One of the first questions new business owners ask us is, “Do I need to charge HST?” The answer depends mostly on how much you sell. Here is how the rules work, in plain English.
The $30,000 small supplier rule
Most businesses do not have to register for GST/HST until their taxable sales go over $30,000. This counts your worldwide taxable sales from all your businesses, plus those of any associated businesses, before expenses. While you stay at or under that amount, the CRA calls you a “small supplier”, and registering is optional. (Charities and public institutions have a higher limit of $50,000.)
The CRA looks at your sales in two ways: in a single calendar quarter, and over the last four calendar quarters in a row. Calendar quarters are January to March, April to June, July to September and October to December.
When you must register
Over $30,000 in a single quarter: you must register right away. Your registration starts no later than the day of the sale that took you over the limit, and you need to charge HST on that sale.
Over $30,000 across four quarters, but not in one quarter: you stop being a small supplier at the end of the month after the quarter in which you went over. You must charge HST starting with your first sale after that date, and register within 29 days. For example, if you crossed the limit during April to June, you stop being a small supplier on July 31, and your first sale after that must include HST.
Should you register voluntarily?
You can register even if you are under $30,000, as long as you make taxable sales in Canada. Some owners choose to because:
You can generally claim back the HST you pay on business purchases, through input tax credits. Larger business clients often expect suppliers to be registered.
The trade-off is that you must charge HST to your customers and file regular returns. If most of your customers are individuals, adding 13% to your price is worth thinking about first.
What is the HST rate in Ontario?
The HST rate in Ontario is 13%. If you sell to customers in other provinces, a different rate may apply, so it is worth checking before you invoice.
What happens after you register
You receive a GST/HST account as part of your Business Number. You show HST on your invoices and keep records of the HST you pay.
You file returns on your schedule. Monthly and quarterly filers file and pay one month after each period. Annual filers generally file and pay three months after their year-end.
Sole proprietors with a December 31 year-end who file annually must pay by April 30 and file by June 15. Most registrants must file their GST/HST returns electronically.
How North Vista can help
We can tell you whether you need to register, set up your GST/HST account, choose a filing schedule that suits you, and prepare your returns so they are accurate and on time.
