When to Charge GST/HST — $30K Threshold Explained

One of the most common questions Canadian business owners ask is "When do I need to start charging GST/HST?" The answer depends on several factors including your revenue, what you sell, and where your customers are located. This comprehensive guide explains everything you need to know about GST/HST obligations in Canada.

The $30,000 Small Supplier Threshold

The most important rule for Canadian businesses is the small supplier threshold. If your total taxable revenues are $30,000 or less over four consecutive calendar quarters, you are considered a "small supplier" and are not required to register for or charge GST/HST.

How the $30,000 Threshold Works

The CRA looks at your taxable revenues over any four consecutive calendar quarters (not necessarily a calendar year). Once you exceed $30,000 in a single quarter or over four consecutive quarters, you must register for GST/HST.

When You Must Register

You must register for a GST/HST account if:

Your taxable revenues exceed $30,000 in a single calendar quarter, OR
Your total taxable revenues exceed $30,000 over four consecutive calendar quarters

Registration Deadline

Once you exceed the threshold, you have 29 days to register for GST/HST. You must start charging GST/HST on the date you exceed the threshold, not when you register.

Voluntary Registration

Even if you're under the $30,000 threshold, you may choose to register voluntarily. This can be beneficial if:

You have significant business expenses and want to claim input tax credits (ITCs)
Your clients are primarily other businesses that can claim ITCs
You want to appear more established and professional
You expect to exceed $30,000 soon and want to prepare

Taxable vs. Exempt vs. Zero-Rated Supplies

Not all goods and services are taxed the same way in Canada. Understanding the three categories is essential for proper invoicing.

Category	GST/HST Rate	Can Claim ITCs?
Taxable Supplies	5% GST or provincial HST rate	Yes
Zero-Rated Supplies	0%	Yes
Exempt Supplies	No GST/HST charged	No

Taxable Supplies (Standard Rate)

Most goods and services sold in Canada are taxable at the standard rate. This includes:

Professional services (consulting, marketing, IT services)
Construction and renovation services
Retail goods (clothing, electronics, furniture)
Restaurant meals and prepared foods
Accommodation (short-term rentals, hotels)

Zero-Rated Supplies (0% Tax)

Zero-rated supplies are technically taxable but at a 0% rate. The advantage is that you can still claim input tax credits on expenses related to these supplies:

Basic groceries: Milk, bread, fresh vegetables, meat, fish
Prescription drugs: Medications requiring a prescription
Medical devices: Wheelchairs, hearing aids, artificial limbs
Exports: Goods and services sold to customers outside Canada
Farm products: Grains, raw wool, tobacco leaves

Exempt Supplies (No Tax, No ITCs)

Exempt supplies are not subject to GST/HST, but you cannot claim input tax credits on related expenses:

Common Exempt Supplies

Most health and medical services: Doctor visits, dental services, nursing services
Educational services: Courses offered by vocational schools, universities
Childcare services: Daycare and babysitting services
Most financial services: Bank fees, insurance premiums, loan interest
Legal aid services: Services provided under a legal aid plan
Long-term residential rent: Rent for residential accommodations (1 month+)
Certain public sector services: Municipal transit, water distribution

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Place of Supply Rules

When selling across provincial borders, you need to know which province's tax rate to charge. This is determined by the "place of supply" rules.

For Goods (Tangible Products)

The place of supply is generally where the goods are delivered to the customer:

Example: Shipping Products

You're based in Alberta and ship furniture to a customer in Ontario:

Charge Ontario HST (13%), not Alberta GST (5%)
The place of supply is Ontario because that's where the goods are delivered

For Services

The place of supply for services is more complex and depends on the type of service:

Service Type	Place of Supply
Services performed at a specific location (repairs, construction)	Where the service is performed
Services related to tangible personal property	Where the property is located
Computer or telecom services	Where the customer ordinarily resides
Advisory, consulting, or professional services	Customer's business address

Out-of-Province Sales

When you sell to customers in other provinces, you need to charge the correct tax rate based on where the supply takes place.

Provincial Tax Rates (2026)

Province/Territory	Tax Type	Total Rate
Ontario	HST	13%
British Columbia	GST + PST	5% + 7% = 12%
Alberta, NWT, Nunavut, Yukon	GST only	5%
Quebec	GST + QST	5% + 9.975% = 14.975%
Nova Scotia	HST	14%
New Brunswick	HST	15%
PEI	HST	15%
Newfoundland & Labrador	HST	15%
Manitoba	GST + RST	5% + 7% = 12%
Saskatchewan	GST + PST	5% + 6% = 11%

Important: Quebec QST Calculation

Since 2013, Quebec's QST is calculated on the subtotal only (not on GST). So for a $100 item: GST = $5, QST = $100 x 9.975% = $9.98, Total = $114.98. iBill.ca handles this automatically.

International Sales (Exports)

Most goods and services exported to customers outside Canada are zero-rated, meaning you charge 0% GST/HST.

Zero-Rated Exports Include:

Goods shipped directly to a foreign customer
Services performed for non-resident clients who are outside Canada
Intellectual property (software, patents) sold to foreign businesses
Advisory and consulting services to non-resident clients

Documentation Required

To claim zero-rating on exports, you must keep proof that the goods or services were exported. This includes shipping records, export declarations, or contracts showing the customer is outside Canada.

Exceptions to Zero-Rating

Some services to non-residents are still taxable if they're performed in Canada or relate to Canadian property:

Services related to real property in Canada
Services related to tangible personal property located in Canada
Services performed in Canada when the non-resident is in Canada

Common Exemptions Explained

Medical and Health Services

Most health services provided by regulated health practitioners are exempt:

Physicians and surgeons
Dentists and dental hygienists
Optometrists
Chiropractors
Physiotherapists
Psychologists
Registered nurses

However, cosmetic procedures are generally taxable unless medically necessary.

Educational Services

Exempt educational services include:

Courses leading to a diploma or degree
Vocational training programs
Tutoring services for school curriculum subjects
Music lessons (individual instruction)

Note: Recreational classes, corporate training, and seminars are typically taxable.

Financial Services

Most financial services are exempt, including:

Interest on loans and mortgages
Insurance premiums (life, health, property)
Bank account fees and service charges
Credit card fees
Securities trading

Registration Timing and Process

When to Register

You should register for GST/HST:

Before starting business if you expect to exceed $30,000 in the first year
Within 29 days of exceeding the $30,000 threshold
Voluntarily at any time if you want to claim ITCs

How to Register

You can register for a GST/HST account through:

Online: CRA Business Registration Online (fastest method)
Phone: 1-800-959-5525
Mail: Form RC1 - Request for a Business Number

What You'll Receive

After registering, you'll receive a Business Number (BN) with an RT account suffix (e.g., 123456789RT0001). This number must appear on all invoices where you charge GST/HST.

Choosing a Reporting Period

When you register, you'll choose how often to file GST/HST returns:

Annual: For revenues under $1.5 million (simplest option)
Quarterly: For revenues between $1.5 million and $6 million
Monthly: Required for revenues over $6 million

When GST/HST Applies: Thresholds, Exemptions, and Place of Supply Rules

Knowing when to charge GST/HST is one of the most common sources of confusion for Canadian businesses. The rules involve revenue thresholds, supply classifications, geographic considerations, and several non-obvious exceptions. Getting it wrong can mean owing back taxes with penalties or overcharging your clients. This section breaks down the key rules every business owner should understand.

The $30,000 Small Supplier Threshold in Detail

CRA uses a rolling four-consecutive-calendar-quarter test to determine whether you must register for GST/HST. If your worldwide taxable supplies (revenue from taxable goods and services, not total income) exceed $30,000 in a single calendar quarter, or over any four consecutive calendar quarters, you must register within 29 days. The count includes zero-rated supplies but excludes exempt supplies, sales of capital property, and goodwill. For example, if you earned $8,500 in Q1, $9,200 in Q2, $7,800 in Q3, and hit $5,000 partway through Q4, you crossed $30,000 during Q4 and must register within 29 days of that transaction. Once registered, you remain registered even if revenue drops below $30,000 in future periods. You can apply to deregister, but only after being registered for at least one year. To learn about the registration process itself, see our guide on how to register for GST/HST.

Zero-Rated vs. Exempt: A Critical Distinction

These two categories are often confused, but the difference has major financial implications. Zero-rated supplies are technically taxable at a rate of 0%. You do not charge GST/HST to your customer, but you can still claim Input Tax Credits (ITCs) on expenses related to making those supplies. Examples include basic groceries (but not snack foods, candy, or prepared meals), prescription drugs, medical devices, and exported goods and services. Exempt supplies, on the other hand, are not subject to GST/HST at all, and you cannot claim ITCs on the related business expenses. Common exempt supplies include most health care and dental services, childcare and daycare, residential rent (long-term), most financial services (loans, insurance), and educational services from public institutions. If your business makes both taxable and exempt supplies, you must apportion your ITCs accordingly, which can add complexity to your tax filings. Ensure your invoices reflect the correct classification. Our CRA-ready invoice guide covers the required fields.

Place of Supply Rules: Which Province's Rate Applies

When you sell across provincial borders, the tax rate is generally based on where the supply is made, not where your business is located. For tangible goods, GST/HST is charged based on the province where the goods are delivered. For services performed at a specific location (such as repairs, construction, or in-person consulting), the tax is based on where the work is performed. For services where the location of performance is not clear (such as accounting, legal advice, or digital services), the tax rate is based on the province where the client is located. This means a web developer in Alberta billing a client in Ontario must charge 13% HST, not 5% GST. Understanding these rules is crucial for businesses that serve clients across Canada.

Export Services: Zero-Rating for Non-Resident Clients

Services provided to non-resident clients are generally zero-rated when the service is for use outside Canada. To qualify, the client must be a non-resident who is not registered for Canadian GST/HST, and the service must not relate to real property in Canada, tangible personal property in Canada, or an individual physically present in Canada at the time the service is performed. For instance, a Canadian marketing consultant providing strategy to a U.S. company for its American operations would zero-rate the invoice. However, a Canadian architect designing a building located in Canada for a U.S. client must still charge GST/HST because the service relates to Canadian real property. Keep documentation proving the non-resident status and the foreign use of the service for audit purposes.

Common Mistakes: What to Charge and What Not to Charge

Several common scenarios trip up Canadian businesses. Tips and gratuities: Do not charge GST/HST on voluntary tips. However, if a mandatory service charge is added to the bill, it is part of the taxable supply and GST/HST applies. Delivery and shipping fees: If delivery is part of a taxable supply, the delivery charge is also taxable. Charging separately does not exempt it. Gift cards: Do not charge GST/HST when selling a gift card. The tax is charged when the gift card is redeemed for a taxable good or service. Deposits and retainers: A non-refundable deposit is considered payment for a taxable supply and GST/HST applies when the deposit is received. A refundable deposit that is merely held as security is not subject to GST/HST until it is applied to a purchase. Track your expense categories accurately using our Canadian business expense categories guide to ensure correct ITC claims on your purchases.

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Frequently Asked Questions

Do I need to charge GST/HST if I make less than $30,000?

No, if your total taxable revenues are $30,000 or less over four consecutive calendar quarters, you are considered a small supplier and do not need to register for or charge GST/HST. However, you can voluntarily register if you want to claim input tax credits on your business expenses.

What is the difference between exempt and zero-rated supplies?

Zero-rated supplies (like basic groceries and exported goods) are taxable at 0%, meaning you don't charge GST/HST but can still claim input tax credits. Exempt supplies (like medical services and financial services) are not taxable and you cannot claim input tax credits on related expenses.

Which province's tax rate do I charge for out-of-province sales?

For goods, you charge the tax rate where the goods are delivered. For services, it depends on the type of service - most are taxed where the service is performed or where the customer is located. This is called the "place of supply" rules.

Do I charge GST/HST on sales to international customers?

Most exports of goods and services to customers outside Canada are zero-rated, meaning you charge 0% GST/HST. However, you must keep documentation proving the export, such as shipping records or contracts with foreign customers.

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