GST and HST are among the most misunderstood tax obligations for Canadian small business owners. Miss a registration deadline or file incorrectly and the CRA will come knocking — often with interest and penalties.
What Is GST and HST?
GST (Goods and Services Tax) is a federal tax of 5% applied to most goods and services sold in Canada. HST (Harmonized Sales Tax) combines the federal GST with a provincial component in provinces that have harmonized their sales tax systems. HST rates vary by province:
- Ontario: 13% HST
- Nova Scotia: 15% HST
- British Columbia, Alberta, Saskatchewan, Manitoba, Quebec: GST (5%) + separate provincial tax
- Quebec specifically uses QST (Quebec Sales Tax) at 9.975%, alongside federal GST
When Do You Need to Register?
You are required to register for GST/HST once your total revenues exceed $30,000 in a single calendar quarter or over four consecutive quarters. This threshold applies to most businesses — sole proprietors, corporations, and partnerships alike. Businesses below $30,000 are considered “small suppliers” and registration is optional (though it can be advantageous to register voluntarily so you can claim input tax credits).
What Are Input Tax Credits (ITCs)?
Once registered, you can claim back the GST/HST you paid on eligible business expenses — this is called an Input Tax Credit (ITC). For example, if you paid $500 in HST on office supplies and software subscriptions, you can offset that against the HST you’ve collected from customers. Only the net amount goes to the CRA.
Common mistake: Many new business owners collect GST/HST from customers but fail to remit it on time — or spend it before the filing deadline. CRA treats unremitted GST as trust money, and the penalties for late remittance are significant.
Filing Frequencies
- Annual: If your revenues are below $1.5M (most small businesses start here)
- Quarterly: If revenues are between $1.5M and $6M
- Monthly: If revenues exceed $6M
The CRA assigns a filing frequency when you register, but you can request a change. Missing a filing deadline results in interest charges from the first day the return was due.