Understanding GST/HST for Canadian Businesses

If you're running a business in Canada, understanding the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) is essential. Failing to register when required — or collecting tax incorrectly — can lead to penalties from the Canada Revenue Agency (CRA). This guide breaks down everything you need to know.

What Are GST and HST?

The GST is a federal tax of 5% applied to most goods and services sold in Canada. The HST is a blended tax that combines the federal GST with a provincial sales tax in participating provinces. Currently, the following provinces use HST:

  • Ontario: 13%
  • Nova Scotia: 15%
  • New Brunswick: 15%
  • Newfoundland and Labrador: 15%
  • Prince Edward Island: 15%

Provinces like British Columbia, Alberta, Saskatchewan, Manitoba, and Quebec do not participate in HST — they charge GST separately alongside their own provincial sales tax (PST or QST).

When Must You Register for GST/HST?

You are required to register for GST/HST when your business's taxable revenues exceed $30,000 in a single calendar quarter or over four consecutive calendar quarters. This threshold applies to most businesses and self-employed individuals.

If you earn less than $30,000, you are considered a small supplier and registration is optional — but voluntary registration can be beneficial (see below).

Who Is Exempt from Registration?

Certain supplies are exempt from GST/HST entirely, including:

  • Most health and dental services
  • Childcare services
  • Most educational services
  • Financial services
  • Residential rent

Businesses that supply only exempt goods and services do not need to register for GST/HST, regardless of revenue.

Should You Register Voluntarily?

Even if your revenue is below $30,000, voluntary registration has advantages:

  • You can claim Input Tax Credits (ITCs) to recover the GST/HST you pay on business expenses and purchases.
  • It can make your business appear more established to customers and suppliers.
  • It's easier to manage from day one rather than scrambling to register after you cross the threshold.

How to Register for GST/HST

Registration is handled through the CRA and can be done:

  1. Online through the CRA's Business Registration Online (BRO) portal
  2. By phone at 1-800-959-5525
  3. By mail using Form RC1

You'll receive a GST/HST account number (an extension of your 9-digit Business Number) which you must display on all invoices.

Your Ongoing GST/HST Obligations

Once registered, you must:

  • Charge GST/HST on all taxable supplies you make
  • File GST/HST returns — monthly, quarterly, or annually depending on your revenue level
  • Remit net tax to the CRA (tax collected minus ITCs)
  • Keep records for at least six years

The Quick Method of Accounting

Small businesses with annual taxable revenues of $400,000 or less may be eligible for the Quick Method, which simplifies GST/HST remittances. Instead of calculating the exact difference between tax collected and ITCs, you remit a fixed percentage of your gross revenue. This can reduce your paperwork significantly — but it may not always result in a lower tax bill, so compare both methods before electing.

Key Takeaways

  • Register for GST/HST once your taxable revenues exceed $30,000.
  • Consider voluntary registration early to start claiming Input Tax Credits.
  • Know the HST rates in your province and the provinces where your customers are located.
  • File returns on time to avoid interest and penalties.

When in doubt, consult a CRA-registered tax professional or accountant. Staying compliant from the start is far easier than catching up later.