Tax guide · 12 min read
Everything you need to know about charging, collecting and remitting GST/HST: who must register, how often to file, what late filing costs, and the simpler methods open to small businesses.
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Sales threshold for small suppliers, in a quarter or over four quarters
Federal GST rate on taxable supplies made in Canada
Combined HST rate in Ontario
To register once you pass the four-quarter threshold
The Goods and Services Tax (GST) and Harmonized Sales Tax (HST) apply to the value of taxable supplies made in Canada, such as sales and leases. A GST registrant must charge GST on every taxable supply it makes in Canada.
GST is the federal sales tax. Some provinces also charge their own Provincial Sales Tax (PST). In the “participating” provinces, the PST has been combined with the GST into one tax, the HST. The CRA administers HST, sending the federal portion to Ottawa and the provincial portion to the province.
HST participating provinces
The federal GST rate is 5%. Provincial rates vary, and in HST provinces a single combined rate applies.
| Province / territory | GST | PST | HST | Total rate |
|---|---|---|---|---|
| Alberta | 5% | — | — | 5% |
| British Columbia | 5% | 7% | — | 12% |
| Manitoba | 5% | 7% | — | 12% |
| Saskatchewan | 5% | 6% | — | 11% |
| Quebec | 5% | 9.975% (QST) | — | 14.975% |
| Northwest Territories | 5% | — | — | 5% |
| Yukon | 5% | — | — | 5% |
| Nunavut | 5% | — | — | 5% |
| Ontario | — | — | 13% | 13% |
| New Brunswick | — | — | 15% | 15% |
| Nova Scotia (since Apr 1, 2025) | — | — | 14% | 14% |
| Newfoundland and Labrador | — | — | 15% | 15% |
| Prince Edward Island | — | — | 15% | 15% |
If your taxable sales stay under $30,000 in every single calendar quarter and across the last four consecutive quarters, you’re a small supplier. You don’t have to register or charge GST/HST, though you can choose to. Registering voluntarily can pay off when the HST you spend on business purchases is more than the HST you collect, because you can claim it back as input tax credits (ITCs) and may receive a refund.
Once you’re no longer a small supplier, you must register, charge and collect GST/HST, file a return by the deadline and remit what you owe. There are two ways to cross the line:
Case 1
Example
By early March your Q1 sales are $29,000. On March 15 you make a $3,000 sale, bringing the total to $32,000. HST applies to that March 15 sale and everything after, so you register effective March 15.
Case 2
Example
Quarterly sales of $8,000, $9,000, $7,000 and $10,000 total $34,000 by December 31. You register within 29 days (by January 29) and start charging HST on January 1.
Your filing frequency depends on your annual taxable supplies, including zero-rated supplies, counted worldwide and including associated businesses.
| Annual taxable supplies | Default frequency | Optional choices |
|---|---|---|
| $1,500,000 or less | Annually | Quarterly, monthly |
| $1,500,001 – $6,000,000 | Quarterly | Monthly |
| Over $6,000,000 | Monthly | None |
Instalments are required for annual filers whose GST/HST payable for the preceding period was $3,000 or more. Quarterly and monthly filers don’t pay them. If you do, you can work out the amount in one of two ways:
Four equal instalments, each 25% of last year’s net tax.
Four equal instalments, each 25% of the net tax you estimate for this year. If you underpay, instalment interest is charged on the shortfall.
Each instalment is due within one month after the end of the fiscal quarter, and the final balance is normally due on the return deadline. An individual with business income and a December 31 year-end must pay the balance on their GST/HST return by April 30 of the next year.
Any late instalment or final payment attracts interest. The CRA sets its prescribed rate every quarter, and the rate charged on overdue tax is usually that rate plus 4%. Interest compounds daily on the amount you should have paid but didn’t.
Example
An instalment of $5,000 is due June 15 and you pay $2,000. The CRA charges daily compound interest on the $3,000 shortfall from June 16 until you pay it.
These are the two most common penalties:
Late return
1% of the amount owing, plus 0.25% of it for each full month the return is late, up to 12 months.
Instalments
Charged when interest on missed or late instalments exceeds $1,000. Penalty = (actual interest × 25%) − $1,000, if the result is positive.
Further penalties can apply for false statements (for example, to reduce the HST you owe) or for negligence, which can add up quickly. That’s why it pays to have your return handled properly. Our firm prepares and files accurate returns that meet CRA requirements.
If you sell taxable goods or services, you may have to charge and collect GST/HST. You can also recover the GST/HST you pay on purchases used to make those sales. That recovery is called an input tax credit (ITC). ITCs are set against the tax you collected and you remit the difference. If your ITCs are larger, you may get a refund of the excess.
Under the regular method, you add up the GST/HST collected, then subtract the GST/HST paid on allowable business expenses. Smaller businesses can cut their paperwork with one of two alternatives.
Available if your taxable supplies (including zero-rated supplies, and including GST/HST) were $400,000 or less in either the first four or the last four of the previous five fiscal quarters. It isn’t available for legal, accounting or consulting services. You must elect to use it, and it stays in effect while you continue to qualify.
Worked example · Ontario service business
Annual services of $60,000 plus 13% HST ($67,800 in total), and a laptop bought for $2,260 including HST. The Quick Method remittance rate for Ontario services is 8.8%.
| HST collected from clients | $7,800.00 |
| Remitted: 8.8% of $67,800 | $5,966.40 |
| Difference you keep | $1,833.60 |
| 1% credit on the first $30,000 | $300.00 |
| HST on the laptop ($2,260 ÷ 1.13 = $2,000 + $260) | $260.00 |
| Total benefit | $2,393.60 |
The big advantage is that you don’t need detailed records of the GST/HST paid on everyday expenses, and it can save you tax. But the savings count as taxable government assistance and must be reported as business income. And because the Quick Method doesn’t let you claim ITCs on most purchases, the regular method can work out better if you pay more GST/HST than you collect. Remittance rates vary by province and are published in the CRA’s Quick Method tables.
This method calculates your ITCs only. As with the Quick Method, you don’t need detailed records, except for GST/HST paid on capital expenditures for real property. To qualify, your taxable supplies in the previous fiscal year (including zero-rated) must be under $1 million, and your taxable purchases in the preceding fiscal year must be $4 million or less, excluding zero-rated purchases.
ITC = taxable purchases (including GST/HST) × [rate ÷ (100 + rate)]
Worked example · Ontario service business
Annual revenue of $100,000 before HST, and $50,000 of purchases including HST.
| HST collected: 13% of $100,000 | $13,000.00 |
| ITC: $50,000 × 13/113 | $5,752.21 |
| HST payable to the CRA | $7,247.79 |
If you buy real property for business, such as land, a building or a lease, you can claim additional ITCs on it. ITCs can’t be claimed for personal use, only for the business-use portion. For meals and entertainment, only 50% of the ITC can be claimed.
The GST/HST on a house depends on whether it’s newly built or previously lived in, and on how you plan to use it.
New houses, condominiums and townhouses are generally taxable supplies under the Excise Tax Act.
Principal residence
GST/HST is generally built into the purchase price. Builders usually apply the GST/HST New Housing Rebate directly, lowering your closing costs, so you don’t pay it separately at closing.
Rental or investment
GST/HST is generally payable on closing. You may qualify for the GST/HST New Residential Rental Property Rebate (NRRPR), which refunds part of the tax (up to about $24,000). The property must be rented long term, usually on a lease of at least one year.
Other uses
Flipping, short-term rentals such as Airbnb, or resale inventory for builders: GST/HST applies in full and no rebate is available.
Buying a previously lived-in home is generally exempt from GST/HST, so you pay none on the purchase price. Related costs such as legal fees, real estate commissions, inspections and post-purchase renovations can still carry GST/HST.
If you bought property during the year and need to understand the GST/HST impact, or want to claim a rebate on a new rental property, contact one of our tax specialists.
A principal residence (house, condo or other qualifying property) is generally capital property, so a profit on sale is normally a capital gain. You may be able to use the principal residence exemption to eliminate or reduce that gain for the years you designate it as your principal residence.
If you sell a property shortly after buying it, whether it’s your home or an investment, the property flipping rule can apply:
The rule applies to residential property sold on or after January 1, 2023. The CRA generally treats a property as caught by it if it’s sold within 12 months of purchase, unless an exception applies, such as death, separation, disability or relocating for work.
If you pay certain expenses for your job that your employer doesn’t reimburse (confirmed on Form T2200), you may be able to claim a GST/HST rebate on the part of those expenses where GST/HST was paid. The rebate is your deductible expense amount multiplied by a fixed factor:
| Province / territory | Factor |
|---|---|
| Ontario | 13/113 |
| Nova Scotia, New Brunswick, Newfoundland and Labrador, Prince Edward Island | 15/115 |
| Alberta, British Columbia, Quebec, Saskatchewan, Manitoba, Nunavut, Northwest Territories, Yukon | 5/105 |
This guide is general information, not tax advice. Rules, rates and thresholds change, so confirm the details for your situation with a tax professional.
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