You started selling, the invoices are adding up, and now you’re wondering whether the government expects a cut of every sale. This guide walks you through the registration rules, the rates, and the paperwork, plus the traps that catch owners after the fact.
Key Takeaways
- The $30,000 small-supplier threshold is a rolling test, not a calendar-year test.
- Crossing $30,000 in a single quarter makes that very sale taxable. There is no grace month.
- Registering voluntarily lets you recover tax on startup costs before you ever hit the threshold.
- Your customer’s province, not yours, usually sets the rate you charge.
- Input tax credits fail audits most often because of missing paperwork, not missing receipts.
What Are GST and HST?
GST is the 5% federal goods and services tax that applies across Canada. Five provinces have merged their provincial portion with it into a single harmonized sales tax: that combined version is what Ontario businesses know as the 13% they see on invoices.
Everywhere else, the 5% federal rate applies alone or alongside a separate provincial levy. For you as an owner, the mechanics are identical: you collect the tax on sales, deduct what you paid on purchases, and remit the difference to the CRA. The tax you collect was never your revenue. Think of yourself as the collection agent holding it in trust.
The $30,000 Small-Supplier Rule: When You Must Register
Under section 148 of the Excise Tax Act, you’re a “small supplier” while your worldwide taxable sales, including those of associated businesses, stay at or under $30,000. Small suppliers don’t have to register or charge anything. The test works two ways, and the difference matters:
| How you cross $30,000 | What happens | Registration deadline |
|---|---|---|
| Over four consecutive calendar quarters (rolling) | You stay a small supplier for one more month; your first sale after that month is taxable | Within 29 days of that first taxable sale |
| In a single calendar quarter | The sale that crosses the line is itself taxable, immediately | Within 29 days of that sale |
Note the rolling nature: the four-quarter test looks at the last four quarters at any point in time, not your fiscal year. Sales can dip and spike, so check the trailing total every quarter. CRA’s registration guidance covers the edge cases.
One exception ignores the threshold entirely: taxi and ride-share drivers must be registered from their first dollar of fares, even at $500 of income.
Two ways to cross, two very different outcomes. Maya, a freelance designer, billed $6,500, $7,200, $8,100 and $9,000 over four quarters: $30,800 rolling. She keeps small-supplier status for one more month and starts charging on her first invoice after it. Her colleague Dev landed a single $32,000 contract in one quarter. That contract itself required tax, and not just on the portion above $30,000: the whole invoice that crossed the line is taxable, and he had 29 days to register. Same threshold, thousands of dollars of difference in timing.
Do You Need to Charge GST or HST on What You Sell?
Not every sale is treated the same. Supplies fall into three buckets, and your bucket determines both what you charge and what you can recover:
| Category | You charge | You claim ITCs | Examples |
|---|---|---|---|
| Taxable | 5%–15% by province | Yes | Consulting, retail goods, software, meals |
| Zero-rated | 0% | Yes | Basic groceries, prescription drugs, exports |
| Exempt | Nothing | No | Long-term residential rent, most health care, financial services |
The zero-rated bucket is the favourable one: you charge customers nothing yet still recover tax on your own costs. Exempt is the restrictive one: a business making only exempt supplies cannot register at all. Builders and landlords sit in a specialized corner of these rules; if that’s you, the HST new housing rebate rules are worth reading separately.
Why Register Voluntarily Before You Hit $30,000
Waiting for the threshold isn’t always the smart play. You can choose to register voluntarily at any revenue level, and three situations make it worthwhile. First, heavy startup spending: equipment, inventory and software all carry tax you can only recover as a registrant. Second, business-to-business clients: they recover whatever you charge them, so registration costs them nothing and makes you look established. Third, growth trajectory: if you’ll cross the threshold within a year anyway, registering early avoids a mid-year pricing change.
The trade-off is real, though. Once registered, you file returns even for nil periods, and price-sensitive consumer customers now pay more. A part-time seller with mostly retail buyers and few expenses often does better staying a small supplier. For a deeper look at using the system to your advantage, see our guide on how to use the GST/HST to save on taxes.
How to Register Using Business Registration Online
Business Registration Online (BRO) is the CRA’s fastest route: most owners finish in one sitting and walk away with their number immediately. You’ll need your SIN, business name and address, a description of your activity, and an estimate of annual sales. The steps:
- Gather your details, and your incorporation certificate if you have one.
- Sign in to BRO through the CRA site and request a business number (BN). Skip this if you already have one from incorporating.
- Add an RC program account for GST/HST to that business number.
- Choose your fiscal year and reporting period.
- Record the effective date carefully, because it drives when you must start charging.
Phone and mail (form RC1) work too, just slower. Sole proprietors also handle their income reporting through the same self-employment forms ecosystem; our guide to self-employment tax forms shows how the pieces fit together.
GST and HST Rates by Province, Plus Provincial Sales Tax
The rate you charge usually follows the place-of-supply rules: in plain terms, where your customer is, not where you sit:
| Province | Rate | Type |
|---|---|---|
| Ontario | 13% | HST |
| New Brunswick, Newfoundland and Labrador, P.E.I. | 15% | HST |
| Nova Scotia | 14% | HST |
| Alberta and the territories | 5% | GST only |
| British Columbia | 5% + 7% PST | GST + PST |
| Saskatchewan | 5% + 6% PST | GST + PST |
| Manitoba | 5% + 7% RST | GST + RST |
| Quebec | 5% + 9.975% QST | GST + QST |
So a Toronto consultant invoicing a Calgary client charges 5%, not 13%. Two cautions: provincial sales tax in BC, Saskatchewan and Manitoba is a separate system with its own registration that the CRA account doesn’t cover, and Quebec’s QST is administered by Revenu Québec under its own rules.
How the Input Tax Credit Works
An input tax credit (ITC) is the registrant’s refund mechanism: the tax you pay on business purchases comes back to you by reducing what you remit. Collect $3,900 on sales, pay $1,200 on your laptop, software and office costs, and you send $2,700 to the government. When ITCs exceed what you collected, which is common in startup years, the refund comes back to you.
The catch is documentation. CRA Memorandum 8-4 sets out exactly what your receipts must show, and the requirements step up with invoice size: under $100, $100 to under $500, and $500 or more. Above the lowest tier, the supplier’s registration number must appear, and it must be valid.
In our CRA representation practice, the reassessments we defend most often aren’t about uncollected tax: they’re about disallowed ITCs. The pattern we see: auditors run supplier numbers through the GST/HST Registry before they question anything else on the claim, and a credit supported by an invalid or cancelled number is denied no matter how genuine the expense was. Thirty seconds of verification on the free Registry when you onboard a supplier is the cheapest audit insurance available.
GST/HST Filing Deadlines and Payment Options
The CRA assigns your reporting period based on annual taxable sales, and you can always elect to file more often than required:
| Annual taxable sales | Default period | Return and payment due |
|---|---|---|
| $1.5M or less | Annual | Sole proprietors with a Dec 31 year-end: pay by April 30, file by June 15. Others: three months after year-end |
| $1.5M to $6M | Quarterly | One month after each quarter |
| Over $6M | Monthly | One month after each month |
Annual filers whose net tax tops $3,000 also owe quarterly instalments the following year. And if bookkeeping isn’t your favourite hour of the week, the Quick Method lets eligible businesses remit a flat reduced percentage of sales instead of tracking every credit, often both simpler and cheaper for service businesses with low expenses.
Common HST Mistakes Small Business Owners Make
- Watching the calendar year instead of the rolling four-quarter total: the test moves with every quarter, and owners routinely discover they crossed months ago. Registration then applies retroactively, meaning tax you never collected comes out of your own pocket.
- Spending the tax you collected. It sits in your account looking like revenue. It isn’t. Hold it in a separate account until remittance.
- Charging your home rate to out-of-province customers instead of applying place-of-supply rules.
- Claiming ITCs on unverified suppliers: the manufacturers and trades businesses our Etobicoke accounting team works with across the west GTA carry long subcontractor chains, and one invalid number in the chain is enough to lose the credit.
- Missing PST obligations in BC, Saskatchewan or Manitoba because the federal account felt like the whole job.
- Forgetting nil returns. No sales still means a return once you’re registered; unfiled periods block refunds and trigger demands.
- Mixing personal and business purchases on ITC claims: audit bait, and the personal portion is never creditable.
Action Checklist
- Calculate your trailing four-quarter taxable sales today, and diarize a quarterly re-check.
- Determine your bucket: taxable, zero-rated, exempt, or a mix.
- Weigh voluntary registration if you’re pre-threshold with real startup costs or B2B clients.
- Register through BRO once required, within 29 days of crossing.
- Open a separate savings account and move collected tax into it weekly.
- Verify every major supplier’s number in the Registry before claiming credits.
- Confirm whether BC, Saskatchewan or Manitoba PST registration applies to your sales.
- Note your filing deadline and set two reminders: one to file, one to pay.
- Revisit the Quick Method election annually as your expense profile changes.
Frequently Asked Questions
Do I have to charge HST if my small business makes less than $30,000?
No. Below $30,000 in taxable sales over four consecutive quarters, you’re a small supplier and charging is optional. Register voluntarily only if recovering tax on expenses or serving B2B clients makes it worthwhile.
When should I start charging GST or HST?
The moment your registration takes effect. If you crossed $30,000 in a single quarter, the sale that crossed is already taxable. If you crossed over four quarters, charging starts with your first sale after the one-month grace period.
Can I register for a GST/HST number online?
Yes. Business Registration Online is the CRA’s direct portal, and most applicants receive their number in the same session. Phone and mailed RC1 forms remain available but take longer.
How long does it take to get a GST/HST number?
Online, usually instantly. By phone, typically the same call. Paper applications can take several weeks to process.
Do small businesses get GST/HST back?
Registrants do, through ITCs. When credits on purchases exceed tax collected on sales, as is common during startup or heavy investment years, the CRA refunds the net difference after the return is filed.
Do I need to charge HST to foreign customers?
Usually not. Exports of goods and most services to non-residents are zero-rated, so you charge 0% while still claiming credits on related costs. Documentation proving the customer is outside Canada is essential.
When do small businesses need to pay HST?
By the payment deadline for your reporting period: one month after quarterly or monthly periods, and for annual-filing sole proprietors with a December year-end, April 30, even though the return itself isn’t due until June 15.
The Bottom Line
- The $30,000 test is rolling and quarterly. Check it before the CRA checks it for you.
- How you cross the line changes when charging starts; a single big contract gives no grace period.
- Voluntary registration is a cash-flow decision, not a compliance one.
- ITCs are valuable exactly to the degree your paperwork survives scrutiny.
- Rates follow your customer’s province; separate PST systems follow their own rules.
Every business crosses this threshold differently, and the right registration timing depends on your customers, costs and growth curve, variables a quick review with a CPA will surface. If a CRA letter about your account has already arrived, our CRA representation team handles the response; if you’re planning ahead, our corporate tax advisory service builds registration into the bigger structure. Either way, reach out before the deadline does the deciding for you.
