What is the GST/HST registration threshold?

The common rule of thumb is $30,000 in revenue over four consecutive calendar quarters (the "small supplier" threshold). Once you exceed it you must register and charge GST/HST. Some businesses must register from their first sale — confirm the current rules for your situation.

What is the difference between GST and HST?

GST is the federal goods and services tax. In provinces that harmonized their provincial sales tax with the GST, the two are combined into a single HST at a higher rate. Provinces that did not harmonize charge GST (and may have a separate provincial sales tax).

What are input tax credits?

Input tax credits (ITCs) let a GST/HST registrant recover the GST/HST paid on business expenses. You remit only the difference between the tax you collected and the ITCs you are entitled to — which is why keeping receipts matters.

Should I register for GST/HST before I hit $30,000?

Often yes. Voluntary registration lets you claim input tax credits on your startup and operating costs right away, which can be valuable for a business with heavy early expenses or for exporters who collect little tax. Weigh the added paperwork against the benefit.

What rate do I charge a customer in another province?

Generally the rate is based on where the customer is and where the supply takes place, under "place of supply" rules. For example, an Ontario vendor may charge 13% HST to an Ontario customer but 5% GST to an Alberta customer, and 0% on an export outside Canada.

What happens if I do not remit the GST/HST I collected?

Collected GST/HST is trust money owed to the CRA. Unremitted trust amounts can be assessed personally against a corporation’s directors, with interest and penalties. Never use collected sales tax to fund operations — set it aside and remit on schedule.

Business number and GST/HST registration in Canada explained

Sales tax is one of the most misunderstood parts of running a Canadian business — and getting it wrong is expensive. Many owners do not realize they crossed the registration threshold until the CRA comes calling. This guide explains the business number, when GST/HST registration is required, how input tax credits work, and why these are "trust" amounts you must take seriously. It draws on themes from Dale Barrett’s start-up guide and is updated for today.

What is a business number, and why do you need one?

A business number (BN) is the single identifier the Canada Revenue Agency uses to tie together all of your program accounts. Think of it as your business’s file number with the CRA.

Onto that BN you attach the specific accounts you need: a GST/HST account, a payroll account, a corporate income tax account, and an import/export account. You can add accounts as your needs change — for example, adding a payroll account when you hire your first employee.

When do you have to register for GST/HST?

The general rule of thumb is that once a business makes $30,000 or more in revenue (over four consecutive calendar quarters), it must register for and charge GST/HST. The book warns that this catches many small operators off guard: people who quietly did more than $30,000 of business without registering can be forced to remit tax they never actually collected from their customers.

The practical lesson: track your revenue, and register before you cross the threshold so you can charge the tax rather than absorbing it. There are also special rules for certain industries (like taxi and ride-share services), so check whether your sector has its own requirement.

Watch the $30,000 revenue threshold over four consecutive quarters
Register before you cross it so you can charge tax, not absorb it
Some industries must register from their very first dollar
Failing to register does not make the obligation disappear

Why register voluntarily, even under the threshold?

Here is a point many new owners miss: once you are a GST/HST registrant, you can claim input tax credits (ITCs) — the GST/HST you paid on business expenses — even if you have not yet hit $30,000 in sales.

The book gives a clear example: a business that collected $2,600 of HST on its sales but paid $1,040 of HST on its expenses would remit only the difference — $1,560 — because the $1,040 comes back as an ITC. And an exporter who pays HST but collects little or none can actually receive a refund cheque from the CRA. For many startups with significant early costs, voluntary registration pays.

How do you charge the right rate?

It is the vendor’s responsibility to apply the correct tax, and the correct rate generally depends on where your customer is and where the goods or services are supplied — not where you are. The book illustrates it neatly: a merchant in Toronto would charge 13% HST to a customer in Sudbury, Ontario, 5% GST to a customer in Calgary, Alberta, and 0% to a customer outside Canada.

In short, "place of supply" rules determine the rate. Build this into your invoicing from day one so every transaction has the right tax applied — every time.

Why GST/HST is "trust" money you must protect

The GST/HST you collect is not your money — the book describes it as "trust" amounts that you hold on behalf of the CRA. This matters enormously: trust amounts are treated very differently from ordinary corporate tax.

Directors of a corporation can be held personally responsible for unremitted trust amounts like GST/HST and payroll source deductions, even though the corporation is supposed to shield them. Businesses in trouble are tempted to "borrow" collected sales tax to pay rent or suppliers — and that is exactly when directors get themselves into serious personal liability. Set the money aside and remit it on time.

This is general information, not legal, tax, or accounting advice. Rules, rates, and thresholds change often and vary by province — verify current requirements with the Canada Revenue Agency, your province, and a qualified professional before you act.

Frequently asked questions

What is the GST/HST registration threshold?: The common rule of thumb is $30,000 in revenue over four consecutive calendar quarters (the "small supplier" threshold). Once you exceed it you must register and charge GST/HST. Some businesses must register from their first sale — confirm the current rules for your situation.
What is the difference between GST and HST?: GST is the federal goods and services tax. In provinces that harmonized their provincial sales tax with the GST, the two are combined into a single HST at a higher rate. Provinces that did not harmonize charge GST (and may have a separate provincial sales tax).
What are input tax credits?: Input tax credits (ITCs) let a GST/HST registrant recover the GST/HST paid on business expenses. You remit only the difference between the tax you collected and the ITCs you are entitled to — which is why keeping receipts matters.
Should I register for GST/HST before I hit $30,000?: Often yes. Voluntary registration lets you claim input tax credits on your startup and operating costs right away, which can be valuable for a business with heavy early expenses or for exporters who collect little tax. Weigh the added paperwork against the benefit.
What rate do I charge a customer in another province?: Generally the rate is based on where the customer is and where the supply takes place, under "place of supply" rules. For example, an Ontario vendor may charge 13% HST to an Ontario customer but 5% GST to an Alberta customer, and 0% on an export outside Canada.
What happens if I do not remit the GST/HST I collected?: Collected GST/HST is trust money owed to the CRA. Unremitted trust amounts can be assessed personally against a corporation’s directors, with interest and penalties. Never use collected sales tax to fund operations — set it aside and remit on schedule.