When Does a Small Business Need to Register for GST/HST?
How the $30,000 small-supplier test works, when Ontario businesses and self-employed people must register for GST/HST, and when registering early makes sense.
The short answer: most businesses have to register for GST/HST once their taxable sales go over $30,000, either in a single calendar quarter or over four consecutive calendar quarters. Below that, you are a "small supplier" and registration is optional. In Ontario, registered businesses generally charge 13% HST.
Who this applies to
Self-employed people, freelancers, contractors and small businesses in Ontario that make taxable sales in Canada. Businesses that only make exempt supplies generally cannot register. Some have their own rules: self-employed taxi and commercial ride-sharing drivers, for example, must register even below $30,000. Check the CRA page below if that is you.
The $30,000 small-supplier test
The CRA looks at your total taxable sales (worldwide, including those of associated businesses) in calendar quarters: January–March, April–June, July–September and October–December.
Over $30,000 in one quarter
You stop being a small supplier immediately. You must charge GST/HST on the sale that took you over $30,000, and register no later than the day of that sale.
Over $30,000 across four quarters
If you go over $30,000 across the last four (or fewer) consecutive quarters, but not in a single quarter, you stop being a small supplier at the end of the month after that quarter, and must register by your first sale after that.
An example
A consultant starts invoicing in February and bills $6,000, $9,000, $8,000 and $5,000 in the four quarters of the year: $28,000 in total. They stay a small supplier. If the next quarter brings in $7,000, the last four quarters total $29,000, still under. If it brings in $9,000 instead, the total reaches $31,000, and registration becomes required.
Should you register voluntarily?
You can register before you reach $30,000. Registering lets you claim input tax credits for the GST/HST you pay on business expenses, but you must then charge HST on your sales and file returns. Whether it is worth it depends on who your clients are and how much HST you pay on expenses, so it is worth discussing before you decide.
Common mistakes we see
- Looking only at the calendar year instead of the last four quarters
- Missing the single-quarter rule after one large contract
- Registering but not setting aside the HST collected
- Not keeping the records needed to claim input tax credits
Tracking sales quarter by quarter is much easier when your books are kept monthly. Self-employed? See our self-employed tax services.
Official sources
- When to register for and start charging the GST/HST (Canada Revenue Agency)
- GST/HST rates and place of supply (Canada Revenue Agency)
- GST/HST for businesses (Canada Revenue Agency)
This guide is general information for Canadian taxpayers and small businesses. It is not tax, legal or financial advice for your situation, and rules change. Check the official sources linked above or book a consultation before acting on it. See the full disclaimer.
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