What is the HST threshold for small suppliers in Canada?
What is the HST threshold for small suppliers in Canada?
By Bader A. Chowdry, CPA, CA, LPA | Insight Accounting CPA
The HST threshold for small suppliers in Canada is $30,000 in taxable supplies over four consecutive calendar quarters (or a single calendar quarter). Below this threshold, you’re generally not required to register for, collect, or remit GST/HST. However, once you exceed $30,000, you must register within 29 days and begin collecting HST on all taxable sales.
Understanding this threshold—and its nuances—is critical for small businesses in Ontario and across Canada, as improper HST handling can trigger penalties, interest, and CRA audits.
How the $30,000 Threshold Works
The CRA calculates the small supplier threshold using a rolling four-quarter lookback period:
Method 1: Four consecutive calendar quarters
Look at your gross taxable revenue (before expenses) in the current quarter plus the previous three quarters. If the total exceeds $30,000, you’ve crossed the threshold.
Example:
- Q1 2024: $8,000
- Q2 2024: $9,500
- Q3 2024: $7,200
- Q4 2024: $6,800
- Total: $31,500 → Threshold exceeded in Q4 2024
Method 2: Single calendar quarter
If your taxable supplies in any single calendar quarter exceed $30,000, you’ve immediately crossed the threshold.
Example: You earn $35,000 in Q2 2024 → Threshold exceeded immediately.
Once you exceed the threshold, you must register for a GST/HST account and begin charging HST within 29 days. Your effective date of registration determines when you start collecting tax from customers.
What Counts Toward the $30,000?
Included:
- All taxable supplies (goods and services subject to GST/HST at any rate, including 0% zero-rated supplies like basic groceries)
- Revenue from worldwide sales (including exports)
- Revenue from all businesses you operate (they’re aggregated)
- Sales by associated businesses in some circumstances
Excluded:
- Exempt supplies (residential rent, most healthcare, educational services, financial services)
- Sales of capital assets (equipment, vehicles sold as business assets)
- Goodwill on sale of a business
This means a consultant earning $28,000 in consulting fees (taxable) plus $5,000 in rental income from a residential property (exempt) is still a small supplier because only the $28,000 counts toward the threshold.
However, understanding what records to keep for CRA is essential for properly tracking these distinctions.
When You Must Register (Even Below $30,000)
Certain circumstances require GST/HST registration regardless of revenue:
Taxi and ride-sharing services: All taxi drivers and ride-sharing operators (Uber, Lyft) must register for GST/HST regardless of income level. There’s no small supplier exemption.
Commercial real estate: If you provide commercial leases, you must register regardless of revenue.
You voluntarily register: You can choose to register even if you’re below the threshold to claim Input Tax Credits (ITCs) on business expenses. This is common for businesses with high startup costs or those serving primarily GST/HST-registered customers.
Voluntary Registration: When It Makes Sense
Many small suppliers voluntarily register for GST/HST to:
Claim Input Tax Credits on expenses: If you’re spending significantly on business inputs (equipment, supplies, software), registering lets you recover the GST/HST you pay. Without registration, that tax is a permanent cost.
Example: An e-commerce business with $25,000 in revenue but $15,000 in expenses (including $1,950 in GST/HST paid) could recover that $1,950 by registering, even though registration isn’t mandatory.
Appear more professional: Some B2B clients prefer working with GST/HST registered suppliers, as they can claim ITCs on the HST they pay you. Being registered signals legitimacy and professionalism.
Prepare for growth: If you expect to exceed $30,000 soon, registering proactively avoids the administrative scramble and potential retroactive compliance issues.
Our bookkeeping services in Mississauga help small suppliers evaluate whether voluntary registration makes financial sense based on their expense profile.
What Happens When You Cross the Threshold?
Once you exceed $30,000:
1. Register within 29 days: File Form RC1 (Request for a Business Number) or register online through the CRA My Business Account. You’ll receive a GST/HST account number and BN (Business Number).
2. Determine your effective date: This is typically the day you exceeded the threshold or the day you began your commercial activity if higher.
3. Begin charging GST/HST: Apply the appropriate rate:
- 13% HST in Ontario
- 5% GST in Alberta, BC (if below PST threshold), territories
- 15% HST in Atlantic provinces
- 5% GST + PST in Manitoba, Saskatchewan, Quebec
4. Choose a filing frequency:
- Annual filing: Revenue under $1.5 million
- Quarterly filing: Revenue $1.5M – $6M
- Monthly filing: Revenue over $6M or if you elect monthly
5. Start tracking ITCs: You can now claim credits for the GST/HST you pay on business expenses, reducing the amount you remit to the CRA.
Failure to register on time can result in penalties, interest on unremitted HST, and retroactive assessments. If the CRA discovers you should have been registered years ago, you may owe HST on all past sales without being able to claim ITCs on corresponding expenses (since you didn’t track them).
The $30,000 Trap: What Many Small Businesses Miss
Trap #1: Mixing business and personal sales
If you sell $15,000 through one business and $20,000 through another, you’ve exceeded the threshold ($35,000 combined). The CRA aggregates revenue from all your commercial activities.
Trap #2: Hitting the threshold late in December
If you cross $30,000 on December 15, you must register by January 13 and start charging HST immediately—even though you may not have collected it in December. This creates a short-term cash flow hit.
Trap #3: Not collecting HST retroactively
If you realize you should have registered months ago, you’re liable for the HST you should have collected but didn’t. The CRA expects you to pay it out of pocket, not go back to customers after the fact.
Trap #4: Threshold gaming
Some businesses deliberately limit revenue to stay under $30,000 to avoid HST registration. While legal if truthful, this severely limits growth and invites CRA scrutiny. If your business has been “conveniently” at $29,000 for three years while clearly growing, expect questions during an audit.
Understanding whether to incorporate your business can affect HST planning, as corporate structures are treated separately for threshold calculations.
ITCs: The Benefit of Registration
Once registered, you can claim Input Tax Credits for GST/HST paid on:
- Inventory and materials
- Office supplies and equipment
- Software and subscriptions
- Professional fees (CPA costs, legal fees, etc.)
- Vehicle expenses (business portion)
- Rent and utilities (commercial property or business portion of home)
You cannot claim ITCs on:
- Meals and entertainment (only 50% of the GST/HST paid)
- Goods/services used for exempt supplies
- Capital property used less than 90% for commercial purposes
- Certain luxury items (private aircraft, yachts over certain thresholds)
Proper documentation is critical—the CRA requires invoices showing the supplier’s GST/HST number to support ITC claims.
Simplified Accounting Methods
Small suppliers who register can use Quick Method or Simplified ITC Method to reduce paperwork:
Quick Method: Instead of tracking ITCs, you remit a reduced percentage of your HST collections (e.g., 8.8% instead of 13% in Ontario), which approximates HST collected minus average ITCs. Available for businesses under $400,000.
Simplified ITC Method: Claim ITCs based on simplified percentages rather than tracking every receipt. Available for businesses under $1 million.
These methods trade precision for simplicity—they work well for service businesses with minimal inputs but poorly for businesses with high expense ratios. Our corporate tax planning team in the GTA can model which approach optimizes your situation.
Provincial Variations
While the $30,000 threshold is federal and applies across Canada, provincial sales tax rules vary:
Ontario (HST): Single 13% harmonized tax, administered by CRA
Quebec (GST + QST): Separate registration with Revenu Québec required
BC, Manitoba, Saskatchewan (GST + PST): Separate provincial registration required when you hit provincial thresholds
If you operate across provinces, each jurisdiction’s rules apply independently—you may be registered federally but not provincially, or vice versa.
Getting Help with HST Compliance
HST compliance is complex, and errors can be costly. Our Mississauga accounting firm provides:
- Threshold monitoring and registration assistance
- Voluntary registration evaluation and cost-benefit analysis
- Ongoing HST return preparation and filing
- ITC maximization strategies
- AI-powered accounting solutions with patent-pending governance frameworks that automate HST tracking
Need help with GST/HST registration or compliance? Call (905) 270-1873 or start here.
Frequently Asked Questions
What if I’m below $30,000 but all my customers are asking for HST invoices?
You can voluntarily register for GST/HST regardless of revenue level. This is common for B2B service providers whose clients want to claim ITCs on their purchases from you. Voluntary registration is often strategically smart even below the threshold. Our fractional CFO services help you evaluate the timing and implications.
Do I charge HST to U.S. or international customers?
Most exports of goods and services to non-residents are zero-rated (0% GST/HST), meaning you don’t charge the customer HST but you can still claim ITCs on your expenses. However, you must still register if your total taxable supplies (including zero-rated exports) exceed $30,000. Proper documentation of export sales is essential.
Can I deregister if my revenue drops back below $30,000?
Yes, if your revenue in the last four quarters is below $30,000 (and you weren’t required to register for other reasons like taxi services), you can request to deregister. However, you must account for any ITCs you claimed on inventory or capital assets through a “deemed supply” calculation. The administrative hassle often makes it worthwhile to stay registered unless your revenue dropped dramatically and permanently.
Insight Accounting CPA provides comprehensive GST/HST compliance, registration, and strategic planning for businesses throughout Toronto, Mississauga, and Ontario. Our bookkeeping services ensure accurate tracking of taxable supplies, and our team can guide you through every aspect of sales tax compliance.
Get expert HST guidance: (905) 270-1873 or get started.
