What Small Business Owners Should Know About HST/GST

If you run a small business in Canada, understanding how GST (Goods and Services Tax) and HST (Harmonized Sales Tax) work is key to managing your finances responsibly.

Whether you’re just starting out or looking to get more organized, here’s what you should know about how GST and HST apply to your business and what to do to stay compliant with the Canada Revenue Agency (CRA).

What Is GST/HST?

The GST is a federal sales tax that applies to most goods and services made in Canada. In some provinces, this is combined with a provincial sales tax to form the HST, which ranges from 5% to 15%, depending on the province.^1,2

The type of tax you charge and remit depends on where your customers are located, not just where your business is based.

When You Need to Register

If your business earns more than $30,000 in gross revenue over four consecutive calendar quarters, you’re required to register for a GST/HST number with the CRA.³

However, many small business owners choose to register voluntarily before hitting that threshold, especially if they can recover business expenses through input tax credits (ITCs) (more on that next).

Understanding Input Tax Credits (ITCs)

When you’re registered for GST/HST, you can recover the sales tax you pay on eligible business expenses by claiming ITCs.³

For example, if you pay HST on office supplies, software, professional services, or equipment, you may be able to claim those amounts back when you file your GST/HST return.

Keep in mind:

The expenses must be directly related to your commercial activities.
You must have proper documentation (receipts, invoices, etc).
You need to file returns on time to stay eligible.

Know What’s Taxable, Exempt, or Zero-Rated

Not all goods and services are treated the same, and there are differences between taxable, exempt, and zero-rated goods and services.

Taxable: Most goods and services fall into this category. You charge and collect GST or HST and can claim ITCs.
Exempt: Includes things like residential rent, financial services, and certain educational services. You don’t charge tax, but you also can’t claim ITCs.
Zero-rated: Includes basic groceries, prescription drugs, and some exports. You charge 0% tax but can still claim ITCs on related expenses.

Classifying your sales correctly is essential for accurate reporting.

Filing and Payment Obligations

Once registered, you’re responsible for filing GST/HST returns and remitting the net tax you owe. The CRA assigns you a monthly, quarterly, or annual filing frequency based on your revenue.

Make sure to keep accurate records of sales and expenses and file on time to avoid penalties and interest. Many business owners use accounting software or work with bookkeepers to simplify the process.

Why It Pays to Get Professional Advice

GST/HST rules can be straightforward in some industries and more complex in others, especially if your business operates in multiple provinces, sells digital products, or has a mix of taxable and exempt sales.

Working with a qualified accountant or financial advisor helps ensure that:

You’re registered when you need to be
You’re collecting and remitting the correct amount
You’re maximizing your tax recovery opportunities
You’re meeting your compliance obligations

Getting GST/HST right helps you protect your business, manage cash flow, and stay in good standing with the CRA.

If you’re unsure about whether you need to register, how to track your ITCs, or how the rules apply to your specific situation, don’t guess. Reach out to a trusted advisor who can help you get it right.

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This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Ivy Pierson, CEP, MBA Investment Advisor Representative Securities and advisory services offered through Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency LLC), member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity. Pierson Wealth Management is located at 28368 Constellation Rd., Ste. 396, Santa Clarita, CA 91355. CA Insurance Lic#0C92500. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful