge GST/HST on those specific sales. - Can I Get Refunds If I Paid More GST/HST Than I Collected
Yes, you can be in a position where you have incurred expenses but not generated any sales yet, or your input tax credits exceed the amount of GST/HST that you have collected on sales, in which case you would submit a return requesting a net refund. - How Long Must I Keep GST/HST Records
Keep these records for six years from the end of the tax year they relate to, as this is the standard CRA audit period during which they can request documentation. - What If I Close My Business or Stop Operating
If you close your business, you must file a final GST/HST return and formally close your GST/HST account with CRA. You’ll need to account for any assets remaining in the business and may need to remit GST/HST on their value. - Can I Use the Quick Method for Calculating GST/HST
The quick method is a simplified calculation where you remit GST/HST at reduced rates but can’t claim most input tax credits. It works well for some service businesses with low expenses, but requires separate analysis to determine if it saves money versus the regular method.
