When to Charge GST/HST

by Holly
(Edmonton, Alberta, Canada)

When to Charge GST/HST Can Be Puzzling!

When to Charge GST/HST Can Be Puzzling!

I am a sales estimator sub-contractor. I've been invoicing my boss for my work this current year. I have made over the $30,000 mark and I have obtained my G.S.T. number.

Today I go to invoice my boss on the GST owed to me from him. He tells me that his accountant has advised him that he does not have to pay me GST on the first $30,000. He said he will only pay me on the remainder after the $30,000.

I thought it was optional if "I" wanted to charge GST before $30,000. So my question is: Does he have the choice to not pay me on the first $30,000? Is it up to him? Or can I bill him for the full amount of GST which is approximately $1650.00?

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Hi Holly,

Hmm a couple things aren't making sense here for me.

First, if you are an independent, self-employed sub-contractor, any work you do is for clients not bosses. You are your own boss. If you have only one client, you may not meet CRA's criteria for being an independent contractor and may in fact be an employee.

Second, while registering for GST/HST is voluntary prior to earning $30,000, you cannot "backbill" GST. You can only charge GST on sales ... and claim ITCs on purchases ... from the date you became a GST/HST registrant. Once you ARE a GST/HST registrant, you must collect GST/HST ... it is NOT optional.

Third, GST/HST is a neutral tax to registered businesses. However, if your client pays GST/HST on amounts that pertain to a non-GST/HST registration period, he will NOT be eligible to claim the ITC ... meaning the sales tax would not be neutral to him.

I hope my pointers help you answer your questions. If you are still confused about anything, please post back here using the "comments" link below.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

Comments for When to Charge GST/HST

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Sep 19, 2012
When Do I Charge GST?
by: Chris, Alberta

Hi there,

I find your website very helpful but it's a lot to take in when first starting.

I am just begining to start my business as a sole proprietorship in Alberta. For the first year I don't think I will meet/exceed $30 thousand in sales, so I'm going to go without the GST# for now.

Do I still have to charge GST on every sale of service so I can give it to the government at the end of the year?


section divider

Hi Chris,

Only GST/HST registrants are authorized to collect GST/HST. If you choose not to register when it is not mandatory (under the $30 thousand threshold), then you do no charge GST/HST.

You will also NOT be eligible to claim your input tax credits.

CRA has this great new questionnaire on their website at www.cra-arc.gc.ca> Businesses> GST/HST> Registering an account> Should you register for a GST.HST account?

It may worth your while to take the quiz just to make sure you have made the right choice.

Sep 19, 2012
Do I Have To Charge HST?
by: Jonathan, Burlington, ON Canada

Last year I was a sole proprietor. I had income above $30,000 and charged HST on all services.

This year I am a full time employee without any outside income until right now. I just got a one off project for a price of $18,000. I am wondering if I have to charge HST on it

I will have no other income this year (outside of my employment income). I do have a GST/HST number and did file last year.

It would assist if I did not have to charge HST but I wonder if that is going to cause me issues when I file at the end of the year.

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Hi Jonathan,

If you did not cancel your GST/HST account, I am sorry to tell you that you still have to charge HST on your self-employment income.

Here's the general rule ... all GST/HST registrants have to collect sales tax on all self employment income.

Mar 12, 2014
by: Fran

Hello. I am a hairdresser in Ontario. I work on 50/50 commission. At the end of the day we total our day of services, subtract off HST and then divide in half for my total and employer's total.

My question is: should the employer be taking off the HST on my half of pay? I am also taxed with the usual CPP, EI and both income taxes on my half of pay. Is there anyway I can be refunded for the HST or is this the correct method at a hair salon?

Mar 15, 2014
Re: Jonathan
by: Anonymous

Regarding Jonathan's question. I'm in same situation except I cancelled my HST. How do I deal with HST?

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If you cancelled your HST account with CRA and are below the $30,000 then you no longer have to charge HST … in fact you are no longer allowed to charge HST. It also means you are not allowed to claim input tax credits.

Mar 15, 2014
by: Lake

Hey Fran,

If you were a self employed hairdresser, CRA has special rules … see cra-arc.gc.ca/E/pub/tg/t4001/t4001-e.html#P1282_133973 .

As you are an employee, your employer has to deduct CPP contributions, EI premiums, and income tax as you would for any regular employees. But you know this already.

HST on all sales is collected in trust and remitted to CRA. Your employer does not get to "keep" these monies. S/he files a report to CRA on a monthly, quarterly or annual basis and remits all the HST collected net of any input tax credits.

If you want the responsibility of collecting, reporting and remitting HST on your sales, you would need to change your employment structure arrangement to be that of self-employed.

May 16, 2014
Marketing contractor
by: selena

Hi...as a contractor, I will be making less than $30000 this year. I know it's not mandatory for register for HST, but I would like to know what is best in my interest, to charge or not? and what benefits will I get in doing or not doing so?

Much appreciated!

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Hey Selena,

Check out this chat on the topic and then you decide what's best for your business. Personally I see more advantages to registering than not but then I also will not participate in "under the table" transactions either.

GST/HST Voluntary Registration.

I also chat about it here.

Jun 10, 2014
Can't find the information I am looking for.
by: Joel.


I have been offered a job in a work from home position, they mentioned me requiring a GST number for tax purposes.

They have also indicated I am responsible for my own taxes and reporting yearly.

Due to extenuating circumstances I am awaiting an appointment to file my taxes late, and due to a problem with the person who did my taxes last year I am still paying off a debt.

Is the GST number something I will be required to provide the employer, contractor or what have you. Or is this something that once I have settled all financial things with the CRA in the coming months I can take care of?

I am concerned not having the GST number could cost me the job to begin with and its a really awesome job.

Thank you.

section divider

Normally you would only need a GST number if you had $30,000 plus in sales. However that would apply only if you were an independent contractor and/or self-employed. You do have the option of registering voluntarily prior to meeting the threshold.

You need to read up on the rules of an employee vs. a contractor. It would be pretty hard to substantiate if the work from home position was your only customer/client.

Read more about the criteria you must meet here.

Jul 31, 2014
GST on subcontracted/subtraded work
by: Anonymous

Great posting. I'm a general contractor (GC) with a couple of employees, and I also get subtrades to do some of the work. Do I charge my client GST on the subtrade's invoice? Some of my subtrades have charged me GST, and some have not.

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I guess it depends on your contract and the conditions you set around pricing? Are you getting reimbursed for the sub trades or are you passing on the invoices to be paid directly by customer? Are you billing at a mark-up or at cost?

The general rule is if you are are a GST Registrant, you must charge GST on your invoices. Any GST you pay will be claimed as an input tax credit, making the GST neutral to you.

Aug 08, 2014
Assessments on a Tax Extra or Tax Included Basis
by: Lake

The CRA URL below discusses how CRA assesses you during an audit for GST/HST that should have been charged on an invoice but wasn't.


This CRA ruling states that it is a case-by-case decision. CRA will look at your invoicing practices, industry practices and supporting documentation such as a contract, invoice or sales agreement.

If "the invoice or agreement is silent with respect to the tax payable and the supplier's records do not suggest that tax was included in the amount charged", tax will be added to the amount.

"Tax-included assessments (5/105) may be made in instances where the supplier indicated on the existing invoice or sale documentation".

Aug 21, 2014
Sub contractor
by: Anonymous

I am opening my own business as a consultant/manager for construction projects in Ontario.

How does the HST work with me?

Do I charge my clients?

Do I then remit that amount to the CRA?

Aug 21, 2014
Construction Subcontracting in Ontario
by: Lake

You have some research to do so you get it right from the start. It will save you so many headaches if you the take the time up front to learn your government compliance requirements.

I'd start with my GST/HST guide keeping in mind that the construction industry has some special reporting requirements ...


You'll also want to understand why skimming is not a great idea ...


Oct 15, 2014
HST on services rendered
by: contractor G

My husband runs his own renovation business, and has for the last ten years. He has a GST/HST number and has filed with the CRA quarterly for as many years. When starting the business, I read all that I could on info about small businesses, and how to file the quarterly returns.

I have now been told by a "friend" that I have not been charging the customers properly when invoicing them. I have always charged customers the labour (provided by my husband) and then charged 13% on his labour and then added materials purchased for the customer which includes the HST for a total sum.

Now this "friend" is telling me that I should be charging the labour plus the materials (that has the HST added) and then adding the HST at the bottom total; to which I replied that the customer would then be charged too much because I would be charging HST on materials that have already been charged HST.

Can you please tell me the proper way to bill a customer, when a service has been done, and materials have been purchased for the customer. Thanks

Oct 18, 2014
How to Invoice Materials Purchased For Customer Job
by: Lake

The problem with billing the way you have is that if your customers are businesses that are GST/HST registered, they will not be able to claim their input tax credits (ITCs) on the materials unless you have a notation on your invoice stating the amount of HST included in the amount.

What I normally do is bill the materials amount before tax and let the software calculate the tax which then shows ups the invoice ... so anyone who claims ITCs or tax rebates has the information they need to do so.

I have chatted briefly on how to present tax on your invoices. Click on the link to see your three options. (If the link isn't showing, from the menu bar, go to The Quick Reference> The Current News. Once there, select HST News for backwork. On the picture index, select the article that says "invoice presentation rules".)

Oct 20, 2014
Should contractor always charge the HST?
by: George, Toronto


A contractor is doing a big job, 70K plus but he is not charging any HST.

Would the contractor or the client get in trouble with CRA?

I'm not sure if the contractor is registered for the HST.

Oct 20, 2014
Invoicing Materials
by: Contractor G

Thanks for your help...

My husband's business is strictly residential, so I do not believe that the customer would have a need for the ITC's...

I just wanted to verify that the way that I was billing the customer was correct, and that I would not have a problem with the CRA.

Oct 20, 2014
Contractor G
by: Lake

Just to be on the right side of CRA, I'd have an footnote saying materials include HST and state the tax amount included. It is option 3 on the invoice presentations options.


Oct 20, 2014
by: Lake

As I understand it, when the CRA eventually audits him or someone tips CRA about him, the business will owe the GST on all sales it should have been charged on.

It is the business's responsibility to register for GST/HST once the $30,000 threshold has been met. A variety of penalties and interest charges could result from not registering and not collecting the appropriate sales tax.

See the post above titled "Assessments on a Tax Extra or Tax Included Basis".

Oct 24, 2014
Self Employed Co-adventurer
by: Sam

I run a tattoo shop with another individual. We are considered self-employed and share the expenses only. She collects HST because she is required, and at this point I am not required.

We also have two other's in the shop who are considered self-employed and who are also not yet required to register for HST. My co-adventurer and I take a 50% cut of their earnings and share it to cover our expenses for supplies and usage of the space.

My question is, since I do not charge HST to my clients and she does, and we share the 50% we get from the other two, are they required to charge HST on her behalf? If so, are they required to charge HST on the full amount of their service or only on the percentage they give to her? Or does she herself have to subtract the HST from her cut?

Oct 24, 2014
by: Lake

You might want to consider getting a ruling from CRA. See GST/HST rulings and interpretations or call 1-800-959-8287.

I would think if you are all self-employed, you should all be operating your business as such. To me, this means you all need to do the appropriate invoicing, have written contracts in place laying out the relationship, and ensure you have source documents to backup your billings.

When you are having trouble deciding what to do, ask yourself what you would do if this was an arms-lenthg transaction. That most likely will be the correct way to handle the transaction (assuming you are handling your "normal" transactions correctly).

As a general rule, only the GST/HST registrant collects this tax.

Nov 11, 2014
GST question
by: Bora


Thank you for your website. I have been through looking at all sorts of website but cannot quite find the answer to my question.

I am a self proprietor and sell products in Canada on behalf of several European companies.

I am a GST registrant here in Canada.

I want to invoice the clients in Europe based on a commission on sales, but they expect me to NOT charge GST as B2B invoicing is usually without GST (in Europe).

Do I have to charge GST or not, as we are both business?


Nov 13, 2014
Bora - Foreign Sales
by: Lake

It is my understanding that non-resident sales attract GST/HST at a zero rate (0%). If you are in a province that attracts provincial sales tax, PST may or may not apply.

I chat a bit about this topic here ...

You may want to ask CRA for a ruling.

Jan 07, 2015
HST Ontario Went over $30,000 for first time
by: Scott

TWO questions:

1. I have not registered for HST as our business has never gone over $30,000 in a year. What happens when it goes over $30,000 for the first time, but we didn't know it would until the year was ended? Will we be charged HST retroactively by CRA? Or we simply be required to register for HST from here on in?

2. What if we have more than one business? One is a sole proprietorship, and one is a partnership with someone else (outside the family)? Is there a difference if each business makes $16,000, for example, so the total is over $30,000, but not each individual one?

THANKS for any help.

Jan 08, 2015
by: Lake

1. CRA RC4022 publication states that "if your revenues are over the threshold amount in one calendar quarter, you are considered a registrant and must collect the GST/HST on the supply that made you go over the threshold amount. Your effective date of registration is the day of the supply that made you go over the threshold amount. You must register within 29 days from that day."

It goes on further to explain in an example that "you have to charge GST/HST on the [...] sale that made you exceed the $30,000 limit, even if you are not yet registered."

2. RC4022 defines a small supplier as a sole proprietor (or partnership or corporation) "and your TOTAL revenues from taxable supplies (before expenses) from ALL of your businesses [my emphasis] are $30,000 or less in any single calendar quarter and in the last four consecutive calendar quarters".

"Total revenues from taxable supplies means your worldwide revenues from your supplies of property and services that are subject to the GST/HST (including zero-rated supplies), or that would be subject to the tax if supplied in Canada."

RC4022 then goes on to explain the definition of being associated with another person. You can read about it here:


Mar 11, 2015
Paying GST
by: Anonymous

When a vendor invoices every month and they don't have a GST number but now it will be over $30,000.00 do I pay the GST on any amounts over the $30 thousand?

Thank You

Mar 11, 2015
Paying GST
by: Lake

See my chat on mandatory registration criteria:


Mar 12, 2015
Need help.
by: Anonymous

I've been working for a guy who contracts off of a company in construction. I've been with them for 7 years. He is the only one I've worked for. I think I'm an employee.

He pays me as a subcontractor and I do my own taxes. I make around $50,000 a year. I've asked him to pay me as a employee but he doesn't want to. He pays me hourly and never asks for invoiced. Since, like I said, I go there every day all year full-time. Should he be paying me GST? Or as a employee? If he got audited would he be in trouble for all this or me? Thank you.

Mar 13, 2015
Contracter vs Employee
by: Lake

I've chatted about CRA's subcontractor checklist here:


From the information you've provided, I'm fairly certain CAR would classify you as an employee. He is taking a risk misclassifying you as a contractor. The penalties to the employer are severe and discussed in my chat.

Mar 29, 2015
Advise Please
by: Dna

Hi ,
I've been working since 2009 as an independent contractor and make over $30k/year and never charged GST/HST to my clients , and therefore never paid them.

This week I received a demand of inscription for GST/HST , stating they have noticed I've been engaged in commercial activities with $30k+ and have no tax account.

I will apply and open the account and start charging my clients for taxes and pay them, but what will happen for the past?

Will I get charged retroactively for all those years? if yes, will there be interest and penalties added?

And last question; until when would I be allowed to pay for 2014 GST/HST?

Please help me.

Mar 30, 2015
by: Lake

As of February 2014, the CRA is also allowed to automatically register your business 60 days after official notification if you haven't done so.

More bad news for you ... because you failed to register after meeting the $30K threshold, you lose your ITCs prior to the official registration date!

The Canadian Tax Foundation August 2014 blog by Jenny Siu says, "It is unclear whether the CRA will issue an assessment for unpaid tax at the same time that it sends the notice of intent, or whether it will delay the assessment until the GST/HST registration number has been assigned."

Read more here: http://www.ctf.ca/ctfweb/EN/Newsletters/Canadian_Tax_Focus/2014/3/140312.aspx

KPMG's Global Indirect Tax branch answers the question "Are there penalties for not registering ...?" in their publication "Canada - Country VAT/GST Essentials".

"Penalties and interest, may be charged for failing to register for GST/HST at the required time. These penalties and interest are generally calculated based on the net tax due for the period commencing when your business should have been registered. The net tax is the tax that should have been charged on supplies, less the input tax credits that your business would have been entitled to recover. There is also a specific monetary penalty imposed for failure to file a document."

I don't give individual advice on this website ... I only provide general information that may or may not be relevant to your circumstances. You really should visit a certified accountant to discuss your situation. S/he will be able to provide advice specific to your situation. Of course they won't be able to dig you out of all the do-do you stepped in all by yourself by failing to register ... but maybe they can give you some options.

Mar 30, 2015
KPMG Publication
by: Lake

KPMG's publication "Canada- Country VAT/GST Essentials" authored by their Global Indirect Tax branch is a good read for non-Canadian entities doing business in Canada.

You can read it here:


Apr 26, 2015
Sub Trades
by: Renee


We are a service company and hired a sub trade to do work for our client. This sub trade does not charge HST as they fall under the $30000 exemption. As we paid them, do we have to charge the HST to our customer when submitting invoice for payment, as we do not fall under the exemption.

Apr 29, 2015
by: Lake

Check out this forum posting (see the comments section). It should answer your question.


General rule as I understand it is if you are a GST/HST registrant, you would charge GST/HST on your sales. For reimbursable expenses (at cost i.e. you don't mark up), I would exclude the sales tax paid in the expense so you can apply the same tax rate. Therefore, if you are just looking for reimbursement you could apply the "exempt" sales tax rate to the sub trade reimbursement.

May 06, 2015
Do I have to pay GST for a money back?
by: Vash

Hi There,

I am a new and beginner subcontractor and I'm kind of confuse. I'm working at this one company and they happened to gave me a wrong amount of payment. So when I noticed that, I was about to give them the money back but then they gave me an invoice asking for that amount with a GST. Do I have to give them the amount plus the GST they're asking? hoping you could help me. Thank you

May 10, 2015
by: Lake

Sorry. I'm confused and don't understand your situation. If you are the subcontractor for a company, you invoice the company. They don't invoice you.

Whether you charge them GST depends on your sales volume not their sales volume.

Does that help?

May 10, 2015
Payment was more than whats invoiced
by: Vash

Yes, I invoiced them for all the jobs I did for them. But the last payment they gave me was more than what was on my invoice. I was going to give it back to them in cash but they gave me an invoice for it with a GST. Now I'm wondering if they really have to do that since I am just going to give back the money to them. And besides it's their fault that they didn't pay attention to the amount on my invoice.

May 12, 2015
by: Lake

You should speak with them. Presumably they don't know that you are not registered for GST/HST ... or they think you should be by the amount they are paying you.

I would consider cashing their cheque and leaving a credit on their account then work out the details so you don't run short on cash flow. Depending on how your chat goes, you could issue a refund for the difference.

You must register for GST/HST and charge it if you have more than $30,000 in sales.

May 29, 2015
GST registration
by: Anonymous

If I billed for a service before registering for GST, do I have to pay GST if the payment date falls after I register? Would really appreciate any advice with this! Thanks.

May 31, 2015
GST Registration
by: Lake

I don't have time right now to research this but my guess is ...

If the invoice is dated BEFORE your official GST registration date AND delivered before your GST registration date (prevents backdating of an invoice), you probably don't have to charge (not pay as you stated) GST on your billing invoice.

Please call CRA and verify this with them.

Jun 01, 2015
Thank you
by: Vash

Thank you for your help. They know that I am GST/HST registrant. I already talked to them and settled the issue.

Jul 03, 2015
casual worker
by: Patty

I have two casual workers to complete an occassional job 3 to 4 hours a week during summer time. I normally paid with cheque for the hours they work.

My question is do they need to complete an invoice for the job done? They have to charge GST on the invoice?


Jul 07, 2015
Occassional job
by: Anonymous

Hello, this time of year is busy for my business, some time I need help with some jobs, some times 8 - 10 hours a week. I always paid with cheque to two people and I know by the end of the year I have to report to CRA T5018 because will .

Could you please let me know what I need to get from the people who help me, I need to get an invoice from them?, They have to charge taxes?


Jul 07, 2015
by: Laura

Check out my chat on the casual labor rules.

If your casual workers qualify as self-employed then yes they have to invoice you for their services.

If they are GST registrants, then yes they have to charge you GST. If they are not GST registrants, then no they do not charge GST.

However if you work your way through the checklist in the link above and determine they meet the criteria of an employee, then you have to place them on payroll and pay them as an employee.

Jul 07, 2015
by: Laura

T5018s are only for the construction industry. If you are not in the construction industry, then you need to complete a T4A.

Aug 19, 2015
Term of penalties
by: Lera

Hello. Please can you help me with the following:

If I worked in Canada a few years ago and somehow didn't submitted GST to Canadian authorities, what is the term (number of years) that Canadian tax authorities can demand payment. And is there such a term at all? Thanks in advance

Aug 19, 2015
by: Lake

Not sure but this is what I found which may or may not be helpful to your situation.


This CGA link is a bit dated as it is from a 1996 article but may still be useful. It says:

"Section 298 of the ETA restricts the period of time that may be covered by a notice of assessment. This limitation is determined by reference to the reporting period that applies to a particular transaction or tax amount. In general, CCRA can assess for net tax up to the later of four years from the date on which the return for the reporting period was filed, or the day it should have been filed. If a return for a reporting period has never been filed — but should have been — the limitation period does not expire and CCRA is free to assess that period at any time. [my emphasis]

Subsections 298(4) and (7) collectively provide for three main exceptions to the general limitation under subsection 298(1). First of all, the limitation does not apply where the person to be assessed has made a misrepresentation that is attributable to the person’s neglect, carelessness, or wilful default. Similarly, the limitation does not apply where the person has committed fraud in making or filing a return or in supplying, or failing to supply, any information relating to GST/HST — whether to the auditor or otherwise). Lastly, if the person files a waiver covering a period or particular matter, the limitation does not apply at any time when the waiver is in effect."

Sep 11, 2015
Charging HST or not...
by: KS

Hi, I've read all of the above comments, but am still a bit confused!

I have a research contract for $1680. The client wrote back asking me to add the HST. My questions:

1. If I do not have an HST number, then I shouldn't add it, correct?
2. If I do have to add it, do I calculate 13% (I'm in Ontario) of the $1680, which would give a total of $1898.40, or does the final total need to amount to $1680?

Thank you!!

Sep 12, 2015
by: Lake

1. Correct. If you are not registered for GST/HST and do not have annual sales over $30,000, then you do NOT charge HST.

2. If you are registered, then you do have to add GST/HST. The rate you charge is based on the address of your client not YOUR location.

If the client lives in Ontario too, then 13% would be correct. If s/he lives elsewhere, you need to check my table to determine the correct rate to charge.

GST/HST Rates by Province.

Oct 29, 2015
Retroactive GST/HST
by: Anonymous

Hello. Can you help me with the following?

Currently going through a CRA audit and the auditor has found invoices where GST were supposed to be charged but was not. Can I by law send an invoice for the GST that should have been billed? Is retroactive billing allowed in this situation? If so, is there a section in the Excise Tax Act that addresses this type of situation?

Thanks very much.

Nov 02, 2015
Retroactive GST/HST
by: Lake

This law blog says that you can bill your customers / clients for GST retroactively:


... but do you really want to do that to your customers / clients? If it is not a lot of money, you might want to consider just eating the expense ... and consider it an expensive lesson ... one of the many small business owners learn every day.

Nov 17, 2015
Subcontractors who do not charge HST
by: Rob


I am running a video production company and although business has been good I am paying a very high amount of HST as a lot of the people I use as subcontractors do not charge HST as they make under $30000 annually.

Is there a form I can have them fill out and claim their expenses as ITCs.

Nov 18, 2015
Invoice with materials
by: Anonymous

My husband bills his invoice with labour/GST and materials.

Do I take off the GST and material amount for line 104 on GST form. Or do I only take off the gst amount from income?

Nov 19, 2015
by: Lake

Sorry Rob I'm not understanding your question/problem. I don't see what your subcontractors GST/HST registration status has to do with you claiming your own ITCs.

Your ITCs are claimed based on the GST/HST you have paid on goods and services. If you haven't paid any sales tax, there is nothing to claim.

If you "want access" to your subcontractors' ITCs then you need to hire them as employees and pay all the related expenses related to the work they do. That way you will have paid GST/HST on YOUR business expenses which will also allow you to claim them as ITCs. Of course then you would have payroll taxes and benefits as well as higher admin fees to process all the additional expenses.

How your subcontractor runs their business is not under your control.

Check out this chat (https://www.bookkeeping-essentials.com/hiring-independent-contractors.html#rules) for information about independent contractors. Make sure your subcontractors meet the criteria.

Suggest to your subcontractors that make under $30,000 consider voluntarily registering for GST/HST so that they can claim their ITCs.

Congrats on doing well in your business to date!

Nov 19, 2015
Invoice with materials
by: Lake

I'm not understanding your question.

I suggest you look at CRA's RC4022 Publication on GST/HST. Take a look here (http://www.cra-arc.gc.ca/E/pub/gp/rc4022/rc4022-e.html#P472_39499).

Line 101 reports your total (ALL) sales for materials and labor excluding GST/HST collected.

Line 103 reports the GST/HST collected on the sales reported on line 101.

Hope that helps.

Nov 24, 2015
Need answers
by: Anonymous

My husband did some subcontracting for a company and he never registered for GST.

Was the company that gave him the subcontracting job suppose to pay the GST or how does this work? Because I am screwed on my income tax because of them both, not sure why my husband ended up owing over $22,000 and me over $6000.

How does subcontracting work?

Nov 27, 2015
Need answers
by: Lake

If your husband was subcontracting, he is responsible for invoicing his customers. If he earned over $30,000 then he was required by CRA to register for GST. Also keep in mind that GST payable is not the same thing as income tax payable.

Without more detail I really can't answer your question.

Try using my search box to see what chats come up ... and hopefully they will be useful.

Nov 28, 2015
BC Provincial taxes and HST in Ontario
by: Rob

Hello there and thanks for responding to my earlier query.As a follow up with regards to HST, I have a subcontractor in BC who has only charged me 5%(PST in BC) on his invoice.

While I am submitting my HST in Ontario is there any part of that that I can claim as an ITC and reduce the amount I owe.His invoice was fairly large and I might end up paying a lot in HST

Nov 30, 2015
by: Lake

Rob you should get a bookkeeper to help you do your return(s) in the beginning until you understand how it is done.

If I understand your question, you operate in Ontario and hired a BC subcontractor. The subcontractor invoiced you 5% GST. (Our PST is 7% here.)

New place of supply rules came out in 2010. All business must now charge GST/HST based on the location of the customer (where the service and/or product was delivered). Previously it had been based on the location of the supplier.

Therefore, if your subcontractor did work for you (delivered in Ontario), s/he should have charged 13% HST.

GST/HST is a neutral sales tax to registered businesses in Canada. Only the end consumer pays the tax. Therefore any GST/HST you pay to your suppliers / subcontractors is claimable as an ITC provided they are legally registered to collect GST/HST and the invoice meets CRA's criteria.

Please take time to read through my GST/HST Guide.

Dec 03, 2015
Need help
by: Anonymous1234


I would like to start selling in Amazon Europe. I live permanently in Canada. Do I have to charge any taxes or VAT. I will be under $30000 per year in sales....

Dec 16, 2015
New Business
by: Ahmed


I registered HST/GST and I am about to invoice my customer the 1st invoice. It's consultation services.

Do I have to charge him HST (13%) + GST (5%) so total will be 18%.

Do both apply to all kind of services?



Dec 17, 2015
by: Lake

You only charge GST or HST ... not both. Here's why:

HST rate % - Federal Part % = Provincial Part %
For example in Ontario since July 1, 2010:
HST rate 13% - Federal Part 5% = Provincial Part 8%

Remember you also charge the rate based on where the client lives. You'll find the rates across Canada here:


Dec 29, 2015
HST - when to register
by: Anonymous

My question is similar to some of the above but maybe needing clarification. As an independent contractor not yet registered for HST, if I make $30k in the first 6 months of 2016, will I only be expected to remit HST on revenues after registering, or will CRA charge me HST also on the $30k from the first 6 months after exceeding the threshold in the same tax year.


Dec 30, 2015
HST - When to Register
by: Lake

It is my understanding that you start charging HST on all sales after the $30,000 threshold has been met ... if you had not registered voluntarily before you met the threshold.

Be aware that if you do not officially register and start collecting the sales tax when you meet the $30,000 threshold, you will lose your input tax credits.

Jan 25, 2016
Services in US
by: Anonymous

I am self-employed and 90% of the consulting work I do is for a company in the US. I live in Canada and do the work from my home in Canada and am wondering if I need to charge GST/HST.

I have been consulting for 2 years but have never passed the $30000 threshold, I anticipate I will pass it this year and am wondering if I need to charge HST since my client is US based?

Jan 25, 2016
Cross Border
by: Lake

While there is a special 90% rule, I understand it to apply if sales to your customers / clients are made where your business resides. This does not appear to apply in your case.

I have chatted about place of supply rules and working remotely in the US.

The general rule if you are electronically exporting services or intangible property to a non-resident person (defined as the billing address is outside of Canada without a permanent establishment in Canada) who is not a GST/HST registrant, you do NOT charge GST/HST as it is zero rated.

You need to determine if the US business has a permanent establishment. I recommend you speak with your accountant to discuss your specific situation.

Regardless of the rate you charge, once you meet the $30,000 sales threshold, you must register for GST/HST if you have not voluntarily registered previously.

Jan 29, 2016
Pay CRA for Unpaid Invoices
by: Anonymous

When doing my HST quarterly, someone told me that I have to declare the HST invoice not paid. That doesn't make sense at all.

Jan 30, 2016
Accrual Accounting
by: Lake

That is correct. Unless you are a farmer or fisherman in Canada, you must follow accrual accounting not as basis accounting.

In accrual accounting, you record the revenue when the transaction is complete, whether or not you have collected payment. Therefore, when you complete your GST/HST return, you include all sales including those in Accounts Receivable.

If the A/R ends up being uncollectible in the future, you can record a bad debt which includes sales tax. This is how it will be 'recaptured' if your customer doesn't pay.

It is very important to have collections procedures in place.

With all the technological advances today, there is very little reason for any small business to provide credit to its customers. Payment should be made before services are delivered or when the service (or product) has been delivered.

Check out PayPal, Square and other affordable payment solutions to ensure the banks are offering the credit and not you.

Feb 11, 2016
Can I charge HST
by: Kevin


I am a sole proprietor & remove scrap metal / e-waste from residential as well as commercial locations.

I charge residential & small commercial a low flat rate fee for my service.

I've been asked to do a pretty large job clearing out a large office.

If I do this job, & bring in self employed contractors to help remove these items, and pay them as such, do I charge the business that is paying me to do the job, HST?

Thank you

Feb 11, 2016
by: Lake

If you are registered for GST/HST with CRA then you have to charge sales tax. The rate charged depends on the location of the customer.

Type "Place of Supply Rules" in the search box for this site to learn more about the rate to charge.

If you aren't a GST/HST registrant, you do not charge sales tax ... and are not authorized to.

Feb 24, 2016
by: Vince, ON


I'm working for a contractor as a welder and he's paying me by the hour, I only get a check from him every week and he doesn't deduct taxes or anything else.

I do not have any other income. I do not have a business registered and will make more than 30k this year.

Do I still count as an employee? Will I need to pay HST in the end of the year on top of my income tax? Do I need to register a business and ask him to pay HST?

Feb 25, 2016
by: Lake

Two possibilities:

1. Surprise, you are running a business and will need to register and charge HST once you meet the $30K threshold. As a sole proprietor, you should be invoicing your customer.

2. You are really an employee and your employer is trying to avoid payroll taxes. There are criteria to determine if you fall in this category. Check out this chat:


Mar 15, 2016
Charging without a GST Number
by: Kelley

I believe I was misinformed when I began my small business in 2015. I was told that I was supposed to charge GST and when I reached the $30,000 in gross sales, that was when I had to register for a GST number. So now what do I do? I have been changing GST already and have not registered for a number. My sale are minimal, but I just don't know what to do.

Mar 17, 2016
by: Lake

I believe what you need to do now is write a letter to CRA explaining what you have done. Attach a cheque for the amount collected. I think you can either decide to register now so that you get to claim your ITCs or not register until you meet the threshold which would mean you DO NOT charge GST/HST and cannot receive input tax credits.

Mar 26, 2016
Report HST for tax return
by: Anonymous

I have a sole proprietorship business in Ontario. I've charged my client HST. After he paid I came to know that I was not suppose to charge HST.

I don't have HST number. How do I report the HST on my tax return?

Mar 26, 2016
Report HST for Tax Return
by: Lake

Please see the posts above on what to do. If it is one customer and it just happened, you might consider revising your invoice and returning the HST to your customer.

People, People, PEOPLE ... it is NOT OKAY to charge your customers sales tax if you are not registered to do so. It is fraudulent.

Small business owners out there, when dealing with small businesses, check their GST/HST number in CRA's registry to see if they are registered and the number is valid.

Learn more here ...


Mar 30, 2016

I am self employed and work for a number of companies in commission sales.

I have an HST number and when I invoice a company for my commission I add the amount + HST 13%

So my gross income for the year is x + 13%. When filing my tax return do I subtract the 13% from gross income my expenses exceeded income this year?

I am required to file and pay HST separately.

Apr 04, 2016
Charging Taxes
by: Anonymous

Hi I'm a construction contractor and have started working on larger jobs that involve sub-contractors.

I am GST registered and only charge GST at the moment.

When I pay the sub-contractors, they charge me GST and PST, which I pay. My question is, how do I charge this back to my customer so that they are not paying taxes twice? For example, say the sub-contractor amount is $1000 plus $50 GST and $80 PST for a total of $1130. When I bill the customer, can I simply charge them $1130 or do I charge them an additional 5% GST?

What if I markup the subcontractor price to $1100?

Apr 11, 2016
by: Lake

Sales are reported excluding GST. If you look closely on the form or in the CRA instruction guide, it will usually explain that the sales figure should exclude GST. If it doesn't, there is sometimes a place on the form to back out the GST amount.

Apr 11, 2016
Charging Taxes
by: Lake

Take a look at my chat on Real Property Contractors here:


Apr 26, 2016


Apr 27, 2016
by: Lake


P.S. When you type all in CAPS it means you are yelling at me. I'll ignore the yelling and guess you weren't aware of that. Have a fabulous week Cherry! ;0)

May 01, 2016
In home salon under $15,000.00
by: Anonymous

I am the sole prepriater of an in home salon, I make under $15,000.00/year. Do I need to do GST every 3 months or can I take it all to my accountant once a year.

It just seems I'm paying more for the bookkeeper to do this every 3 months and the bookkeeper is making more for the service than I collect in tax. I only charge my clients 5% tax as I don't sell product, so clients only pay tax on my services and not for product sitting on a shelf. What can I do?

May 04, 2016
Sub-contracting Q's
by: Anonymous

What deductions must I take off pay for EI, CPP etc?
The job is $20/hr. And I was told as a sub-contractor I do not need to pay taxes unless I make over $30,000/yr.

This can't be true!!

May 07, 2016
Subcontracting Qs
by: Lake

The $30,000 refers to registering and collecting GST/HST on your sales.

As an independent contractor, you pay your own income taxes and CPP premiums on your Net Income when you file your personal income return by completing Schedules T2125 and Schedule 8.

As a subcontractor, you don't qualify for EI unless you register for and pay into the voluntary EI program.

In order to be classed as a subcontractor though, you have to meet certain criteria... other wise CRA may reclassify you as an employee.

Please check out this chat on the criteria:


May 12, 2016
Sales on GST return
by: David

I am a construction contractor, who installs power poles for one customer. When I report my sales on my GST return, do I use the amount I invoiced in the year, or the amount my customer paid me?

David ... here is the CRA line by line guide to completing your return.


Jul 14, 2016
by: Robyn

Hi there. I'm not required to charge GST. I buy software subscriptions, which are charged GST. When I bill this software back to the client (no mark up), would I just put 2 line items, Software and GST paid to Third Party? Are they able to claim that GST themselves if I'm not directly charging them?
Thanks so much for your help. Great forum.

Jul 31, 2016
by: Lake

Sorry it took so long to get back to you.

If it were me, I'd bill the client exactly the same way you got billed. Generally that usually means 2 separate lines.

If you want them to be able to claim GST ITCs, the amount and rate and GST# has to be identified on the invoice.

Aug 31, 2016
by: Nail-tech

If some clients are paying me cash, I don't charge tax and I don't plan on filing my cash income. Is there a way I can get in trouble for this. Also, I rent a space in a salon. They're taxing me for the rent, is that legal? I have registered for HST and I only charge client who use my debit machine for that. When should I file my taxes and am I only giving them the HST on all my transactions or do I have to pay more?

Sep 01, 2016
Nail Tech
by: Laura

You really need to arrange for a consultation with an accountant.

As you are an HST registrant, you must collect HST on all of your sales regardless of how your customer pays you.

In addition, you must report all your income including cash sales. Please take a few minutes to read my Good Bookkeeping page at


where I explain moonlighting and skimming are illegal. I talk about the myths around dealing in cash.

Your salon operator obviously understands the sales tax rules which is why you are charged sales tax on your rental space.

Spend some time typing each question in the search box to get the answers to all your questions.

I would be very anxious if I were you. Please spend time on this site reading about all your business compliance responsibilities so you don't up with stiff fines and / or visiting a cell for a bit. All it takes is one of your customers or co-workers to send in a tip to CRA. If this ever happens, it will be too late to wish you had run your business above board.

Ask yourself, are you willing to go to jail for the amount of money your are not reporting? Is it really worth the risk?

Sep 23, 2016
Employment Agency HST
by: Stephen


I temporarily supplied employees to an associate's business while he was getting it all started and organized.

All of the payroll, remittances and such were paid and reported under my company.
I guess you can say that I operated an employment agency for a few months.

When I invoice my friend's business to acquire compensation for the $70K in gross payroll expenses that I incurred, do I charge him HST as well?

Please advise.

Thank you very much for your assistance.


Sep 25, 2016
by: Lake

I'd check with CRA but the way I look at it is this a just another customer to you so I'd say yes you would charge you normal HST as you would with any customer.

Oct 12, 2016
HST Question
by: Anonymous

I am a new small business and I do not expect my sales to go over $30,000 for the year.

I did opt to register for an HST account so I can claim the taxes I've paid.

Here's my question,

Do I have to charge everyone HST now that I have registered? I have some businesses that I deal with that want an invoice with taxes charged on it and then I have some individual customers that don't really want to pay it. Can I charge HST on those who need to see it and then not charge it on those who don't want to see it? as long as I stay under $30,00 of course?

I want to track my income and expenses obviously, but don't want to get in trouble with the government for not charging taxes on everything I sell.

Thanks, in advance, for your help

Oct 13, 2016
HST Question
by: Lake

Once you register for GST/HST, you must collect the sales tax on all applicable sales. Whether the customer likes it or not does not enter the equation.

Check out this tip on how to record "cash under the table" sales:


Nov 01, 2016
US Based Contractor
by: Anonymous

I am a US based contractor who occasionally does work in Canada. how does GST/HST effect me? I believe I need to pay GST on the use of my machinery while in Canada (similar to my US Use tax) but is there a GST component based on revenues earned? I think what I am reading is I can then applt credits (ITC's for my expensesincurred)? Do I have the basics correct?

Nov 07, 2016
US Based Contractor
by: Lake

Please see CRA's publication on Doing Business in Canada


To be able to collect GST and receive the ITCs, you must register with CRA.

Check out this article on US businesses operating in Canada written by law firm MNP.


Hope that helps.

Dec 03, 2016
Charging HST
by: Made

Hello there!

Should I charge HST on invoices which are going to be paid in cash?

If yes, I should journalize this invoices in QuickBooks as paid in cash.

If no to adding HST to these kind of invoices, then I should journalize them as cash without HST?

I would like to use this money for buying other stuff in the company.

Thank you for your advice.

Dec 06, 2016
by: Lake

If you are a GST/HST registrant, you charge the sales tax on ALL your sales. How someone pays for the goods or services is irrelevant.

Please see my chat (copy the link below into your browser) on how to record a cash sale:


The biggest mistake small business owners make is using government funds collected in trust to provide cash flow for their business or fund their personal lifestyle. This rarely ends well for the small business owner.

Read more about this here:


Jan 07, 2017
GST Basics
by: Dave

Hi There,

Great site. I am new to self-employment and made approximately $40,000 on a contract this calendar year. I wasn't aware at the time I needed to collect GST at the time so hadn't registered (I have now). For future reference, and just to clarify, I charge GST to my client only on services above the $30,000 threshold, and the Government charges me similarly. Is this correct? When I use the GST calculator on the CRA website it always seems to charge the amount owing on the full $40,000. Also, does the $30,000 threshold begin anew every January 1

Thank you in advance.....

Jan 12, 2017
by: Lake

You'll find my understanding of what happens when you initially meet the threshold here:


Once you are registered as a GST/HST registrant, you must collect GST/HST on all sales according to the place of supply rules. I have a nice flowchart for that here:


Jan 19, 2017
Charging HST to employees?
by: Anonymous

Our business purchases tools which the employees may purchase (new) from us. We do this so if they would like to pay in installments from payroll deductions, the don`t have to pay all at once by purchasing on their own. We pay HST on the initial tool purchase, but then claim that back based on HST charged to our customers. Do we have to charge the employees HST on their purchase from us or do we just charge them net price?

Jan 25, 2017
Charging HST on employee purchase
by: Lake

I'm going to say yes charge HST because if they had purchased it themselves, they would have paid HST. You are basically giving them an interest free loan assuming you are not marking up the price.

CRA's taxable benefit chart says that if you reimbursed an employee for tools, you would charge sales tax. So I don't see why the opposite wouldn't also be true.

GST/HST rules can be complex and it is not my speciality. I don't have time to research this so you may want to call CRA and find out what they say.

Feb 26, 2017
Filing for GST
by: Lyndon F.

I work for myself and I make over $30,000 a year. I invoice my work at an hourly rate. I got a letter for Revenue Canada for a filing for GST.

So how do I file for GST return when I am not selling any goods to charge GST. Can someone please help me.


Mar 08, 2017
by: Lake

GST stands for Goods and Services Tax.

You are selling your services so you must charge GST on the sale of your services.

Mar 23, 2017
Own business plus job
by: Anonymous

Hi there, I am a sole proprietor of a personal training business. I also work at a gym that pays me their rate for classes taught and clients. So I am on their payroll. They don't pay me hst on top of their rate. Do I report hst from the total received, or do I have to collect/ report from them at all?

section divider

No your employment income will be reported on a T4 slip your employer will give you. Employment income is reported on a different tax line than business income. Get/HST only applies to your business income and related business expenses. The two streams of income are different.

Mar 29, 2017
Taxi driver or uber driver GST
by: abealberta

Hi ;

I started to work as a taxi cab in 2016 and to start with the company as a contractor , GST number was mandatory even if I said I'am driving only as par-time.
I have a GST number.
and did some Uber too.
but after couple months working with them I found I am not making any money . so made less then $30000 in 2016. do I have to pay GST on that?

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Check out this article by Ledger Online on how to handle progress advances in the construction industry ...


Mar 31, 2017
Charging PST on hourly labour
by: Anonymous

My husband repairs heavy equipment (excavators, etc.), we are registered vendors for GST and PST in BC. Are we correct in charging the 7% sales tax on labour? I believe we are unless the customer provides a Certficate of Exemption, but want to be sure. Thank you.

section divider

Check out this chat on PST Basics and Contractors:


May 02, 2017
Advance Payments by Customer
by: Suzanne

My husband is a carpenter. The job he is working on has started in 2016 and will end in 2017. He has received advances for some of the work completed. We pay HST on a yearly basis, so we have to remit for the calendar year.

Does he claim the HST on the advances he has received to date on his return for 2016? Or does he claim the HST when he gives the final invoice in 2017?

Can you tell me where exactly to see the answer to the information requested on the CRA website?

section divider

Check out Ledgers Online article on how the construction industry handles progress advances ...


May 04, 2017
GST for Owners truck operators and meals
by: Nataly

My husband is truck driver that provides services to carrier which biweekly submit him pay for trips and deducts fuel (bought on diesel cards)
I read that it is services that are zero rated and while preparing GST return we will never pay only we can claim all receipts for truck repairs and fuel etc.
Once I asked accountant she said we should get letter from carrier company...when contacted carrier they said they will not provide letter, s/he will only send a copy of contract...
So now I am completely puzzled...

Also there is meal allowance 17$ per meal can we take GST out of that allowance?


section divider

Go back and se your accountant. Bring your contract with you. Depending on what advice your accountant gives you they could contact the carrier and make the request on your behalf.

May 23, 2017
Charging GST/HST between two businesses
by: Joe

Is it optional to charge GST/HST for a transaction between two registered businesses? Or is it just a false rumour?

section divider

I'd say yes that would be a false rumor. There are some instances where official, legal paperwork can be drawn up between two companies, but the instances when this is applicable are complex and rigid.

Jul 27, 2017
Limo owner operator in Toronto
by: Gui

Hello Lake,

I am a sole proprietor limousine business and I have a HST number because I make gross over 30,000 anually. I work just for a large limousine business, where they take 25% for each run, and at the end of the month they pay me by cheque for the runs that I did plus HST (13%). I do my income tax with my accountant, declaring all my income and expenses.

My concern is that I am receiving two different letters from the Canada Revenue Agency. One of them is for the Program Individual (what I assume is my personal taxes) and the other letter is for my GST/HST (assuming it is taxes related to my business). In both of these letters, I have to pay different amounts of money.

My question is as a sole proprietor, do I have to pay for two different taxes? Is this normal?

I would appreciate your response!

Aug 06, 2017
by: Lake

The short answer is yes you have to pay both amounts.

The GST/HST correspondence pertains to a problem with your GST/HST account. Perhaps you didn't file on time; perhaps you filed the report but didn't pay the amount owing; or perhaps you file annually but need to make quarterly installments.

You will need to read the correspondence to see what they are asking for and why.

If the other correspondence is relating to your personal income taxes, you will see your social insurance number as the reference.

Again you need to look at what they are asking for and why. It could be you have outstanding income tax due or perhaps you have quarterly tax installments outstanding.

Oct 30, 2017
by: Eliza


I was hire in 1 company as independent contractor, my income was not exceeding $ 30,00 a year it around $28,000 from July to December 2017.

I don't have gst/hst number and didn't collect gst/hst from my client, but I pay GST/HSt on top of my purchases related on my work/business. My question is, do I have to file a GST/HST or do I need to claim the gst/hst that I pay on my purchases from the merchant and other suppliers?

Thank you so much!

More power


Oct 31, 2017
by: Lake

If you are a GST/HST registrant, the sales tax is neutral. What I mean by that is you get to offset your input tax credits (sales tax paid on your purchases) against the sale tax collected ... which means the business pays no GST/HST ... it is passed onto the consumer.

However, if you are not a GST/HST registrant, you do not get to claim your input tax credits.

Make sure you check the rules for mandatory GST/HST registration so you know when it kicks in. You rad about that here:


Dec 08, 2017
Sole proprietor with overseas client
by: Airfix

I am a sole proprietor and have one overseas client who I invoice and the end of each month.

I have a signed advisory agreement with them and plan to pay CPP as both employer and employee and file my taxes correctly. ( I just started in Sept)

Do I need a GST account when I exceed 30K and do I need to charge my offshore client GST?

I live in BC and travel around the world providing my service along with working from my home for them using the internet and Skype.

This company has no connection to Canada but uses my service as I am a "subject matter expert" and it is hard to find anybody locally in their country.

Appreciate your view on this.
Many thanks.

Jan 20, 2018
by: Lake

You really should engage one of the large national firms in Canada or a firm that has international affiliations. You don't want to make a mistake in handling this area. It is much better to pay for a consultation and get advice specific to your situation.

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