Every business selling in Canada deals with the 5% federal GST. What sits on top of it depends on the province: some combine the two into a single HST, some charge a separate provincial sales tax, and Alberta and the territories add nothing further. Whichever applies to you, the GST/HST account is where the CRA's attention tends to go. Here are the fundamentals.
When you must register
You are required to register for GST once your worldwide taxable sales exceed $30,000 over four consecutive calendar quarters. Until then you are a "small supplier" and registration is optional. Two details catch people out:
- The test is a rolling four-quarter total, not a calendar year - you can cross the threshold mid-year.
- If you exceed $30,000 in a single quarter, you lose small-supplier status immediately.
Why register before you have to
Voluntary registration lets you claim input tax credits (ITCs) - recovering the GST you pay on equipment, supplies, software, rent, and other business expenses. For a startup spending money before revenue arrives, those refunds are real cash flow. The trade-off is that you must then charge GST on your sales and file returns on schedule.
How filing works
Each return reports the GST you collected on sales, subtracts your ITCs, and remits (or refunds) the difference. The CRA assigns a filing frequency based on revenue: annual for most small businesses, quarterly or monthly for larger ones, and you can elect to file more often if refunds or cash-flow discipline make that attractive. Annual filers with net GST of $3,000 or more in the prior year also owe quarterly instalments.
What good GST records look like
- Invoices that show your GST registration number and the tax charged.
- Receipts supporting every ITC claim - the CRA can and does ask for them.
- A GST account in your books that reconciles to what you have filed and remitted.
Common mistakes we clean up
- Charging GST without being registered, or registering and never filing.
- Claiming ITCs on expenses with no GST in them (insurance, wages, most bank fees).
- Missing ITCs on big purchases - vehicles and equipment are frequently forgotten.
- Spending collected GST as if it were revenue instead of setting it aside.
If you are approaching the threshold, unsure whether to register early, or behind on filings, our GST services cover registration through filing - or book a consultation and we will look at your situation together.
A note on this article: tax rules and deadlines change. This article is general information, not advice for your specific situation - for that, talk to us.