GST/HST for New Founders

Who this guide is for

Founders who know GST/HST exists and now have real questions about how to handle it, especially freelancers, consultants, and small sellers serving clients across Canada or abroad.

If you've read the setup and accounts guides and you're now asking the harder questions — should I register before I have to, what rate do I put on an invoice to a client in another province, what can I actually claim back, and is there a simpler way to remit — this is the guide. It assumes you understand the basics (the $30,000 threshold, that GST/HST is collected for the government) and goes one level deeper into the decisions and mechanics.

The rates here are 2026 figures. They change — Nova Scotia's rate dropped in 2025 — so treat them as current-year reference and confirm against CRA before you rely on them.

You must register past $30,000 — but should you do it sooner?

The rule is fixed: once your taxable revenue crosses the $30,000 small-supplier threshold (in a single quarter or over four consecutive quarters), registration is mandatory. Below that, it's your choice, and the choice actually matters.

The deciding question is almost always: who are your customers?

One caution: registering is a commitment. Once you're in, you charge and remit on all taxable sales and file every period; you can deregister, but generally not for at least a year. Decide deliberately, not by accident.

The rule that catches almost everyone: charge the customer's province

This is the single most common GST/HST mistake new founders make, and it can trigger a CRA reassessment. The rate you charge is not based on where your business is. Under the place-of-supply rules, it's generally based on where your customer is.

• For services, the rate generally follows the province of the customer (their business or billing address). A B.C.-based consultant invoicing an Ontario client charges 13% (Ontario's HST) — not B.C.'s 5% GST.
• For goods, the rate generally follows where the goods are delivered. Ship a product from Alberta to Nova Scotia and you charge 14% (Nova Scotia's HST).

The reassuring part: you don't register separately in each province. You charge the right rate per customer, but you file a single federal GST/HST return with the CRA covering all of it.

What to charge, by province

This is the GST/HST you charge as a registrant. Note that B.C., Saskatchewan, Manitoba, and Quebec also levy a separate provincial sales tax (PST/QST) that is administered separately from GST/HST; more on B.C.'s below.

Clients in other provinces, and clients abroad

Two situations come up constantly for founders, especially online service businesses:

• A national contract serving clients in several provinces. You may need to apply different rates to different portions, or split the invoice. This is normal for consulting work delivered across the country.
• Exporting to customers outside Canada. Sales of many goods and services to non-residents are zero-rated — you charge 0% GST/HST to the foreign client, but you can still claim input tax credits on your Canadian business costs. For founders serving international clients, this often means a refund position rather than a bill.

Three categories — and why the difference is money

What you sell falls into one of three GST/HST buckets, and the bucket decides both whether you charge tax and whether you can claim ITCs. This is not academic: it's the difference between getting refunds and getting nothing back.

The trap is the gap between zero-rated and exempt. Both mean the customer pays no GST/HST, but only zero-rated supplies let you recover the tax you paid on your costs. If your business makes exempt supplies, you generally can't register for those activities or claim ITCs on them. Knowing which bucket your work falls in changes the whole calculation.

Input tax credits: the half founders leave on the table

Every time you pay GST/HST on a legitimate business expense — software subscriptions, equipment, professional fees, supplies — you can generally claim it back as an input tax credit, reducing what you remit (or producing a refund). Over a year, for a real business, this adds up to serious money.

But ITCs come with a condition founders routinely ignore: documentation. To claim an ITC you need proper records — receipts and invoices that show the supplier's information (including their GST/HST registration number for larger purchases), the date, the amount, and a description. "I know I paid it" is not enough if the CRA asks. The documentary requirements get stricter as the purchase amount rises.

The Quick Method: less paperwork, sometimes less tax

The Quick Method of Accounting is an election that swaps detailed ITC tracking for a flat-rate remittance. It's one of the most useful — and least known — tools for small service businesses.

Here's the mechanism: you still charge customers the normal GST/HST rate (their invoices look the same). But at remittance time, instead of tracking every ITC, you remit a prescribed flat percentage of your GST/HST-included sales — a rate set by the CRA that varies by your business type and province, and is lower than what you collected. The gap is your built-in, notional ITC. On top of that, you get a 1% credit on the first $30,000 of eligible supplies each fiscal year.

Who can use it

• Your worldwide taxable supplies (including GST/HST, plus associates) are $400,000 or less in the year, and you've generally been in business 365 days (or you're a new registrant projecting under the threshold).
• You're not in an excluded category. Notably, accountants, bookkeepers, lawyers, financial consultants, and tax preparers cannot use it — along with certain financial institutions and non-profits.
• You elect by filing Form GST74 (or through My Business Account). The election takes effect on the first day of a reporting period and stays for at least a year before you can revoke it.

A simple Ontario service example: if you invoice $100,000 plus 13% HST, your GST/HST-included eligible sales are $113,000. At an 8.8% Quick Method remittance rate, you would remit about $9,944 before the 1% first-$30,000 credit, or about $9,644 after it. Under the regular method, you would remit the HST collected minus your actual ITCs — so you still need to compare both methods.

The cash-flow discipline, and when to bring in help

The most damaging GST/HST habit isn't a filing error — it's spending the tax you collected. Because the money sits in your account between collecting and remitting, it feels like revenue. It isn't. The cleanest discipline is to move collected GST/HST (net of expected ITCs) into a separate account the moment it lands, so the remittance is never a scramble.

One simple rule for when to get help: the first time you're unsure which rate to charge a client, or whether the Quick Method would save you money, that's a single, inexpensive accountant conversation — and it usually pays for itself in avoided reassessments or remittance savings.

If you're an immigrant founder

GST/HST works the same regardless of your immigration status — the threshold, rates, and rules don't change. Two points are worth flagging.

First, the credibility angle cuts in your favour. If you're building a B2B service business without a long Canadian track record, registering for GST/HST (even voluntarily) signals an established, professional operation — and because your business clients reclaim the tax as their own ITC, charging it costs them nothing. It's a low-cost way to look settled.

Second, if you serve clients back in your home country or elsewhere abroad, those exports are often zero-rated: you charge them 0%, but can still claim ITCs on your Canadian costs. For a newcomer founder with international clients, that's frequently a refund position worth setting up properly from the start.

If you're in British Columbia

B.C. is a GST-plus-PST province, which means two separate systems — and founders often forget the second one:

• GST is federal; PST is provincial and separate. As a GST/HST registrant you charge 5% GST (or the customer's HST rate for out-of-province sales). B.C.'s 7% PST is a completely separate tax with its own registration and rules — it is not part of your GST/HST return and is remitted to the province, not the CRA.
• PST applies mainly to goods and some services. Historically, many pure services weren't subject to PST — but that is changing for professional services (see the 2026 update below). Selling goods, or taxable services, in B.C. generally means registering for and collecting PST on top of GST. Check whether what you sell is PST-taxable.
• Place of supply still applies for the GST/HST side. A B.C. business billing an Ontario client charges Ontario's 13% HST on that invoice — your B.C. location doesn't change it.

Rates and rules checked June 2026. The professional-services PST expansion is subject to the enabling legislation and final regulations — confirm current B.C. PST rules and the federal place-of-supply rules before relying on them.

Common mistakes to avoid

Official sources

Verify anything rate- or rule-related — these change. These are the primary government sources behind this guide.