On this page…

• What is GST/HST?
• Who pays the GST/HST
  • False GST/HST exemptions
• Do you have to charge the GST/HST?
• Should you register for the GST/HST?
  • Small supplier
  • Effective date of registration
  • Voluntary registration
  • How to register
• Fiscal year for GST/HST purposes
• Reporting periods
• Input tax credits
  • Becoming a registrant
  • Operating expenses
  • Home office expenses
  • Meal and entertainment expenses
  • Passenger vehicles and aircraft
• Calculating your net tax
  • Bad debt adjustments
• GST/HST returns
• Filing and remitting due dates
  • Monthly and quarterly filers
  • Annual filers

What is the GST/HST?

The GST is a tax that applies to most supplies of goods and services made in Canada. The GST also applies to many supplies of real property (for example, land, buildings and interests in such property) and intangible personal property such as trademarks, rights to use a patent, and digitized products downloaded from the Internet and paid for individually.

The participating provinces harmonized their provincial sales tax with the GST to implement the harmonized sales tax (HST) in those provinces. Generally, the HST applies to the same base of property and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on certain qualifying items. For more information, see "Point-of-sale rebates" in Guide RC4022, General Information for GST/HST Registrants.

GST/HST registrants that make taxable supplies (other than zero-rated supplies) in the participating provinces collect tax at the applicable HST rate. The HST rate can vary from one participating province to another. GST/HST registrants collect tax at the 5% GST rate on taxable supplies they make in the rest of Canada (other than zero-rated supplies). Special rules apply for determining whether a supply is made in Canada and in a participating province. For more information on the HST rates and the place-of-supply rules, see Guide RC4022, General Information for GST/HST Registrants.

Special rules apply for determining the rate of the GST/HST that applies to the sale of new housing. For more information, see "Sales of new housing" in Guide RC4022, General Information for GST/HST Registrants.

Who pays the GST/HST?

Almost everyone has to pay the GST/HST on taxable supplies of property and services (other than zero-rated supplies). However, Indians and some groups and organizations, such as certain provincial and territorial governments, do not always pay the GST/HST on their purchases. For more information, refer to "Supplies to diplomats, governments, and Indians" in Guide RC4022, General Information for GST/HST Registrants.

False GST/HST exemptions

Some individuals, businesses, and organizations are falsely claiming to be exempt from paying the GST/HST. In some cases, they may even present a fake exemption card to avoid paying the tax on their purchases.

If you do not collect the GST/HST from someone who falsely claims to be exempt from paying the GST/HST, you still have to account for the tax you should have collected.

Some provinces exempt farmers, municipalities, and certain businesses from paying the provincial sales tax. However, these provincial exemptions do not apply to the GST/HST.

Do you have to charge the GST/HST?

Generally, GST/HST registrants have to charge the GST/HST on all taxable (other than zero-rated) supplies of property and services they provide to their customers. You are a GST/HST registrant if you are registered or are required to register.

Should you register for the GST/HST?

You have to register for the GST/HST if you:

• provide taxable supplies in Canada
• are not a small supplier
• operate a taxi, commercial ride-sharing, or a limousine service

You do not have to register if one or more of the following apply:

• You are a small supplier.
• Your only commercial activity is the sale of real property, other than in the course of a business (although you do not have to register for the GST/HST in this case, your sale of real property may still be taxable and you may have to charge and collect the tax). For more information, see Guide RC4022, General Information for GST/HST Registrants.
• You are a non-resident who does not carry on business in Canada (see Guide RC4027, Doing Business in Canada – GST/HST Information for Non-Residents).

Small supplier

You are a small supplier and do not have to register if you meet one of the following conditions:

• you are a sole proprietor and the total amount of all revenues (before expenses) from your worldwide taxable supplies from all your businesses and those of your associates (if they were associated at the beginning of the particular calendar quarter) is $30,000 or less in any single calendar quarter and in the last four consecutive calendar quarters
• you are a partnership or a corporation and the total amount of all revenues (before expenses) from your worldwide taxable supplies and those of your associates (if they were associated at the beginning of the particular calendar quarter) is $30,000 or less in any single calendar quarter and in the last four consecutive calendar quarters
• you are a public service body and the total amount of all revenues (before expenses) from your worldwide taxable supplies from all of the organization's activities and those of your associates (if they were associated at the beginning of the particular calendar quarter), is $50,000 or less in any single calendar quarter and in the last four consecutive calendar quarters

Total revenues from taxable supplies means your revenues from your worldwide supplies of property and services that are subject to the GST/HST (including zero-rated supplies), or that would be subject to the tax if supplied in Canada. It does not include goodwill, supplies of financial services, or sales of capital property. You also have to include the total revenues from taxable supplies of all of your associates in this calculation. For more information about your total revenues from taxable supplies, see Guide RC4022, General Information for GST/HST Registrants.

Effective date of registration

The effective date of your GST/HST registration depends on when you go over the small supplier threshold amount of $30,000 (or $50,000 if you are a public service body).

If your revenues are over the threshold amount in one calendar quarter, you are considered a registrant and must collect the GST/HST on the taxable supply (other than a zero-rated supply) that made you go over the threshold amount. Your effective date of registration will be the day the supply made you go over the threshold amount. You must register within 29 days from that day.

If you are under the threshold amount in one calendar quarter, but you are over the threshold during four (or fewer) consecutive calendar quarters combined, you are considered to be a small supplier for those calendar quarters and a month after those quarters. Your effective date of registration would be the day you make your first taxable supply after you stop being a small supplier. You have 29 days after this day to register for the GST/HST.

Voluntary registration

If you are a small supplier and you are engaged in a commercial activity in Canada, you can choose to register for GST/HST voluntarily. Once you are registered, you have to charge and remit the GST/HST on your taxable supplies of property and services. You may be eligible to claim ITCs for the GST/HST paid or payable on property and services you acquired for making these supplies. You have to stay registered for at least one year before you can ask to cancel your registration. For more information, see Guide RC4022, General Information for GST/HST Registrants.

If you choose not to register, you do not charge the GST/HST (other than on certain taxable supplies of real property), and you cannot claim ITCs.

How to register

You can register for a GST/HST account when you register for a business number (BN). Your BN will be your business identification for all your dealings with us. If you are incorporated, you may already have a BN and a corporation income tax account.

Fiscal year for GST/HST purposes

Usually, your fiscal year for GST/HST purposes is the same as your tax year for income tax purposes. Generally, the tax year of the following persons is a calendar year:

• individuals and certain trusts
• professional corporations that are members of a partnership (such as a corporation that is the professional practice of an accountant, a lawyer, or a doctor)
• partnerships, where at least one member of the partnership is an individual, a professional corporation, or another affected partnership

However, some persons use non-calendar tax years. If you use a non-calendar tax year approved by the CRA, you may want to use that same year as your GST/HST fiscal year.

A corporation generally uses the same fiscal year for both income tax purposes and GST/HST purposes. However, if a corporation has a non-calendar tax year for income tax purposes, it can elect to use a calendar year for its GST/HST fiscal year.

If you are a corporation that uses a non-calendar year for both income tax purposes and GST/HST purposes, and you change to another non-calendar tax year for income tax purposes, inform us of the change as soon as possible and we will change your GST/HST fiscal year to match it.

You or your authorized representative can change your fiscal year by using our online services:

• If you are a business owner, go to My Business Account My Business Account.
• If you are an authorized representative, go to Represent a Represent a Client.
• You can also send a completed Form GST70, Election or Revocation of an Election to Change a GST/HST Fiscal Year to your tax centre. To get the address of your tax center, go to Tax services offices and tax centres.

Reporting periods

Reporting periods are the periods of time for which you file your GST/HST returns.

Generally, your reporting period is determined based on the revenue from your total taxable supplies of property and services made in Canada in your immediately preceding fiscal year or in all preceding fiscal quarters ending in your current fiscal year.

This revenue includes zero-rated supplies of property and services made in Canada, and those of your associates.

Do not include revenue from:

• supplies made outside Canada
• zero-rated exports of property and services
• zero-rated supplies of financial services
• exempt supplies
• taxable sales of capital real property
• goodwill

Generally, when you register for the GST/HST, we assign an annual reporting period. However, you may choose a more frequent reporting period. The following chart shows the threshold revenue amounts that determine the assigned reporting periods, and the optional reporting periods available if you want to file a return more frequently.

You or your authorized representative can change your assigned reporting period by using our online services:

• If you are a business owner, go to My Business Account.
• If you are an authorized representative, go to Represent a Client.
• You can also send a completed Form GST20, Election for GST/HST Reporting Period to your tax centre. To get the address of your tax center, go to Tax services offices and tax centres.

Input tax credits

As a registrant, you can recover the GST/HST paid or payable on property and services you acquired for your commercial activities by claiming an input tax credit (ITC). If you are filing electronically, claim your ITC in your line 108 calculation. If you are filing a paper GST/HST return, calculate your ITC on line 106.

You may be eligible to claim ITCs only to the extent that the property and services you acquired are for consumption, use, or supply in your commercial activities.

There are some property and services you acquired for which you cannot claim an ITC, such as:

• certain capital property. For more information on these properties, see Guide RC4022, General Information for GST/HST Registrants
• taxable supplies of property and services acquired or imported to make exempt supplies of property and services
• membership fees or dues to any club whose main purpose is to provide recreation, dining, or sporting facilities (including fitness clubs, golf clubs, and hunting and fishing clubs), unless you acquire the memberships to resell in the course of your business
• property or services you acquired or imported for your personal consumption, use, or enjoyment

To claim an ITC, the property and services you acquired must be reasonable in quality, nature, and cost in relation to the nature of your business.

Becoming a registrant

When you become a GST/HST registrant, you may be eligible to claim an ITC to recover the GST/HST you paid or owe on certain property and services you acquired before you became a registrant.

In the case of property, you are considered to have purchased the property when you became a registrant if you held the property for consumption, use or supply in the course of your commercial activities just before you became a registrant. You are also considered to have paid GST/HST on the purchase. The amount of tax paid is equal to the basic tax content of the property. As a result, you may be eligible to claim an ITC for the tax you are considered to have paid.

In addition, certain services, such as legal and accounting fees and regulatory fees acquired to set up a corporation, may be treated as depreciable property included in class 14.1 for income tax purposes. In this case, the services would be treated as property and an ITC may be available.

For more information, see archived Interpretation Bulletin IT-143R3, Meaning of Eligible Capital Expenditure.

For information on the meaning of basic tax content, and the availability of ITCs for start-up costs, see Guide RC4022, General Information for GST/HST Registrants; Policy Statement P-018R, Limitation on ITC Eligibility where a Person Becomes a Registrant; and Policy Statement P-019R, Eligibility for ITC on start-up costs – Eligible capital property.

Operating expenses

The following are examples of operating expenses for which you may be eligible to claim an ITC:

• commercial rents
• equipment rentals
• advertising
• utilities
• office supplies such as postage, computer disks, paper, and pens

You can claim an ITC equal to 100% of the GST/HST paid or payable by you for a particular operating expense (property or service) if substantially all (90% or more) of your consumption or use of that property or service is (or is intended to be) in the course of your commercial activities and all the other ITC criteria are satisfied.

You cannot claim an ITC for any of the GST/HST paid or payable by you for a particular operating expense (property or service) if substantially all of your consumption or use of that property or service is (or is intended to be) other than in the course of your commercial activities (for example, consumed or used to make exempt supplies).

Home office expenses

You may be eligible to claim ITCs for your home office expenses, as long as you meet one of the following conditions:

• it is your principal place of business
• consumed or used 90% of the time or more to earn income from your business and used on a regular and continuous basis for meeting your clients, customers, or patients

This restriction for home office expenses is similar to that used for income tax purposes. For more information, see Income Tax Folio S4-F2-C2, Business Use of Home Expenses.

Meal and entertainment expenses

You may be eligible to claim an ITC for the GST/HST you pay on reasonable meal and entertainment expenses that relate to your commercial activities. When the deduction for income tax purposes is limited to 50% of the cost of meals and entertainment, you can only claim 50% of the GST/HST you pay on those expenses as an ITC.

Passenger vehicles and aircraft

Corporations follow a primary use rule (more than 50% use in commercial activities) to determine their ITCs for passenger vehicles and aircraft.

However, individuals and partnerships usually claim ITCs for passenger vehicles and aircraft based on the capital cost allowance (CCA) claimed for income tax purposes. If the use in commercial activities is 10% or less, you cannot claim any ITC. If the use in commercial activities is 90% or more, you may be eligible to claim a full ITC.

You usually calculate your CCA for income tax purposes at the end of your fiscal year. Once you have calculated your CCA, you can calculate your ITC.

Note that ITC claims relating to passenger vehicles are subject to the capital cost limitations for passenger vehicles, which are currently $30,000 for purchases and $800 per month for leases.

For more information on calculating and claiming ITCs, restrictions for ITCs, time limits for claiming ITCs, and special rules that apply to charities, refer to Guide RC4022, General Information for GST/HST Registrants.

Calculating your net tax

You have to calculate your net tax for each GST/HST reporting period and report this on your GST/HST return. To do so, calculate both:

• the GST/HST collected or that became collectible by you on your taxable supplies made during the reporting period
• the GST/HST paid and payable on property and services you acquired for which you can claim an ITC

The difference between these two amounts, including any adjustments, is called your net tax. It is either your GST/HST remittance or your GST/HST refund. If you charged or collected more GST/HST than the amount paid or payable on your purchases, send us the difference. If the GST/HST paid or payable is more than the GST/HST you charged or collected, you can claim a refund of the difference.

For more details on calculating your net tax, see Guide RC4022, General Information for GST/HST Registrants. To help reduce paperwork and bookkeeping costs, most small businesses can use the quick method of accounting to calculate their GST/HST remittance. For more information, see Guide RC4058, Quick Method of Accounting for GST/HST.

Bad debt adjustments

If you have already reported and remitted the GST/HST for a credit sale on your GST/HST return, and all or part of the amount owed to you became a bad debt, you can recover the GST/HST that relates to that bad debt as a tax adjustment when you calculate your net tax.

If you claimed a GST/HST adjustment on a previous GST/HST return for a bad debt you wrote off and later you receive a payment toward that debt, you have to add back the GST/HST part of that payment as a tax adjustment in the calculation of your net tax on the GST/HST return for the reporting period in which you received the payment for the bad debt.

GST/HST returns

Unless you have filed a GST/HST return online, we will automatically send you Form GST34, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return for Registrants, which includes personalized pre-printed information about your account. You can stop receiving the GST/HST returns automatically by using our online service:

• If you are a business owner, go to My Business Account
• If you are an authorized representative, go to Represent a Client

Filing and remitting due dates

Monthly and quarterly filers

If you have a monthly or quarterly reporting period, you have to file your GST/HST return and send any amount owing no later than one month after the end of your reporting period.

Annual filers

If you have an annual reporting period, you usually have to file your return and send any amount owing no later than three months after the end of your fiscal year.

As an annual filer, you may also have to pay quarterly instalments. If so, they are due no later than one month after the last day of each fiscal quarter. For more information, see Guide RC4022, General Information for GST/HST Registrants.

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