Charging GST/HST and Invoicing Clients Correctly

Introduction
Understanding charging GST/HST and invoicing clients correctly is essential for Canadian businesses, freelancers, consultants, and incorporated professionals. Mistakes in GST/HST invoicing lead to CRA or Revenu Québec penalties, denied input tax credits (ITCs), customer disputes, and audit exposure. Whether you operate a small online store, a consulting practice, a construction business, or any service-based enterprise, applying sales tax rules correctly protects your business from serious compliance risks. Québec adds another layer of requirements through the QST system, making invoicing accuracy even more important. This guide explains everything businesses need to know about charging GST/HST and invoicing clients correctly, helping them stay compliant, tax-efficient, and audit-proof.

Legal and Regulatory Framework
Charging GST/HST and invoicing clients correctly is governed by the Excise Tax Act and Québec’s Taxation Act. Businesses must register and charge GST/HST when:

• they exceed the small supplier threshold of $30,000 in worldwide taxable revenues in the last four consecutive quarters, or
• they expect to exceed $30,000 in a single quarter, or
• they operate a taxi or rideshare business (mandatory, regardless of revenue), or
• they voluntarily register to claim ITCs

Once registered, businesses must:

• charge the correct GST/HST rate based on the client’s province
• charge QST separately if operating in Québec
• include all required elements on invoices
• remit sales tax to CRA and Revenu Québec
• maintain proper documentation to support taxes charged

Understanding charging GST/HST and invoicing clients correctly requires applying federal and provincial rules with precision.

Required Elements on a Valid GST/HST Invoice
Even though we avoid tables, we list the mandatory components clearly. A valid GST/HST invoice must include:

• supplier’s legal business name
• supplier’s GST/HST registration number
• invoice date
• unique invoice number
• client’s name
• description of goods or services
• amount before tax
• GST/HST amount charged
• applicable tax rate
• total amount due

Québec invoices must also include the QST registration number and QST amount charged separately.

Key Court Decisions
Court rulings reflect the importance of charging GST/HST and invoicing clients correctly. Key themes include:

• businesses that fail to charge GST/HST remain liable even if customers do not pay
• ITCs can be denied if invoices are missing required information
• reconstructed invoices are not always accepted
• interprovincial service rules must match the “place of supply” guidelines
• QST must be charged separately even on invoices that include GST

In one case, a business tried to retroactively add GST to old invoices. The court ruled GST must be charged at the time of sale, not afterward. Québec rulings similarly emphasized strict compliance with QST invoicing rules.

Why CRA Targets This Issue
CRA and Revenu Québec closely monitor charging GST/HST and invoicing clients correctly because sales tax non-compliance is widespread. Common audit triggers include:

• missing GST/QST numbers on invoices
• charging the wrong tax rate for interprovincial customers
• claiming ITCs without proper documentation
• large discrepancies between GST collected and GST remitted
• failing to charge GST after exceeding the $30,000 threshold
• lump-sum invoices with unclear tax allocation
• repeated late GST/QST filings

Both tax authorities match invoices, bank deposits and GST/QST returns to detect inconsistencies.

Mackisen Strategy
Mackisen CPA provides a full, structured approach to charging GST/HST and invoicing clients correctly:

• determining when registration is required
• validating GST/HST and QST numbers
• setting up correct tax codes in invoicing systems (QuickBooks, Xero, Wave)
• applying place-of-supply rules for interprovincial sales
• preparing compliant invoice templates for both Canada and Québec
• ensuring digital platforms (Shopify, Stripe, Square) charge correct sales tax
• correcting past invoicing errors through voluntary disclosures
• reconciling GST/QST returns with accounting records
• training businesses on proper documentation for ITCs

We ensure all aspects of charging GST/HST and invoicing clients correctly are applied consistently and defensibly.

Real Client Experience
Many businesses approach Mackisen after receiving GST/QST reviews or penalties. One consultant exceeded the $30,000 threshold and continued invoicing without GST. CRA assessed over $6,000 in GST plus interest. Mackisen filed a voluntary disclosure and reduced penalties.

A Québec retailer listed GST and QST as a single combined tax. Revenu Québec denied QST ITCs due to incorrect invoicing format. We corrected all invoices and restored compliance.

One online business used U.S. invoicing software that charged no tax to Canadian customers. Mackisen corrected invoicing rules, registered GST/QST, and remitted overdue taxes.

Another contractor charged the wrong GST/HST rates for customers in Ontario and Alberta. We implemented correct place-of-supply rules and fixed all returns. These examples show why charging GST/HST and invoicing clients correctly is essential.

Common Questions
Businesses frequently ask:

• Do I need to charge GST/HST if under $30,000 revenue?
No—unless operating a taxi/rideshare or choosing to register voluntarily.

• If a client is in another province, which tax applies?
Use place-of-supply rules—based on the client’s province.

• Do I need a GST number and QST number?
Québec businesses need both.

• Can I claim ITCs without receipts?
No—documentation is required.

• Can GST be added later if I forgot?
Legally, GST must be charged at the time of sale. Retroactive charging often fails.

Understanding these points clarifies charging GST/HST and invoicing clients correctly.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you're filing your first GST/QST return or optimizing multi-year refunds, our expert team ensures precision, transparency and protection from audit risk. When charging GST/HST and invoicing clients correctly, Mackisen provides complete sales tax setup, compliance evaluation, invoicing templates and professional support to protect your business.