GST/HST for Business: Simplifying Your Tax Obligations in Canada

Understanding GST and HST is a must for every Canadian small business owner. These taxes don’t just affect how you price your products or services—they also impact your cash flow, your accounting, and ultimately, the growth of your business. Ignore them, and you could face penalties, interest, or even audits.

In 2022 alone, over 3 million Canadian businesses filed GST/HST, with Ontario accounting for 1.5 million of those filings. If you’re running a small business, there’s a very real chance you’ll need to charge, collect, and remit GST or HST. Knowing how these taxes work isn’t just about compliance—it’s about keeping your business running smoothly and avoiding surprises that could hurt your bottom line.

This guide is designed to cut through the confusion. From registering for a GST/HST number, to filing returns, to paying taxes online, you’ll learn everything you need to manage your obligations confidently—and keep your focus on growing your business.

Key Takeaways

• GST/HST Registration: Know when and how to register for a GST/HST number to stay compliant.
• Tax Filing: Learn how to file GST/HST returns on time and avoid penalties.
• HST vs. GST: Understand the difference between GST and HST and when each applies to your business.
• Payment Methods: Familiarize yourself with the various methods of paying HST online and using Netfile for businesses.
• Avoid Common Mistakes: Learn about common GST/HST mistakes businesses make and how to avoid them.

What is GST/HST?

Once you understand why GST and HST matter, the next step is knowing exactly what they are. The Goods and Services Tax (GST) is a federal tax of 5% applied to most goods and services sold in Canada. Some provinces, however, have chosen to combine their provincial sales tax with GST, creating the Harmonized Sales Tax (HST).

• GST applies across Canada at 5% in provinces that don’t participate in HST.
• HST applies in provinces like Ontario (13%), Nova Scotia (14%), and New Brunswick (15%), combining the federal and provincial portions into a single, simplified tax.

The key difference is that HST streamlines tax collection for businesses operating in provinces that harmonize their sales tax with GST. Which tax you charge depends on where your business is located and where your customers are based—so getting this right from the start keeps your pricing, invoicing, and reporting smooth and compliant.

How to Register for a GST/HST Number

Now that you understand what GST and HST are, the next step is knowing if and how your business should register. In Canada, businesses with annual revenues over $30,000 are required to register for a GST/HST number. This registration gives you the legal ability to charge, collect, and remit GST/HST, ensuring your business stays compliant with federal and provincial tax laws.

Even if your revenue is below the $30,000 threshold, registering voluntarily can provide benefits, such as the ability to claim input tax credits (ITCs) for GST/HST paid on business expenses—a smart move for many growing businesses.

Here’s a step-by-step guide to get registered:

Step 1: Determine if Your Business Exceeds the $30,000 Threshold

The $30,000 limit applies to your gross revenue over the last four consecutive calendar quarters or in a single calendar quarter. Include revenue from all related businesses under your ownership. If your business earns above this amount, GST/HST registration is mandatory.

Tip: Even if you’re under the threshold, consider registering voluntarily if you have significant business expenses, as this allows you to recover GST/HST through input tax credits.

Step 2: Gather Required Documents

Before registering, ensure you have the necessary information ready:

• Your business number (BN) issued by the CRA (if you don’t have one, you can request it during registration).
• Legal business name as registered federally or provincially.
• Contact information including mailing address, phone number, and email.
• Business structure details (sole proprietorship, partnership, or corporation), since this affects registration options and tax obligations.

Step 3: Register Online or by Phone

You can register for your GST/HST number online via the CRA’s Business Registration Online (BRO) portal or by calling the CRA directly. Online registration is generally faster and allows you to get your GST/HST number immediately.

During registration, you’ll also provide information on your business activities, fiscal year-end, and intended filing frequency (monthly, quarterly, or annually), which depends on your revenue and business type.

Step 4: Receive and Use Your GST/HST Number

Once registration is complete, you will receive a unique GST/HST number, which identifies your business to the CRA. Use this number on:

• Invoices and receipts for sales or services charged
• GST/HST filings and remittances
• Claiming input tax credits for business expenses

Properly using your GST/HST number ensures smooth compliance and helps avoid potential audits or penalties.

Once you have your GST/HST number, you’re officially set up to charge, collect, and remit taxes—but registration is just the first step. The next crucial part of staying compliant is filing your GST/HST returns on time, which ensures your business avoids penalties and keeps your finances in order. Let’s walk through how to handle filing, what forms you’ll need, and tips for making the process as simple as possible.

Filing GST/HST Returns

Once you’ve registered for a GST/HST number, the next step is filing your returns. How often you need to file depends largely on your annual revenue, and knowing your filing schedule helps you stay compliant, manage cash flow, and avoid penalties. Let’s walk through the typical filing frequencies and what they look like in practice.

Annual Filing

For smaller businesses with annual revenue under $1.5 million, filing is usually done once a year. This is common for local boutiques, freelance consultants, or independent service providers who have a manageable volume of transactions. Your return is typically due within three months of your fiscal year-end, so while you only file once, it’s important to keep accurate records throughout the year. Tracking sales, invoices, and receipts will make your annual filing smoother and ensure you claim all eligible input tax credits (ITCs).

Quarterly Filing

As your business grows and your revenue reaches between $1.5 million and $6 million, you’ll likely move to quarterly filings. This applies to mid-sized operations such as established retail stores, regional service providers, or small distribution companies. Filing every three months helps businesses avoid a large lump-sum payment at the end of the year and allows for more regular cash flow planning. Deadlines typically fall one month after the end of each quarter, so consistent bookkeeping is essential. Staying organized ensures you correctly report the GST/HST you’ve collected and claim ITCs without errors.

Monthly Filing

For larger businesses earning over $6 million annually, monthly filing is the standard. High-volume operations like large e-commerce businesses, franchise chains, or manufacturing companies fall into this category. Filing every month might seem like extra work, but it prevents large tax liabilities from building up and keeps your accounts aligned with CRA requirements. Returns and payments are usually due by the end of the following month, and frequent, organized record-keeping is key to avoiding mistakes. Accounting software or a dedicated accountant can save time and reduce the risk of errors.

Once you’ve determined your filing frequency—annual, quarterly, or monthly—you’ll report the GST/HST you’ve collected and subtract any input tax credits. Filing can be done easily online using CRA’s Netfile for businesses, making the process straightforward and efficient. With your returns ready, the next step is paying HST online, ensuring your remittances reach the CRA securely and on time.

Paying HST Online

Paying your HST online is the next step after filing, and the CRA has made the process simple and secure. Once your return is ready, you can quickly remit the taxes you owe without leaving your office, helping you stay compliant and avoid late fees.

• Online banking:Pay directly through your bank’s website.
• Credit card payments: Available via third-party providers.
• Pre-authorized debit: Set up automatic payments for recurring filings.

Pro Tip: Schedule reminders before payment due dates to avoid penalties and interest. Late payments can result in charges starting from 1% per month.

With your HST collected, reported, and remitted, it’s also important to understand how rates differ across provinces and which businesses are required to charge GST/HST, ensuring you remain compliant wherever you operate in Canada.

How Much is GST/HST Across Canada?

Understanding the GST and HST rates in your province is key to charging the correct amount and keeping your business compliant. While the federal GST is consistent at 5%, provinces that participate in the Harmonized Sales Tax combine this with their provincial portion, resulting in different HST rates across the country. Knowing which rate applies to your business location—and where your customers are—ensures accurate pricing and helps you avoid costly mistakes. Below is a breakdown of the current GST and HST rates across Canada:

Source: RetailCouncil.org

By understanding the GST and HST rates that apply to your business, you can ensure you’re charging the correct amount and claiming any input tax credits you’re eligible for. Staying on top of these rates helps prevent errors and keeps your business compliant. Next, we’ll look at some of the most common GST/HST mistakes small businesses make—and how you can avoid them—to protect your business from penalties and audits.

Common GST/HST Mistakes to Avoid

Even small oversights with GST/HST can lead to penalties, interest, or even audits. Many small business owners struggle with compliance simply because these tasks can feel complex or easy to forget. Understanding the most common mistakes and taking steps to prevent them will save time, money, and stress in the long run.

Failing to Register on Time

Not registering for a GST/HST number when your business exceeds the $30,000 threshold is a common mistake. Late registration can lead to owing back taxes and potential penalties. To avoid this, monitor your revenue closely and register promptly once you meet the requirement.

Incorrectly Charging GST or HST

Charging the wrong tax rate—whether GST instead of HST, or an incorrect provincial HST rate—can create compliance issues and upset customers. Always check your customers’ location and confirm the correct rate before invoicing. Keep updated with CRA resources or provincial guidelines to ensure accuracy.

Missing Filing Deadlines

Even if you’re registered correctly, filing late can trigger interest charges and penalties. Filing deadlines vary depending on your revenue (monthly, quarterly, or annually), so make sure you know your schedule and set reminders to avoid missing due dates.

Neglecting Input Tax Credits (ITCs)

Many businesses fail to claim the GST/HST they’ve paid on business expenses. Input tax credits can significantly reduce your net tax payable. Keep clear records of all business-related purchases and ensure you’re claiming eligible ITCs on each filing.

By understanding these common GST/HST mistakes, you can proactively prevent errors that lead to penalties, interest, or audits. Awareness of the pitfalls—from late registration to misapplied tax rates—lays the foundation for strong tax practices. With these lessons in mind, the next step is learning practical tips and strategies to stay fully compliant with GST/HST regulations while keeping your business running smoothly.

Tips to stay compliant:

Staying on top of GST/HST obligations doesn’t have to be overwhelming. With the right habits and tools, you can simplify tax management, avoid costly mistakes, and ensure your business stays in good standing with the CRA. Here are some practical tips to help you remain compliant:

Maintain Detailed Records of All Sales and Purchases

Accurate and thorough record-keeping is the backbone of GST/HST compliance. Keep track of all invoices, receipts, and financial transactions. This ensures you can correctly report taxes collected, claim input tax credits, and provide evidence in the event of an audit. Well-organized records save time and reduce stress when filing returns.

Use Accounting Software That Tracks GST/HST Automatically

Modern accounting tools can automatically calculate and track GST/HST on sales and purchases. Software like QuickBooks or Wave Accounting can help you generate reports, monitor tax obligations, and ensure your filings are accurate. This reduces human error and frees up time to focus on growing your business.

Consider Consulting a Tax Professional, Especially During the First Year

A tax professional can guide you through the complexities of GST/HST registration, filings, and payments. They can help you avoid mistakes, optimize your tax strategy, and provide peace of mind, particularly when you’re just starting. Even occasional consultations can prevent costly errors and ensure compliance.

By maintaining organized records, leveraging accounting software, and seeking professional advice when needed, you can confidently manage your GST/HST obligations. These practices make it easier to stay compliant while focusing on growing your business, reducing the risk of penalties, and keeping your finances in order.

Do I need to charge GST if I earn under $30,000?

No. If your business earns less than $30,000 per year, you’re considered a “small supplier,” which means you’re not required to register for or charge GST/HST. That said, you can choose to register voluntarily. Doing so can be beneficial because it allows you to claim input tax credits (ITCs) to recover the GST/HST paid on business-related expenses—helpful for reducing costs as your business grows. Voluntary registration is often a smart move for new businesses planning to expand or make significant purchases early on.

Managing Your GST/HST with Confidence

Understanding GST/HST is crucial for Canadian entrepreneurs. While it may seem complex at first, following a structured approach—registering properly, filing on time, and paying accurately—ensures smooth operations and avoids penalties.

Beyond understanding your GST/HST obligations, managing cash flow is key. Merchant Growth provides flexible financing to help cover tax payments, manage business operations, and support expansion.

If your business has over $10,000 in revenue and has been operational for at least six months, you may qualify for term financing to help with cash flow or tax obligations.

Focus on running your business while Merchant Growth supports your financial needs. Apply today to secure funding and keep your business on a path to growth with confidence.