When to register for GST/HST: the $30,000 rule, explained

When I did bookkeeping for freelancers, the most expensive mistake I saw was not a missed deduction. It was a business that had quietly crossed the GST/HST threshold months earlier, never registered, and then owed tax on sales it had never charged tax on. The rule itself is simple. Tracking it is where people slip.

The small supplier rule

Most businesses that sell taxable goods or services in Canada must register for and collect GST/HST. The main exception is the small supplier: a business whose total taxable sales, including those of associated businesses, are $30,000 or less over four consecutive calendar quarters. A small supplier can choose not to register.

Two details matter. The threshold is measured across any four consecutive calendar quarters, not your business’s fiscal year. And it counts revenue before expenses, so a business that earned $34,000 and spent $20,000 has still crossed it.

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The threshold counts what comes in, not what you keep. Expenses do not move you back under it.

When you cross it

If you go over $30,000 in a single calendar quarter, you stop being a small supplier immediately: the sale that takes you over is generally taxable, and you must register within 29 days. If you go over across four quarters without passing $30,000 in any single one, you stop being a small supplier at the end of the month after the quarter in which you crossed, and must register within 29 days of the day you start making taxable supplies as a registrant.

In this example the business crossed $30,000 in the October to December quarter. It would stop being a small supplier at the end of January and would need to start charging GST/HST and register by the deadline. The CRA’s GST/HST for businesses pages set out the exact timing rules and how to register.

Should you register before you have to?

You can register voluntarily even as a small supplier, and there are good reasons to. Once registered, you can usually claim input tax credits for the GST/HST you pay on business expenses, such as equipment, software and supplies. If most of your clients are themselves GST/HST-registered businesses, charging tax costs them little, since they can claim it back.

Tracking it without a bookkeeper

Add a simple line to your monthly routine: total your sales for the month and keep a running sum of the last twelve months. When that number reaches about $25,000, decide whether to register voluntarily, so you are never doing it in a hurry. If you work from your apartment, this is also a good time to set up your home office records; see how to claim home office expenses when you rent and running a business from a rented apartment.

For other credits and programs small businesses often overlook, see seven benefits small business owners miss.