Charging GST/HST as a Freelancer: When and How to Start – A Complete Guide by a Montreal CPA Firm Near You

One of the first tax questions freelancers and self-employed Canadians face is: Do I

need to charge GST/HST?

Many new contractors start working without registering, believing GST/HST doesn’t

apply until their business is large. Others register too early or incorrectly charge the

wrong rate to clients. CRA enforces strict rules regarding when GST/HST must be

charged, how to register, how to add it to invoices, and when to remit it. Failure to follow

these rules can result in uncollected tax, penalties, interest, and GST/HST audits. This

guide explains when freelancers must register for GST/HST, how to obtain a GST/HST

number, how to correctly charge tax on invoices, and how to stay compliant as your

business grows.

Legal and Regulatory Framework

GST/HST obligations for freelancers are governed by the Excise Tax Act. Under the

law:

• You must register for GST/HST once you exceed $30,000 in taxable revenues in any

12-month period (the small supplier threshold).

• Taxable revenues include worldwide revenue from taxable goods and services.

• Freelancers may voluntarily register before reaching $30,000 to claim input tax

credits (ITCs).

• Once registered, you must collect GST/HST on invoices, file GST/HST returns, and

remit net tax.

• The tax rate depends on the province of supply (5% GST or 13%/15% HST).

• GST/HST registrants must maintain proper business records and receipts.

Freelancers report GST/HST collected and ITCs claimed using the GST34 return, filed

monthly, quarterly, or annually depending on revenue. These statutes form the legal

foundation for charging GST/HST as a freelancer in Canada.

Key Court Decisions

Courts have reinforced CRA’s strict enforcement of GST/HST rules.

In Walls v. Canada, CRA reassessed a freelancer who failed to register after surpassing

$30,000 in revenue. The court confirmed that registration is mandatory regardless of

intent.

In Global Cash Access v. Canada, the Federal Court of Appeal upheld CRA’s

interpretation of taxable supplies and denied ITCs for improperly documented

expenses.

In Cornwallis Financial Corp. v. Canada, CRA successfully assessed GST/HST on

services incorrectly classified as exempt.

These cases highlight that GST/HST compliance is not optional, and freelancers must

follow registration and charging rules precisely.

Why CRA Targets This Issue

CRA audits freelancers frequently because GST/HST errors are common. CRA targets

situations where:

• income exceeds $30,000 but no GST/HST registration exists

• freelancers collect GST/HST but do not remit it

• tax is charged incorrectly (wrong rate, wrong province)

• GST/HST returns are filed late or not at all

• ITCs are claimed without proper receipts

• cash-based freelancers underreport income to avoid registration

CRA also cross-references T4A slips, PayPal and Stripe deposits, online platform

income, and bank records to detect unregistered taxable activity. Understanding these

risks is essential for self-employed compliance.

Mackisen Strategy

At Mackisen CPA Montreal, we help freelancers implement a clean, audit-proof

GST/HST system. Our approach includes:

• determining when registration is required or beneficial

• registering your GST/HST number with CRA correctly

• reviewing your invoicing process to ensure correct tax rates

• applying place-of-supply rules for interprovincial clients

• teaching clients how to calculate net tax (GST collected – ITCs)

• preparing GST/HST returns on a monthly, quarterly, or annual basis

• evaluating whether the Quick Method would reduce tax and simplify filings

• ensuring GST/HST reporting aligns with income on your T2125

• resolving CRA inquiries or audits regarding GST/HST compliance

This ensures freelancers avoid costly CRA reassessments and maximize legal

deductions.

Real Client Experience

A graphic designer exceeded the $30,000 threshold but continued operating as a small

supplier. CRA reassessed her for uncollected GST/HST, creating a large unexpected

bill. We registered her retroactively and implemented proper invoicing.

Another freelancer collected GST/HST but missed filing deadlines. CRA charged

penalties and interest. We restored compliance by filing all late returns and creating a

structured reminder system.

A consultant incorrectly charged GST instead of HST to Ontario clients. CRA adjusted

his filings and required amended invoices. We corrected the invoicing system and

trained him on place-of-supply rules.

Common Questions

Freelancers often ask whether GST/HST applies to all services. Most services are

taxable unless exempt by law (e.g., certain health and financial services).

Others ask whether GST/HST is required for U.S. clients. No—services supplied to

foreign clients are usually zero-rated.

Some ask if they should register before hitting $30,000. Voluntary registration allows

ITCs, but requires compliance.

Another question: How do I add GST/HST to invoices? Simply charge the correct rate

and display your GST/HST number.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps

freelancers register, charge, collect, and remit GST/HST accurately and efficiently.

Whether you’re just starting out or scaling your freelance business, our expert team

ensures compliance, clarity, and protection from CRA audits.