What Is GST in Canada?

The Goods and Services Tax (GST) is a federal consumption tax of 5% charged on most goods and services sold in Canada. It applies nationwide and is administered by the Canada Revenue Agency (CRA). Whether you are hiring a contractor, purchasing equipment, or selling a service, GST is charged if the seller is registered — and you can claim it back as an Input Tax Credit (ITC) if you are registered too.

GST registration is mandatory once your total annual taxable revenues exceed $30,000 in any single calendar quarter or over four consecutive quarters. Below $30,000, registration is voluntary but often smart — it lets you claim back all the GST/HST you pay on business expenses.

At Pathak Professional Corporation in Mississauga, we help Ontario businesses register for GST/HST, file returns, recover ITCs, and handle CRA audits. Call 437-872-7399.

What Is HST in Canada?

The Harmonized Sales Tax (HST) is a single combined tax that merges the federal 5% GST with a province’s sales tax into one rate. Provinces that have harmonized collect one tax instead of two, and businesses file a single CRA return. In Ontario, HST is 13% (5% federal + 8% provincial), which has applied since July 1, 2010 when Ontario eliminated its separate 8% PST.

GST vs HST vs PST: Complete 2025 Rates for Every Province

HST vs GST: Key Differences for Canadian Businesses

How HST Works for Ontario Businesses: Step-by-Step

1. Collect 13% HST on every taxable sale — add it to your invoices
2. Track Input Tax Credits (ITCs) — the 13% HST you paid on eligible business purchases (office rent, equipment, professional fees, marketing)
3. Calculate your net HST: HST collected − ITCs = amount owed to CRA
4. File your HST return — quarterly for most Ontario small businesses
5. Remit the balance — or claim a refund if your ITCs exceed HST collected (common in startup phase)

Real Ontario Example: A Mississauga consulting firm invoices $150,000 in Q1 2025:

• HST collected from clients: $150,000 × 13% = $19,500
• HST paid on office rent, software, and professional services: $4,200 ITCs
• Net HST remittance to CRA: $19,500 − $4,200 = $15,300

Zero-Rated vs Exempt Supplies: Critical Distinction

Why this matters for Ontario businesses: If you provide both taxable and exempt services (e.g. a law firm billing for legal services AND subletting office space), you must allocate your ITCs between the two activities. Overclaiming ITCs on exempt activities is a top CRA audit trigger.

GST/HST Registration: When and How

• Mandatory threshold: $30,000 in annual taxable revenues — register within 29 days of exceeding this
• Voluntary registration: Businesses under $30,000 can register — recommended if you have significant business expenses (you can reclaim HST paid on them immediately)
• How to register: Online via CRA My Business Account, by phone at 1-800-959-5525, or through a CPA
• What you get: A 9-digit Business Number (BN) with an RT0001 suffix for your GST/HST account
• Retroactive liability: Once you exceed $30,000, you owe HST on the very sale that put you over — even if you weren’t yet registered

GST/HST Filing Deadlines: Ontario Businesses

Late-filing penalty: 1% of the balance owing + 0.25% per complete month late (max 12 months) + daily compound interest. The penalty for filing late is always higher than paying late — file even if you cannot pay.

The HST Quick Method: Save Time, Sometimes Money

Ontario businesses with revenues under $400,000 can use the Quick Method — remit a flat percentage of HST-included revenues instead of tracking every ITC:

• Service businesses in Ontario: Remit 8.8% of HST-included revenues
• Retail/goods businesses in Ontario: Remit 1.8% of HST-included revenues

Quick Method example: Ontario service firm with $226,000 in HST-included revenues ($200,000 + $26,000 HST):

• Normal method: Collect $26,000 − $4,000 ITCs = $22,000 owed
• Quick Method: $226,000 × 8.8% = $19,888 owed (savings of $2,112)
• Quick Method favours businesses with low expenses relative to revenue

Top 5 GST/HST Mistakes That Trigger CRA Audits

1. Late registration — failing to register after crossing $30,000 creates retroactive liability plus interest
2. Claiming 100% ITC on meals — only 50% of business meals are eligible; overclaiming 100% is a known audit trigger
3. Charging HST on exempt supplies — collecting tax you’re not entitled to creates refund obligations to customers
4. Missing PST when selling into non-HST provinces — if you sell to BC, SK, MB or QC customers, you may need to register for their provincial tax
5. Not keeping supplier invoices — CRA requires invoices over $30 to include the supplier’s Business Number; without it, your ITC claim is invalid

Frequently Asked Questions: HST vs GST Canada

What is the difference between HST and GST in Ontario?

In Ontario, HST (Harmonized Sales Tax) at 13% replaced both GST and the old Ontario PST on July 1, 2010. The HST combines the 5% federal GST and the 8% Ontario provincial portion into a single tax administered by the CRA. Ontario businesses file one HST return with the CRA instead of two separate returns, and can claim ITCs on the full 13% paid on business expenses — making it administratively simpler than provinces with separate PST systems.

Does Ontario have PST in 2025?

No. Ontario eliminated its separate Provincial Sales Tax (PST) in July 2010 when it harmonized into the 13% HST. Ontario businesses only register with and remit to the CRA. Provinces that still have separate PST alongside GST include British Columbia (7% PST), Saskatchewan (6% PST), and Manitoba (7% RST) — businesses selling into those provinces may need to register for provincial tax separately.

At what revenue do I have to register for GST/HST?

You must register for GST/HST once your annual taxable revenues exceed $30,000 — either in a single calendar quarter or over four consecutive quarters. Registration is required within 29 days of exceeding this threshold. Voluntary registration before hitting $30,000 is available and often recommended, as it immediately allows you to claim back HST paid on all your business purchases as Input Tax Credits.

What is the GST/HST Quick Method and should I use it?

The Quick Method lets eligible Ontario businesses (under $400,000 revenue) remit a flat rate (8.8% for services, 1.8% for goods) on their HST-included revenues instead of tracking individual ITCs. It reduces bookkeeping but is not always beneficial — it works best for service businesses with minimal expenses. A Mississauga CPA can calculate whether the Quick Method saves you money based on your specific ITC profile. Contact Pathak Professional Corporation at 437-872-7399 for a free comparison.

When Does HST Apply vs GST? Real-World Examples for Ontario Businesses

Understanding exactly when HST applies versus GST is critical for Ontario businesses to stay compliant. Here are practical real-world scenarios that illustrate the distinction:

• Ontario business selling to an Ontario customer: Charge 13% HST (5% federal + 8% Ontario provincial component combined into one rate)
• Ontario business selling to an Alberta customer: Charge 5% GST only — Alberta has no provincial sales tax and does not participate in the HST framework
• Professional services (accounting, legal, consulting) in Ontario: 13% HST applies to the entire invoice amount
• Construction contractor working on a residential renovation in Ontario: HST applies at 13% for most renovation services; new residential construction has specific rebate rules
• Selling basic groceries in Ontario: Zero-rated — no HST or GST applies to most basic food items
• Medical and dental services: Exempt from HST — providers cannot collect HST and cannot claim Input Tax Credits on related expenses

The core principle: in Ontario and other HST provinces, HST replaces both the federal GST and the provincial sales tax. When you charge HST, you remit both portions through a single CRA GST/HST return — no separate provincial filing is required.

Input Tax Credits (ITCs): Recovering HST Paid on Business Expenses

One of the most significant advantages of GST/HST registration is the ability to claim Input Tax Credits (ITCs). ITCs allow businesses to recover the HST paid on qualifying business inputs and expenses — making the tax cost-neutral for most registered businesses.

Common expenses eligible for ITC claims:

• Office rent, utilities, and property costs
• Business equipment, computers, and technology
• Professional services (accounting, legal, marketing, consulting)
• Business vehicle expenses (fuel, maintenance, leasing)
• Advertising, website costs, and digital marketing
• Business meals and entertainment (50% of the HST portion)
• Business travel and accommodation

To claim ITCs, you must keep proper documentation: receipts showing the supplier’s GST/HST registration number, the transaction date, a description of the purchase, and the total amount including HST. The CRA frequently disallows ITC claims during audits when documentation is incomplete.

Important: Businesses providing exempt supplies (such as residential rent or health services) cannot claim ITCs on related expenses. If your business provides both taxable and exempt supplies, ITCs must be proportionally allocated.

GST/HST Filing Requirements and Deadlines in 2026

For 2026, GST/HST rules remain consistent for most Canadian businesses. Key dates and thresholds Ontario businesses must know:

• Small supplier threshold: Annual taxable supplies under $30,000 — registration not mandatory, but voluntary registration permits ITC claims
• Ontario HST rate: 13% (unchanged in 2026)
• Annual filers (December 31 year-end): Return due June 15, 2026; payment due April 30, 2026
• Quarterly filers: Return and payment due within 1 month of each quarter end
• Monthly filers: Return and payment due within 1 month of the period end
• Electronic filing: Mandatory for most businesses — use CRA Netfile or authorized tax software

For step-by-step instructions on submitting your return online, see our complete GST/HST Netfile filing guide.

Additional HST vs GST Questions — Answered for 2026

Related resources: GST/HST Netfile Filing Guide 2026 | Personal Tax Filing Mississauga | Corporate Tax Rate Canada 2026 | CRA Voluntary Disclosure Program