Starting a business comes with many questions, and one of the most common is: Do I have to charge GST/HST? Understanding the answer is important for staying compliant with the CRA and setting up proper financial systems from the beginning.
This is the first article in GBA’s six-part HST blog series, designed to guide Ontario business owners through key GST/HST topics. In this post, we’ll cover registration requirements, exceptions, and what it means once you’re registered.
GST, or Goods and Services Tax, is a federal tax of 5% that applies to most goods and services sold in Canada. In certain provinces, including Ontario, the federal GST is combined with a provincial portion to form the Harmonized Sales Tax (HST). In Ontario, the HST rate is 13%.
Whether GST or HST applies depends on the products/services provided and the province where the supply is made. Businesses must understand these factors to ensure they are charging the correct tax rate.
You are required to register for a GST/HST account if:
It is important to consult with your accountant before making this decision. Voluntary registration can result in new reporting obligations, and determining whether it is beneficial depends on your specific business model and cash flow needs.
If you are a GST/HST registrant, you are required to charge tax on all taxable supplies of goods and services you provide in Canada. This includes:
The applicable rate depends on where your customer is located and what product/services are provided. For example, supplies made to customers in Ontario are subject to 13% HST. If you supply goods or services to other provinces, the rate may differ. Charging the correct rate is your responsibility as a registrant.
Certain goods and services are either zero-rated or exempt from GST/HST.
Zero-rated supplies are taxable at a rate of 0%, meaning you do not charge GST/HST to your customers but can still claim input tax credits on related expenses. Common zero-rated items include:
Exempt supplies are not subject to GST/HST, and businesses that only make exempt supplies are not permitted to claim input tax credits. Examples include:
If your business provides both taxable and exempt supplies, you may be required to allocate input tax credits accordingly. An accountant can help you determine how the rules apply to your business.
Registration can be completed:
You will need to provide:
Once registered, the CRA will issue a GST/HST program account number. This number must appear on your invoices.
Registration can be back dated 30 days but if you require your registration to be back dated further than this we would recommend you consult your accountant before commencing the registration process.
Once registered, you must charge the appropriate GST/HST on all taxable sales and include the following details on every invoice:
Proper invoicing is essential for both compliance and your clients’ ability to claim input tax credits.
You are also required to file GST/HST returns and remit the amounts collected to the CRA. Your filing frequency will be determined by your total annual taxable revenues:
Filing deadlines vary depending on your assigned frequency. Late filings or remittances may result in penalties and interest.
Failing to register for and collect GST/HST when required can result in:
The CRA takes non-compliance seriously. Errors or omissions, even when unintentional, can have financial consequences. It is always advisable to consult with a qualified accountant to ensure your business is compliant.
Knowing when and how to charge GST/HST is a crucial part of running a compliant and well-organized business. Proper registration, accurate invoicing, and timely remittance protect you from penalties and interest, while also helping you maintain clear financial records.
While the rules can seem complex—especially if your business operates across multiple provinces or provides both taxable and exempt goods or services—having a solid understanding from the start makes day-to-day operations smoother and reduces the risk of costly mistakes.
At GBA LLP, we assist business owners across Ontario in understanding and managing their GST/HST obligations. If you are unsure about your responsibilities or want to ensure your systems are compliant, our team is here to help. Stay tuned for the next article in our series where we’ll look at input tax credits for small to medium-sized businesses in Canada.
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This blog is not meant to provide specific advice or opinions regarding the topic(s) discussed above. Should you have a question about your specific situation, please discuss it with your GBA advisor.
GBA LLP is a full-service accounting firm in the Greater Toronto Area, but we primarily service all of Ontario as well as the rest of Canada virtually, except Quebec. Our team of over 30 provides audits and reviews of financial statements, compilations of financial information, and corporate tax returns. We provide specialized corporate tax and succession planning for small and medium businesses, in addition to general advisory services.
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