The $30,000 Rule: When You Must Register for GST/HST

Every self-employed Canadian runs into the same question: at what point do I have to start charging GST/HST? The answer is the CRA's small supplier rule — and it is a rolling test, not a calendar-year one.

The rule

You are a small supplier — and do not have to register — while your total taxable sales stay at $30,000 or less. The test is applied two ways:

• Single quarter: if your taxable sales pass $30,000 in one calendar quarter, you stop being a small supplier at that moment. The sale that put you over the line itself is taxable, and you must register effective that day.
• Four consecutive quarters: at the end of any quarter, add up that quarter and the three before it. If the total passes $30,000, you stop being a small supplier at the end of that month, and must register from the following month.

The sales counted are your worldwide taxable supplies — including zero-rated sales like exports — before tax, and including the sales of anyone associated with you. Exempt sales (like most health and educational services) do not count.

A worked example

A freelance writer bills $9,000 in Q1, $9,500 in Q2, $8,000 in Q3 and $7,000 in Q4 — total $33,500. No single quarter crossed $30,000, but the four-quarter total did. She stops being a small supplier at the end of the month in which Q4 ended, registers, and charges GST/HST on invoices from that point. Nothing about her earlier invoices changes retroactively.

Why many freelancers register early anyway

Registration is allowed voluntarily at any income level, and there are two good reasons to take it early:

• Input tax credits: once registered, you recover the GST/HST you pay on business expenses. If you buy equipment, software or subcontractor help, that is real money back.
• Credibility: business clients expect a GST/HST number on invoices; having one signals an established operation.

The cost of registering early is the paperwork: charging the tax, filing returns (annually for most small registrants, with quarterly instalments), and keeping records. If your clients are mostly consumers rather than businesses, remember the flip side — your prices effectively rise by the tax once you register, because consumers cannot claim it back.

After you register

You get a GST/HST account number (your business number + RT0001). You charge the rate for your client's province (see the rate table), show your number on invoices over $30, and file on the cycle the CRA assigns. If your sales are under $400,000, consider the Quick Method to simplify the filing — and run your numbers in the calculator first.