GST/HST for Small Businesses: What to Charge, Collect, and Remit

If you run a small business in Canada and you are registered for GST/HST, you already know you need to charge it — but the day-to-day mechanics of charging, collecting, and remitting can feel less obvious. Most business owners pick this up piece by piece as they go. This guide walks through what each step means in practice, and where small business owners most commonly get tripped up.

What GST/HST Means for a Small Business

GST (Goods and Services Tax) is a 5% federal tax applied to most goods and services sold in Canada. In the harmonized provinces — Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island — GST is combined with the provincial portion into a single Harmonized Sales Tax (HST). In Ontario, for example, the HST rate is 13%. In the other provinces and the territories, you charge GST at 5% and the province handles its own sales tax separately where it applies.

For a registered small business, GST/HST is not revenue. It is tax you collect on behalf of the Canada Revenue Agency. You charge it to customers, hold it temporarily, and eventually remit the net amount — what you collected, minus Input Tax Credits (ITCs) for GST/HST you paid on eligible business expenses — to the CRA. Understanding this flow is the core of staying compliant without stress.

When You Need to Start Charging GST/HST

Once you are registered, you must begin charging GST/HST on eligible sales from your effective registration date. If you have not yet registered, the main trigger is the $30,000 small-supplier threshold over four consecutive calendar quarters — covered in detail in our guide on GST/HST registration. For the rest of this article, we will assume you are already registered.

How Charging GST/HST Works in Practice

Charging GST/HST means adding the appropriate tax amount to each taxable sale and clearly showing it on the invoice or receipt you give the customer. The rate you use depends on the province where the supply is considered to be made — not where your business is based. A consulting firm in Alberta billing a client in Ontario, for example, generally charges 13% HST rather than 5% GST.

Your invoices also need to display your GST/HST registration number — a 9-digit Business Number followed by “RT” and a 4-digit account suffix. Without it, customers who are themselves GST/HST registrants cannot claim Input Tax Credits on what you charged them, which can create friction with business clients.

What It Means to Collect GST/HST from Customers

Collecting simply means actually receiving the GST/HST amount from your customer as part of the payment they make to you. When a customer pays a $1,130 invoice for a $1,000 service in Ontario, they are paying $1,000 for your work and $130 of HST that you are collecting on the CRA’s behalf.

The practical implication: that $130 is not yours to keep or spend. It belongs to the CRA, offset only by any Input Tax Credits you can claim on related business expenses. Treating collected tax as part of your cash flow is one of the most common and costly mistakes small business owners make — especially in the early months after registration, when the collected amounts can quietly inflate what looks like a healthy bank balance.

What Remitting GST/HST Means

Remitting is the process of filing a GST/HST return with the CRA and paying the net amount you owe. The net amount is what you collected from customers during the reporting period, minus the Input Tax Credits you can claim on GST/HST you paid on eligible business expenses. If your ITCs exceed what you collected, you are typically eligible for a refund instead of a payment.

Your reporting period and filing frequency are set by the CRA when you register, and they depend on your business’s size and circumstances. Returns must be filed on the schedule you are assigned — even in periods where your net tax is zero. Missing a filing, or paying late, can trigger penalties and interest that add up faster than most business owners expect.

Common Mistakes Small Business Owners Make

• Treating collected GST/HST as part of operating cash flow and spending it, then scrambling when the remittance is due.
• Forgetting to update invoice templates after registration, so GST/HST is under-charged or the registration number is missing — which frustrates business clients who need it for their own ITCs.
• Charging the wrong rate for the customer’s province of supply — for example, charging 5% GST on an Ontario sale when 13% HST was required. Under-collecting means paying the shortfall out of your own pocket.
• Not tracking ITC-eligible expenses carefully throughout the year. Missed ITCs mean a larger net remittance than necessary.
• Skipping a return because the business had no sales or owed $0. The CRA still expects the return on schedule.
• Paying GST/HST late from general revenue because the tax was spent along the way. Penalties and interest compound the problem.
• Mixing GST/HST with regular bookkeeping instead of tracking collected tax and ITCs in separate accounts. This makes return preparation painful at period-end.

When Professional Advice Helps

Most small businesses can manage GST/HST day-to-day once a clean system is in place. Some situations, though, regularly benefit from a qualified accountant’s input:

• You sell across multiple provinces and are unsure which rate applies to a given customer or type of supply.
• Your business provides a mix of taxable, zero-rated, and exempt supplies — for example, a wellness professional who bills both services and retail products.
• You are setting up bookkeeping for the first time after registering and want it done correctly from day one.
• You have fallen behind on filings or have received a CRA notice about GST/HST.
• You are changing business structures — incorporating, adding partners, or winding down — and need to understand how your GST/HST account is affected.

Our bookkeeping and payroll services include GST/HST tracking and remittance support, and our small business services cover the broader setup that makes tax compliance smoother from the start. If you would like a second set of eyes on your current approach, book a consultation.

Frequently Asked Questions