GST/HST for Self-Employed Canadians (2026 Guide)

GST/HST reaches a self-employed business in two directions. Once you are registered, you charge it on your sales and send it to the CRA, and you recover the GST/HST you pay on business purchases by claiming input tax credits (ITCs). Getting it right comes down to four things: knowing when registration starts, charging the rate for the place the sale is made, keeping receipts that meet the CRA's documentation tiers, and filing on time.

This guide is written for sole proprietors. Every rule comes from canada.ca, mainly Guide RC4022, and the QST rules from Revenu Québec (sources at the end). Examples are hypothetical.

When You Must Register: The Small-Supplier Test

You don't have to register while you are a small supplier. For a sole proprietor, that means your revenue from worldwide taxable supplies, from all your businesses and those of your associates, is $30,000 or less in a single calendar quarter and over the last four consecutive calendar quarters. It is revenue before expenses, and it includes zero-rated supplies such as most exports. It leaves out financial services, sales of capital property and goodwill from the sale of a business. Calendar quarters start on January 1, April 1, July 1 and October 1.

Going over $30,000 in either test ends small-supplier status, but the two tests start registration at different times:

• Over $30,000 in a single calendar quarter: you stop being a small supplier immediately. Your effective date of registration is no later than the day of the sale that took you over, and you charge GST/HST on that sale.
• Over $30,000 across four consecutive quarters, but not in any one: you stay a small supplier until the end of the month after the quarter in which you went over. Your effective date is no later than the day of your first sale after that, and you charge GST/HST from then on.
• Either way, you have 29 days from your effective date to register.

In the CRA's examples, a consultant whose third quarter reached $38,000 registered effective the sale that crossed $30,000, and charged tax on it. A seller whose four quarters to March 31 totalled $32,000, none over the line alone, stopped being a small supplier on April 30 and started charging on its next sale, May 2.

Taxi and commercial ride-sharing drivers must register even as small suppliers.

Registering Voluntarily

A small supplier can register voluntarily if it makes taxable sales in Canada; you generally cannot register if you make only exempt supplies. Your effective date is usually the day you request your GST/HST account, and it can be up to 30 days before that. Once registered you must charge, collect and remit GST/HST on your taxable supplies, file returns for every reporting period, and stay registered for at least one year before you can cancel, unless you stop your commercial activities.

In return you can claim ITCs. As a new registrant you may also be able to claim ITCs for GST/HST paid on property you have on hand on the day you register, such as equipment. The trade-off depends on your clients: registered businesses recover the GST/HST you charge, but consumers cannot, so for them your price rises by the tax.

Charging the Right Rate by Province

The rate depends on where the sale is made, not where you live. For most services, the general rule in RC4022 is that the supply is made in the province of the client's home or business address that you obtain in the ordinary course of business. RC4022's example: a Calgary accounting firm whose only address for its client is in London, Ontario charges 13% HST, not 5% GST. Personal services, services related to real property and some others have their own rules.

Where GST and a provincial tax both apply, the GST is calculated on the price before the provincial tax. Services you perform wholly outside Canada are generally not subject to GST/HST, and certain advisory, professional or consulting services supplied to a non-resident are zero-rated: taxable at 0%, so you charge nothing but can still claim ITCs on the costs of making them.

Input Tax Credits: What You Can Claim

An ITC recovers the GST/HST paid or payable on purchases you use in your commercial activities. You can claim only to the extent a purchase is for use in those activities, and it must be reasonable in quality, nature and cost for your business. If 90% or more of an operating expense is for commercial use, you claim 100% of the tax on it. If an expense is shared, the business share must come from a fair and reasonable allocation used consistently all year. If your ITCs for a period exceed the GST/HST you collected, the CRA refunds the difference.

You cannot claim ITCs for:

• Purchases for personal use, or the personal share of a mixed-use expense
• Purchases used to make exempt supplies
• Membership fees or dues to a club whose main purpose is recreation, dining or sport, such as a fitness or golf club
• Certain capital property (RC4022 sets out separate rules for capital property)
• Exempt and zero-rated purchases, because no GST/HST was charged
• Provincial sales taxes: PST and RST are never part of an ITC
• GST/HST charged by a supplier registered only under the simplified regime for digital-economy businesses. Give such suppliers your GST/HST number so they do not charge it.

You normally claim an ITC on the return for the period you made the purchase, but you can catch up later. For most registrants, the deadline is the due date of the return for the last reporting period ending within four years after the period in which the ITC could first have been claimed.

What a Receipt Must Show: The $100 and $500 Tiers

You need sufficient documentary evidence before you claim an ITC, and what counts depends on the total sale. These tiers replaced the earlier $30 and $150 thresholds on April 20, 2021:

• Under $100: the supplier's (or intermediary's) business or trading name, the invoice date (or the date GST/HST was paid or payable), and the total amount paid or payable.
• $100 to $499.99: all of the above, plus the GST/HST charged (or a statement that the price includes it at the applicable rate), the status of each supply if taxable and exempt items are mixed, and the supplier's or intermediary's GST/HST registration number.
• $500 or more: all of the above, plus your name or trading name (or your authorized agent's), a brief description of the goods or services, and the terms of payment.

Hypothetical example: a $240 printer from an Ontario retailer supports an ITC only if the receipt shows the HST (or says it is included) and the retailer's registration number. You can check a number with the CRA's free GST/HST Registry before you claim, and ask for a corrected receipt while the purchase is recent.

Meals and Entertainment: The 50% Restriction

The ITC follows the income tax limit. Where your deduction for meals and entertainment is limited to 50% of the cost, you can claim 50% of the GST/HST you paid on them as ITCs. RC4022 gives two ways to do it: claim 50% of the actual tax in each reporting period, with no year-end adjustment, or claim 100% during the year and add back the excess. Annual filers make that adjustment on the same year's return; monthly and quarterly filers on the first return of the next fiscal year.

How ITCs Reduce Your T2125 Expenses

You cannot recover the same tax twice. Guide T4002 says that when you claim GST/HST as an ITC, you reduce the business expense on Form T2125 by the amount of the credit, at the time the tax was paid or became payable, whichever is earlier, and enter the net figure. An ITC on depreciable property reduces its capital cost for capital cost allowance. If you are not registered, the GST/HST you pay is simply part of each expense.

PST: A Provincial Matter

British Columbia (7% PST), Manitoba (7% RST) and Saskatchewan (6% PST) run their own sales taxes beside the 5% GST. The CRA does not administer them: whether you must register to collect a provincial sales tax, and what it applies to, is set by each province, and RC4022 tells you to contact your provincial sales tax office. Ontario and the Atlantic provinces have no separate PST because it is built into the HST.

On the cost side, PST you pay on business purchases is not recovered through an ITC on your GST/HST return, so it stays part of the expense you deduct on T2125. Record GST/HST and PST as separate amounts on every receipt. One combined tax figure makes it impossible to claim the right ITC.

QST: Revenu Québec's Own System

Quebec Sales Tax is administered by Revenu Québec, not the CRA, and if your business is physically located in Quebec, Revenu Québec generally administers your GST/HST too, so you file with it on its forms. Per Revenu Québec:

• As a rule, you must register for the GST and QST if you carry on commercial activities in Québec and your worldwide taxable supplies, with your associates', exceed $30,000 in a calendar quarter or in the four preceding calendar quarters. The small-supplier timing mirrors the federal test.
• A business that carries on commercial activity in Québec and registers for the QST must also register for the GST/HST, and must stay registered for at least one year.
• Taxi businesses must register for both regardless of revenue.
• The QST rate is 9.975%, calculated on the sale price, not on the price plus GST. Together the two come to 14.975%.
• Registrants recover QST paid on business inputs by claiming input tax refunds (ITRs), Quebec's counterpart to ITCs, with similar exclusions such as personal-use purchases.
• You cannot claim an ITR for QST paid to a supplier outside Québec registered under the special regime (an "NR" number). Give them your QST number, which begins with "TQ", before the sale so they do not charge it.

The Quick Method

The quick method is an optional way to calculate what you remit. You still charge GST/HST at the normal rate, but instead of tracking the tax on every expense you remit a fixed percentage of your GST/HST-included sales. In exchange you give up ITCs on operating expenses; you can still claim them on capital assets such as computers and vehicles. You also get a 1% credit on the first $30,000 of eligible GST/HST-included sales each fiscal year.

• Eligibility: annual worldwide taxable supplies, including GST/HST and your associates', of $400,000 or less, and a permanent establishment in Canada.
• Excluded: anyone providing bookkeeping, financial consulting, tax consulting or tax-return preparation services, and legal, accounting or actuarial professionals.
• Service-business rates by where your permanent establishment is: 3.6% if your establishment and the sale are both in a 5% GST province; 8.8% if both are in Ontario; 9.4% for Nova Scotia; 10.0% for a 15% HST province. Other combinations have their own rates in Guide RC4058.
• How to elect: through My Business Account or Form GST74. Annual filers must elect by the first day of their second fiscal quarter.

Filing and Payment Deadlines

The CRA assigns your reporting period from your annual revenue from taxable supplies: $1,500,000 or less is annual, more than $1,500,000 up to $6,000,000 is quarterly, and above that is monthly. You can elect to file more often.

• Monthly and quarterly filers file and pay one month after the end of each period.
• Most annual filers file and pay three months after their fiscal year-end.
• A sole proprietor with a December 31 year-end and business income for the year pays by April 30 and files by June 15. The same rules put the 2026 dates at April 30 and June 15, 2027, but the CRA had not published its dated 2026 calendar when this was written, so confirm before you file.
• If your net tax was $3,000 or more in both the previous and current fiscal year, an annual filer pays quarterly instalments, each due one month after the end of a fiscal quarter.
• File a return for every period, including a nil return when there is nothing to report.
• Returns for periods ending in 2024 and later must be filed electronically, except by charities and selected listed financial institutions; a paper return draws a penalty.

What to Keep

• Every sales invoice you issued, showing the GST/HST you charged
• Every purchase receipt or invoice, meeting the documentary tier for its amount
• GST/HST, PST and QST recorded as separate amounts for each expense
• Your filed returns, registration confirmation and any quick method election

Keep GST/HST records for six years from the end of the year they relate to. The CRA may ask you to keep them longer, and to destroy them sooner you need its written permission.

Frequently Asked Questions

Do sales to clients outside Canada count toward the $30,000 threshold? Yes. The small-supplier test counts revenue from worldwide taxable supplies, including zero-rated supplies such as most exported services. A freelancer with mostly foreign clients can therefore have to register even though they charge little or no GST/HST.

Should I register voluntarily before I reach $30,000? It can pay off if you have significant business expenses or mostly registered business clients, since you recover GST/HST through ITCs and your clients recover what you charge them. If your clients are consumers, your price rises by the tax for them. Voluntary registration also means filing returns and staying registered for at least a year.

I live in Alberta. Do I charge HST to a client in Ontario? Generally yes. For most services the sale is made in the province of the client's address you obtain in the ordinary course of business, so a client with an Ontario business address is charged 13% HST. Personal services and services related to real property follow other rules.

Can I claim PST or QST as an input tax credit? No. ITCs cover only GST and HST. PST and RST are not recoverable on your GST/HST return and stay part of the expense. QST is recovered separately, through input tax refunds claimed with Revenu Québec, if you are registered for the QST.

I forgot to claim ITCs last year. Have I lost them? Usually not. Most registrants can claim an ITC up to the due date of the return for the last reporting period ending within four years after the period in which it could first have been claimed, as long as you have receipts that meet the documentary requirements.

Can a bookkeeper or tax preparer use the quick method? No. Persons who provide bookkeeping, financial consulting, tax consulting or tax-return preparation services, and legal, accounting or actuarial professionals, cannot use the quick method. They calculate net tax the regular way, with ITCs.