A practical guide to HST/GST for Canadian businesses

Key takeaways

• GST is a 5% federal tax that applies across Canada. HST combines GST with provincial sales tax in five provinces, with combined rates between 13% and 15%
• You must register for a GST/HST account with the CRA once your worldwide taxable revenue exceeds $30,000 in a single calendar quarter or over any four consecutive calendar quarters
• Registrants can claim input tax credits on GST/HST paid for business purchases, which lowers the net amount you owe at filing
• Your filing frequency depends on your annual taxable supplies and runs annual, quarterly, or monthly. Missing a deadline triggers interest and penalties.

What is HST/GST?

HST/GST is the combined name for two related Canadian consumption taxes. The Goods and Services Tax (GST) is a 5% federal tax charged on most goods and services sold in Canada. The Harmonized Sales Tax (HST) folds a province's sales tax into the GST, so the buyer pays a single combined rate at checkout.

Five provinces use HST. The remaining provinces and territories charge GST on its own or pair it with a separate provincial tax like PST, RST, or QST.

If you run a business in Canada, you'll deal with HST/GST at three points: charging customers, paying suppliers, and filing your return with the Canada Revenue Agency (CRA).

What are the current HST/GST rates by province?

The rate you charge depends on where the supply is made, not where your business is headquartered. Place-of-supply rules determine the province based on the customer's location for most services and the delivery address for goods. Double-check the CRA's GST/HST rates page before you invoice, since provincial rates can change.

If you sell across provinces, your invoicing system needs to apply the correct rate per transaction. A Toronto-based consultant invoicing a client in Halifax charges 14% HST on that invoice, not 13%.

When do you need to register for GST/HST?

The CRA uses a $30,000 threshold to decide who has to register. Two independent triggers apply:

• Single-quarter trigger: If your worldwide taxable revenue exceeds $30,000 in a single calendar quarter, you're no longer a small supplier and must register by the end of the following month
• Four-consecutive-quarters trigger: If your worldwide taxable revenue exceeds $30,000 over any four consecutive calendar quarters, you must register by the end of the month following the quarter in which you crossed the threshold

Whichever trigger hits first controls your registration deadline, and the $30,000 threshold applies to revenue from your business and any associated entities combined.

A few situations override the threshold:

• Taxi and ride-share operators: Must register from the first ride, regardless of revenue
• Non-resident vendors selling digital products or services to Canadian consumers: Subject to simplified GST/HST registration once they cross the threshold
• Voluntary registration: Even if you're below the threshold, you can register to claim input tax credits on your business purchases

Voluntary registration is worth considering if you spend meaningfully on taxable inputs like software, equipment, and contractors. The GST/HST you recover through input tax credits can outweigh the administrative cost of filing returns.

How do input tax credits work?

When you're registered, you collect GST/HST on what you sell and pay GST/HST on what you buy. Input tax credits (ITCs) let you recover the tax you paid on business purchases. That means you remit the net amount to the CRA, not the gross amount you collected.

For example, say you collected $13,000 in HST on Ontario sales over a quarter and paid $4,200 in HST on software, supplies, and other business expenses. You'd file your return claiming $4,200 in ITCs and remit $8,800 to the CRA.

To claim an ITC, four things need to be true.

• You're registered: You must have an active GST/HST account during the period the expense was incurred
• The expense is for commercial activity: Personal expenses, exempt supplies, and capital property used less than 50% in business don't qualify
• You have documentation: The supplier's name, GST/HST number, date, amount, and tax charged need to be on the receipt or invoice. For purchases under $30, you can use lighter documentation. Between $30 and $150, you need more detail. Above $150, you need full supporting documents.
• You claim within four years: Most registrants have four years from the due date of the return in which the ITC could have first been claimed. Large businesses with over $6 million in annual taxable supplies have two years.

The documentation rule is where most small businesses lose money. If a receipt is missing the supplier's GST/HST number, the CRA can deny the credit during an audit, so capturing receipts at the point of purchase, with the tax breakout intact, is the easiest way to keep your ITC pool defensible.

How is GST/HST filing frequency determined?

The CRA assigns your filing frequency based on your annual taxable supplies, though you can also elect a more frequent schedule if it helps your cash flow.

• Annual filing: Default for businesses with taxable supplies of $1.5 million or less. Your return is due 3 months after your fiscal year-end, unless you're an individual with a December 31 year-end. In that case, the return is due June 15 with payment due April 30.
• Quarterly filing: Default for businesses with taxable supplies between $1.5 million and $6 million. Returns and payments are due 1 month after the quarter ends.
• Monthly filing: Default for businesses with taxable supplies above $6 million. Returns and payments are due 1 month after the month ends.

Annual filers with more than $3,000 owing in the previous year also have to make quarterly installments, and missing an installment results in interest charges even if your annual return is filed on time.

Where does HST/GST compliance break down?

Wrong tax rates, missing receipts, and late filings are the three most common GST/HST compliance failures as businesses scale.

Wrong rate applied at invoicing

A vendor charges 13% on an invoice to a New Brunswick customer instead of 15%, and the shortfall comes out of margin when the CRA catches it. Place-of-supply rules need to live inside your billing system, not in a spreadsheet someone updates manually.

Missing or incomplete receipts

Employee expenses are the most common source of denied ITCs. Common failures include a receipt photo that cuts off the GST/HST number, a credit card statement used instead of a proper receipt, or a cash purchase with no documentation. The CRA doesn't accept "we know we paid the tax" as evidence.

Late filings and late remittances

Interest accrues from the day after the deadline, compounded daily, and a penalty applies if you've failed to file on time and have missed filings in prior reporting periods. Two missed filings in a row usually triggers a CRA letter, and three usually triggers a compliance review.

How to set up GST/HST compliance: A 5-step plan

1. Register with the CRA: Register for your Business Number and GST/HST account through the CRA's Business Registration Online portal, or submit Form RC1 by mail or fax. You'll need your business name, structure, fiscal year-end, and estimated annual taxable supplies. If you operate in Quebec, you'll also register separately with Revenu Québec for QST.
2. Configure your billing system with current rates: Every invoice needs to apply the correct combined rate based on the customer's place of supply, show the tax as a separate line item, and include your GST/HST number. If you use accounting software, set up tax codes per province and confirm the rates match the CRA's published rates.
3. Capture every receipt with full tax detail: Don't reimburse any business expense without a receipt that shows the supplier's name, GST/HST number, date, amount, and tax. This protects your input tax credit claims through audit.
4. Reconcile collected tax and ITCs monthly: Don't wait until the quarter or year ends. A monthly reconciliation between what you've collected, what you've paid, and what's sitting in your GST/HST liability account flags errors while they're still easy to fix.
5. File on time and pay on time, every period: Set calendar reminders 10 days before each filing deadline. If cash is tight, file the return on time anyway and make a partial payment, because interest accrues on the unpaid balance but you avoid the late-filing penalty.

For finance teams managing operations across multiple provinces, the bottleneck is usually step 3. Receipt capture and coding at the point of purchase, with tax broken out automatically, is what makes the rest of the process reliable.

Keep GST/HST clean on every transaction with Ramp

The compliance plan above works when every transaction is coded correctly, every receipt is captured with tax detail intact, and every filing period starts with a clean ledger. The gap is usually between knowing that and actually having systems that do it without manual work.

Ramp closes that gap. Every card transaction and bill payment is automatically coded with the right HST, GST, PST, or QST rate and mapped to the correct GL account in your ERP. Receipts are captured and matched as they happen, with the supplier name, tax registration number, and tax breakout preserved—the exact documentation the CRA requires for ITC claims.

That means your monthly reconciliation between collected tax and your GST/HST liability account is a review, not a reconstruction. When filing deadlines hit, the numbers are already there.

Ramp syncs natively with QuickBooks Online, Xero, NetSuite, and Sage Intacct in CAD. Cards are issued by Peoples Trust, your business underwrites in Canada, and everything settles in CAD.

Stop hand-coding provincial tax at month-end.

See how Ramp works for Canadian businesses →