GST and HST Rules for Canadian Freelancers

What Is GST/HST and Who Pays It?

The Goods and Services Tax (GST) is a federal consumption tax of 5% that applies to most goods and services sold in Canada. The Harmonized Sales Tax (HST) is a combined federal-provincial tax used in provinces that have merged their provincial sales tax with the federal GST into a single rate. When you charge HST, the entire amount goes to the Canada Revenue Agency (CRA), which then distributes the provincial portion back to the participating province.

As a freelancer or independent contractor supplying taxable services, you are the one responsible for collecting GST/HST from your clients and remitting it to the CRA. Your client is technically paying the tax — you are the tax collector. This is why GST/HST is called an "indirect tax." The money you collect is never your income; it is held in trust for the government until you remit it.

Here are the current GST/HST rates across Canada:

Only the five provinces with HST (Ontario, Nova Scotia, New Brunswick, Newfoundland & Labrador, and PEI) have a fully harmonized system where you collect one combined rate. In all other provinces, you only collect GST federally, and provincial taxes (PST, RST, QST) are handled under entirely separate registration systems.

The Small Supplier Threshold: When You MUST Register

You are not required to register for GST/HST until your total taxable revenues exceed $30,000 in any single calendar quarter or over four consecutive calendar quarters. This is called the "small supplier" threshold. If you stay below $30,000, you can operate as a small supplier and not charge GST/HST at all.

The key phrase is "four rolling quarters." This is not a calendar year — it is the most recent four consecutive quarters. So if you earned $8,000 in Q2, $9,000 in Q3, $7,000 in Q4, and $7,500 in Q1 of the following year, your total over those four rolling quarters is $31,500. You have exceeded the threshold and must register.

What counts toward the $30,000 threshold?

• Revenue from taxable supplies of goods and services made in Canada
• Revenue from all your self-employment activities, even across multiple clients
• Revenue from a partnership you are part of (your share)
• Revenue earned through an agent acting on your behalf

What does NOT count:

• Revenue from zero-rated supplies (exports to non-Canadian clients)
• Revenue from exempt supplies (most healthcare, most financial services, childcare)
• Employment income (T4 income is not self-employment revenue)
• GST/HST already collected (do not include the tax portion itself in your revenue count)

Once you are required to register, you must begin charging GST/HST on all taxable invoices from the date of registration (or the date you were required to register, if you registered late).

How to Register for a GST/HST Number

Registering for GST/HST is straightforward and free. There are three ways to register:

1. Online through CRA My Business Account — the fastest method. If you already have a CRA My Account (personal), you can link it to a business account. Visit canada.ca/my-cra-business-account and follow the registration steps. You will need your SIN, date of birth, and recent tax return information to verify your identity.
2. By phone — call 1-800-959-5525 (Business Enquiries line). Have your SIN and business details ready. Processing takes a few days and your number arrives by mail.
3. By mail or fax — complete Form RC1 (Request for a Business Number) and send it to your local tax services office. This is the slowest method (2–4 weeks).

When you register, the CRA assigns you a Business Number (BN) — a 9-digit identifier unique to your business. The GST/HST program account is identified by the extension RT0001. So your full GST/HST registration number looks like: 123456789 RT0001. The "RT" stands for "GST/HST Return" and "0001" is the account number (most freelancers have only one).

Keep this number handy. You are legally required to show it on invoices over $150 where GST/HST is charged. See our guide on how to include your Business Number on invoices for the exact formatting rules.

Voluntary Registration: Should You Register Before $30,000?

You can register for GST/HST voluntarily at any time — even if you have earned $0 in revenue. There are legitimate business reasons to do so early in your freelancing career.

Benefits of Voluntary Registration

• Input Tax Credits (ITCs) — once registered, you can claim back the GST/HST you pay on business expenses. If you buy a laptop, software, or a phone plan for business use, you recover 5–15% of the cost depending on your province. For a freelancer spending $5,000/year on business expenses in Ontario, that is $650 in ITCs annually.
• Professional credibility — many corporate clients, particularly large companies, expect suppliers to have a GST/HST number. Not having one can signal that you are a very small operation. Some clients specifically ask for your BN before they will pay an invoice.
• No awkward mid-year switch — if you register once you hit $30,000, existing clients suddenly see a new line item on their invoices. Registering early means all your invoices have consistent GST/HST from the start.

Drawbacks of Voluntary Registration

• Administrative burden — you must file GST/HST returns on schedule, even if you owe nothing. Missing a return triggers penalties.
• Price perception for consumer clients — if you work with individual consumers (not businesses), adding 13% HST to your rate can feel like a price increase. Business clients are unaffected because they recover the tax through their own ITCs.
• Cash flow management — you are holding client money (the tax) until you remit. This requires discipline to avoid spending GST/HST collected.

How to Calculate GST/HST on an Invoice

The rate you charge depends on where your client is located (the "place of supply"), not where you are located. See our detailed guide on place of supply rules. For most remote services, you charge the rate of your client's province.

Here are three practical examples:

Example 1: Ontario Client (13% HST)

Example 2: Alberta Client (5% GST only)

Example 3: Quebec Client (5% GST + 9.975% QST)

Note: GST is charged by you on your invoice if you are GST-registered. QST is a separate provincial tax administered by Revenu Québec — you only collect QST if you are also registered for QST. See our PST/QST guide for details on when QST registration applies to out-of-province suppliers.

Filing Your GST/HST Return

Once registered, you are assigned a reporting period — how often you must file and remit. The CRA assigns your initial reporting period based on your annual revenue:

Most new freelancers are assigned annual filing frequency. You can request quarterly or monthly filing from the CRA if you prefer more frequent remittances (some freelancers do this to avoid a large lump sum at year end).

The Quick Method of Accounting

If your annual revenues are under $400,000, you may qualify for the Quick Method — a simplified way to calculate GST/HST remittances. Instead of tracking every ITC, you simply remit a fixed percentage of your GST/HST-inclusive revenue. The rates for service businesses are:

• If you provide services in a province with HST: remit 8.8% of HST-inclusive revenue (vs the full 13% you collected in Ontario — you keep the difference)
• If you provide services in a GST-only province: remit 3.6% of GST-inclusive revenue

The Quick Method is particularly attractive for freelancers with low business expenses because you keep a portion of the tax you collected. However, if you have significant business purchases (equipment, software, office space), the regular method with ITCs may be more advantageous. Consult your accountant to choose the right method for your situation.

Input Tax Credits (ITCs): Offsetting What You Pay

One of the biggest advantages of being GST/HST-registered is the ability to recover GST/HST you pay on business expenses through Input Tax Credits (ITCs). On your GST/HST return, you subtract your ITCs from the GST/HST you collected. You only remit the difference.

Eligible ITC expenses for freelancers include:

• Computer equipment, monitors, tablets, and peripherals
• Software subscriptions (Adobe, Microsoft 365, Figma, QuickBooks, etc.)
• Business phone and internet — proportional to business use
• Home office rent or mortgage interest — proportional to workspace area
• Professional development courses, books, and memberships
• Accounting and legal fees
• Office supplies and equipment
• Business meals (50% eligible for income tax; 100% GST/HST eligible)
• Vehicle expenses — proportional to business use

ITC Record-Keeping Requirements

The CRA requires supporting documentation for every ITC you claim. The rules depend on the transaction amount:

• Under $30: minimal records required (receipt with supplier name and amount)
• $30 to $149.99: receipt must show supplier name, date, total paid, and amount of GST/HST charged
• $150 and over: receipt must also show the supplier's GST/HST registration number and your business name

Common GST/HST Mistakes Freelancers Make

1. Charging the Wrong Province's Rate

Charging Ontario's 13% HST to an Alberta client is a real and common error. The place of supply rules require you to charge the rate applicable to where your client is located, not where you are. If you charge an Alberta client 13%, you have collected 8% too much — and that extra amount still belongs to the CRA, meaning you cannot simply refund it without adjusting your return. Always confirm your client's province before finalizing an invoice.

2. Not Registering on Time

Freelancers often only discover they needed to register after they file their income tax return and see their total revenue. If you exceeded $30,000 during the year but didn't register until tax time, you were required to remit GST/HST on all taxable supplies since the date you crossed the threshold — even if you never collected it from your clients. The CRA will assess you for the unremitted amounts plus interest and potential penalties.

3. Mixing Personal and Business Expenses

Claiming ITCs on expenses that are partially personal (like a phone used for both work and personal calls) without apportioning correctly is a common audit trigger. You can only claim the business-use percentage of the GST/HST paid. Document your business-use percentage and be conservative — claiming 100% ITC on a phone you also use personally will not hold up in an audit.

4. Spending the GST/HST You Collected

This is the most financially damaging mistake. The GST/HST you collect is never your money — it belongs to the CRA. Open a separate savings account and transfer every GST/HST payment you receive into it immediately. Treat it as a tax trust account. Freelancers who spend collected GST/HST and then cannot remit it at filing time face significant financial penalties and interest charges.

5. Forgetting to Charge GST/HST After Crossing the Threshold

Some freelancers operate as small suppliers for their first year and forget to start charging GST/HST once they register. If you registered in March, every invoice you issue from March forward must include GST/HST. Going back to existing clients to re-invoice for tax you forgot to charge is awkward and sometimes impossible — you end up absorbing the tax out of your revenue.