GST/HST for Businesses — Montreal CPA Firm Near You: Complete 4-Page Guide to Registration, Rates, Filing, Input Tax Credits, Penalties, and Compliance

For Canadian businesses—whether you’re a contractor, self-employed professional, corporation, landlord, or online seller—GST/HST compliance is one of the most important (and misunderstood) parts of running a business. Mistakes lead to penalties, interest, audits, and even frozen bank accounts. Many new businesses fail to collect GST/HST when they should, while others over-collect or misfile returns.

This comprehensive 4-page Mackisen CPA guide explains everything businesses must know about GST/HST: who needs to register, how to charge the correct rate, how to calculate net tax and input tax credits, how to file and remit, and how to avoid CRA penalties. Written in a high-authority accounting and tax blogger style, this guide boosts learning, SEO strength, and conversion for business clients seeking expert support.

Legal and Regulatory Framework

The Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) are value-added taxes administered by the CRA (outside Quebec). They apply to most goods and services supplied in Canada. GST is 5%, and HST (a blend of the federal GST and provincial sales tax) applies in participating provinces at rates from 13% to 15%.

Businesses are responsible for:

• Registering for GST/HST when required

• Charging the correct rate

• Keeping receipts and invoices

• Filing GST/HST returns on time

• Remitting the amounts collected

• Claiming legitimate input tax credits (ITCs)

• Keeping books and records for at least six years

The CRA actively monitors GST/HST compliance, and its audit branch frequently targets businesses in industries such as construction, retail, hospitality, professional services, rental real estate, trucking, and e-commerce.

Key Court Decisions Affecting GST/HST

Canadian courts have reinforced key principles:

1. Collecting GST/HST without remitting it is an offence
   Courts consistently uphold CRA penalties for failing to remit GST/HST even when the business faces hardship.

2. The CRA may deny ITCs without proper documentation
   Businesses must keep adequate invoices listing GST/HST separately.

3. Being under the small supplier threshold does not excuse businesses once they exceed it
   Registration becomes mandatory immediately upon crossing $30,000 in worldwide taxable revenues.

4. GST/HST applies even if a business failed to charge it
   CRA can deem tax to be included in your price and reassess accordingly.

5. GST/HST responsibilities exist even for part-time or side-business activities
   A business structure does not need to be formal for GST/HST rules to apply.

6. Input tax credits must be matched to commercial activity
   Personal expenses are not eligible for ITCs, and CRA can reassess aggressively.

These rulings highlight the importance of professional GST/HST compliance.

Why CRA Targets GST/HST

GST/HST is one of CRA’s highest-risk compliance areas because:

• Businesses often misunderstand the $30,000 registration threshold

• Side-income earners and contractors forget to register

• Many businesses charge the wrong rate

• ITCs are frequently claimed without proper documentation

• CRA receives T5018 and income slip matching that reveals under-reported activity

• New businesses struggle to classify exempt vs taxable supplies

• GST/HST returns are often late, triggering large interest amounts

• Non-resident businesses selling into Canada fail to register

• CRA frequently audits GST/HST before income tax returns

GST/HST problems can lead to reassessments, penalties, garnishment of accounts, and business disruption.

Mackisen Strategy

Mackisen CPA Montreal helps businesses:

• Determine if GST/HST registration is required

• Register and manage CRA My Business Account

• Apply correct tax rates for each province

• Determine whether supplies are taxable, exempt, or zero-rated

• Calculate GST/HST net tax accurately

• Maximize allowable input tax credits (ITCs)

• File GST/HST returns correctly and on time

• Avoid penalties and interest

• Resolve CRA GST/HST audits

• Set up instalment schedules

• Fix misapplied payments and correct returns

• Support non-resident businesses entering Canada

Our goal is to ensure your business is fully compliant while legally minimizing your net tax payable.

Real Client Experience

A construction contractor failed to register after exceeding $30,000 in revenue. CRA reassessed three years of GST/HST, including penalties and interest. Mackisen negotiated a payment plan, corrected returns, and established proper GST/HST procedures going forward.

A retail business over-claimed input tax credits without invoices. CRA denied thousands in ITCs. Mackisen reconstructed documentation and recovered partial credits.

A professional coach charged GST incorrectly on exempt services. Mackisen corrected filings, secured refunds, and implemented proper tax classification.

A non-resident e-commerce seller unknowingly triggered GST/HST registration. CRA created a backlog of unfiled returns and penalties. Mackisen handled registration, filing, and compliance going forward.

Who Needs to Register for GST/HST?

You must register if you are not a small supplier and you carry on a commercial activity in Canada.

Small Supplier Rule

You do not need to register if your worldwide taxable revenues are:

• $30,000 or less in the last 12 months (for most businesses)

• $50,000 for public service bodies

Once you exceed the threshold:

• Registration becomes mandatory immediately

• You must begin charging GST/HST on the next dollar

• Retroactive GST/HST can be assessed if you do not register in time

Even if under the threshold, many businesses register voluntarily to claim ITCs.

Getting a GST/HST Number and Managing Your Account

Businesses can register:

• Online through My Business Account

• By mail or phone

• Through an accountant using Represent a Client

Once registered, you must:

• Track GST/HST collected

• Remit the amounts

• File returns based on reporting period (annual, quarterly, monthly)

• Update CRA when changing addresses, owners, business structure, or closing

As of October 20, 2025, businesses can view their GST/HST access code directly in My Business Account.

Charging and Collecting GST/HST Correctly

Businesses must charge:

• GST at 5% in non-HST provinces

• HST at 13%–15% in participating provinces

• Zero-rated (0%) on certain goods/services

• No GST/HST on exempt supplies

Examples:

Zero-Rated:

• Basic groceries

• Prescription drugs

• Exports

Exempt:

• Residential rent

• Health services

• Educational services

Taxable:

• Most goods and services

• Digital products

• Restaurants

• Contractors and tradespeople

• Ride-share and gig services

Mackisen ensures your invoices reflect the correct GST/HST amount.

Calculating Net Tax and Input Tax Credits (ITCs)

GST/HST collected
minus
Eligible input tax credits
= Net tax payable

Eligible ITCs include GST/HST paid on:

• Supplies used in business activities

• Office expenses

• Equipment

• Rent

• Utilities

• Advertising

• Subcontractors

• Vehicle expenses (prorated when mixed-use)

Not eligible:

• Personal expenses

• Meals/entertainment over 50%

• Capital assets used mainly for personal use

• Expenses without receipts

You must hold proper invoices showing:

• Supplier GST/HST number

• Amount of GST/HST paid

• Date

• Description of goods/services

Filing Your GST/HST Return

Returns must be filed:

• Annually

• Quarterly

• Monthly

CRA assigns your filing frequency based on revenue.

You can file:

• Through My Business Account

• Using GST/HST NETFILE

• Through Represent a Client

• By mail (slower, not recommended)

Returns must match the period’s actual activity, even if $0.

Remitting (Paying) GST/HST

Payments must be made by the due date:

• Annual filers: 3 months after year-end

• Quarterly/monthly filers: 1 month after period-end

Payment methods include:

• Online banking

• My Business Account

• Pre-authorized debit

• Third-party providers

• Canada Post with QR code

• Wire transfer (non-residents)

Late payments incur interest.

GST/HST Filing Penalties

Penalties apply for:

• Filing late

• Failure to file

• Incorrect filings

• Inaccurate ITCs

• Gross negligence

• Missing reporting periods

CRA also issues instalment interest for annual filers with large GST/HST balances.

Claiming GST/HST Rebates

Rebates may apply for:

• Public service bodies

• Foreign visitors (limited)

• Housing rebates

• Overpayments

• Damaged or returned goods

Quebec businesses may qualify for QST rebates through Revenu Québec.

Confirming a GST/HST Number

Use CRA’s online tool to confirm whether a business is legitimately registered to charge GST/HST. Businesses collecting without registration violate the law.

Common Questions

Do I need to collect GST/HST on online sales?
Yes, if you exceed the $30,000 threshold or voluntarily register.

Can I claim ITCs without receipts?
No—CRA requires proper documentation.

Is residential rent taxable?
No, residential rent is exempt.

Do non-profits need to register?
Yes, if they exceed the small-supplier threshold.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal ensures your business complies with every GST/HST requirement—from registration to filing, from ITCs to audits. Whether you’re a new business, growing corporation, contractor, landlord, or non-resident operating in Canada, our team ensures accurate filings, maximum ITCs, and full compliance with CRA rules.

If you want expert help managing GST/HST and preventing costly errors, Mackisen ensures your business stays compliant, profitable, and protected.