How to Charge GST/HST on an Invoice

Three decisions sit behind every Canadian invoice: whether you charge sales tax, which rate you use, and how you display it. Get those right and the invoice is done. This page walks through them in that order.

Step 1 — Do you have to charge tax at all?

You charge GST/HST once you are registered. Registration becomes mandatory when your revenue passes $30,000 in a single calendar quarter or across four consecutive quarters. Below that you are a "small supplier" and registration is optional.

If you are not registered, do not put a tax line on the invoice at all. Charging tax without a registration number is the one error here that causes real trouble, because you have collected money you have no account to remit it to.

Your registration number belongs on the invoice

Once registered, your GST/HST number has to appear on invoices where you charge tax. Under the documentary requirements, a buyer needs your registration number to claim an input tax credit on any purchase of $100 or more. Leave it off and your client cannot claim the credit — which is when you get the email asking for a corrected invoice.

Step 2 — Which province's rate applies

This is the question that trips up almost everyone: for most remote work the rate follows your client's province, not yours. An Alberta consultant billing an Ontario client charges Ontario's 13% HST, not Alberta's 5% GST.

That is the general rule, and it has real exceptions. Which one applies depends on what you supply:

Step 3 — Where the tax goes on the invoice

You have two legitimate options. You can show the tax as a separate amount, clearly identified — or you can quote a tax-included total, provided the invoice states that the amount includes tax. Both are permitted. What is not permitted is charging tax and leaving the client unable to tell.

For business clients, showing tax separately is the better choice, even though the tax-included option is legal. A client claiming an input tax credit has to identify the tax amount, and an invoice that makes them work it backwards out of a total is the invoice that generates a request for a corrected copy.

1. Subtotal — your work, before tax
2. Each tax on its own line — "GST (5%)" and "PST (7%)" rather than a merged "Tax 12%"
3. Total — subtotal plus taxes
4. Your GST/HST number — anywhere on the invoice, usually near your business details

In provinces with HST there is a single harmonized line. In BC, Manitoba, Saskatchewan and Quebec there are two, because the federal and provincial taxes are separate taxes collected by different governments. Splitting them is not a federal filing requirement — PST and QST are provincial — but merging them into one figure makes your client's bookkeeping harder and obscures the GST portion, which is the only part they can claim back federally.

A worked example

You are a BC-based designer billing $2,000 of work to a client in Ontario.

Your own BC rates never enter into it. If the same client were in Alberta the line would read "GST (5%) — $100.00" and the total would be $2,100.00.

Five mistakes that cause problems later

• Using your own province's rate. The most common one, and it either short-changes you or overcharges your client.
• Merging GST and PST into one line. Not a federal filing breach, but it hides the GST portion — the only part your client can claim back — and creates avoidable back-and-forth.
• Omitting your registration number. Blocks your client's input tax credit on anything $100 or over.
• Charging tax before registering. You have collected money against an account that does not exist yet.
• Rounding the tax line by hand. Small discrepancies compound across a year and make your filing harder to reconcile.

Letting the invoice do it for you

iBill reads the client's province off their record and applies the correct combination automatically — one line for HST provinces, two where GST and PST are separate, QST handled as its own tax. Your registration number is pulled from your business profile onto every invoice, so it cannot be forgotten.