Most business owners know they need to charge GST. But when it comes time to register, calculate what you owe, or file a return, things can get confusing quickly.
The good news is that GST doesn’t have to be complicated. Once you understand the basics — when to register, how to track what you collect, and how to calculate what you owe — it becomes much easier to manage.
Here’s a simple guide to GST for small business owners.
What is GST?
The Goods and Services Tax (GST) is a 5% federal tax charged on most goods and services in Canada.
As a business owner, you collect GST from customers and send it to the government. That extra 5% isn’t income for your business — it belongs to the government from the moment you collect it.
Because of that, it’s important to keep track of the GST you collect and set it aside so you’re prepared when it’s time to file your return.
When do you need to register for GST?
Most sole proprietors and corporations must register for a GST account once their business reaches $30,000 in taxable sales.
This threshold is based on your total taxable revenue over four consecutive calendar quarters.
Once you exceed $30,000:
- You must register for a GST account within 29 days
- You must start charging GST on taxable sales
- Your GST number must appear on invoices
If your sales exceed $30,000 in a single quarter, you must begin charging GST immediately after the transaction that pushed you over the limit.
Voluntary registration
Even if your sales are below $30,000, you can still choose to register for GST.
This can be helpful for businesses that are just starting out and have significant expenses. If you’re registered, you can claim back the GST you paid on business purchases through Input Tax Credits (ITCs).
How to calculate the GST you owe
As a business owner, you’ll need to track the GST you collect from customers.
A simple rule of thumb: GST collected should be about 5% of your taxable sales.
Many businesses transfer GST collected into a separate savings account so it’s available when it’s time to remit it.
There are two main ways to calculate how much GST you owe.
The net GST method
The net GST method is the most common approach.
To calculate your GST payable:
- Add up all the GST you collected from customers.
- Subtract the GST you paid on business purchases.
The GST paid on purchases is called Input Tax Credits (ITCs).
GST collected – ITCs = Net GST payable
This method works well for businesses that have regular expenses or purchase inventory.
The quick method
Some small businesses can choose to use the Quick Method of Accounting for GST/HST.
With this method, you still charge 5% GST on sales. However, instead of tracking GST on most expenses, you remit a fixed percentage of your sales.
For many service-based businesses, this rate is 3.6% of sales (including GST).
This method can work well for:
- Consultants
- Contractors
- Freelancers
- Service-based businesses with minimal expenses
Because these businesses often don’t have many Input Tax Credits to claim, the quick method can simplify bookkeeping and sometimes provide a small financial advantage.
Eligibility rules apply, so it’s worth speaking with your accountant before choosing this option.
Goods and services that are exempt from GST
Some goods and services are exempt or zero-rated, meaning GST isn’t charged. The rules can be complex, so it’s best to check with your accountant if you’re unsure.
Examples include:
- Most healthcare services and medical devices
- Basic groceries
- Prescription drugs
- Residential rent
- Insurance services
- Financial services (such as interest or loan payments)
- Most educational services
- Daycare services
The difference between exempt and zero-rated supplies can affect your ability to claim Input Tax Credits, so professional advice can help avoid mistakes.
GST reporting periods
Your GST filing frequency depends on your annual taxable sales.
Annual filers (under $1.5 million in revenue)
- Corporations file within three months after their fiscal year-end
- Sole proprietors file by June 15, but any balance owing must be paid by April 30
Quarterly filers ($1.5 million to $6 million in revenue)
Returns are due one month after the end of each quarter.
Monthly filers (over $6 million in revenue)
Returns are due one month after each reporting period.
How to register for a GST account
The easiest way to register is online through the CRA’s Business Registration Online system or your CRA My Business Account.
You’ll need to provide:
- Name and Social Insurance Number (SIN) of the owner(s)
- Business address
- Date of birth
- Business name
- Business number (if one already exists)
- Type of business (sole proprietor, partnership, corporation, etc.)
- Description of your business activities
If you’ve recently incorporated or are setting up a new business, it’s a good idea to talk with your accountant about the best fiscal year-end and filing options before registering.
Filing your GST return
GST returns are filed through CRA My Business Account.
To file your return, you’ll need:
- Total sales (including GST)
- Input Tax Credits (GST paid on purchases)
- Any adjustments from previous periods
- Instalments paid
- Your reporting period
- Your GST number
Even if your business had no activity during the reporting period, you still need to file a nil return.
Need help with GST?
GST can feel complicated when you’re busy running a business. But with the right systems in place — and the right advice — it becomes much easier to manage.
At True North Accounting, we help small business owners with everything from bookkeeping and GST filing to payroll and tax planning. Our team works with freelancers, contractors, consultants, tradespeople and professionals across Calgary, Okotoks and British Columbia to make the financial side of business simpler.
If you need help registering for GST, calculating what you owe, or filing your return, we’re here to help.
Read more about Corporate Tax topics that may be helpful to you and your small business.
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