Please note: this information is current as of May 2026. I do my best to keep this updated as the CRA changes things, however I cannot guarantee the accuracy of this information. Please make sure you do your own research and due diligence.
If you’ve ever googled ‘hst for small business’ at 11pm while wondering whether you were supposed to be charging sales tax this whole time, you’re in good company.
If you’ve ever wondered,
- Do I need to charge GST/HST?
- When do I need to start charging GST/HST?
- How much should I be charging?
… you’re not the first business owner to ask these questions, and you definitely won’t be the last.
This is one of those topics that feels way more complicated than it should be.
And honestly? A lot of that confusion is justified. The rules are not intuitive, the consequences for getting it wrong are real, and nobody hands you a manual when you start freelancing or launch your creative business.
Here is what I know from watching this play out over and over again: most people either panic about HST way too early, or they realize way too late that they should have been charging it months ago.
Both situations are stressful. Both are avoidable.
The thing is, once you understand how the threshold actually works (and I mean really understand it, not just skim a CRA page and hope for the best) this stops being scary.
It just becomes one more operational thing you handle.
So let’s talk about what GST/HST actually is, when you need to start charging it, what happens if you mess it up, and why I think most creative business owners should consider registering before they technically have to.
I’m Dana, the bookkeeper behind Fernweh Bookkeeping. I work with Canadian creative business owners who would rather be doing literally anything other than figuring out tax stuff. If you are at the point where you want someone else to keep track of all this so you can get back to your actual work, you can check out what services I offer whenever you’re ready.
A quick lil disclaimer: This blog content is for educational and informational purposes only and does not constitute financial, legal, or tax advice. While I strive to provide accurate and helpful information, readers should consult with licensed professionals before making any financial or legal decisions based on this content.
Table of Contents
What GST/HST actually is and why the CRA cares about your tiny creative business
GST/HST is sales tax.
That is it. That’s the whole thing.
In Canada, most products and services have sales tax applied to them. When you buy a coffee, you pay sales tax. When you hire a photographer, you pay sales tax. When someone hires you to design their website or write their copy or plan their wedding, they pay sales tax.
The difference now is that YOU are the one collecting it.
Here is where it gets important: that sales tax money is not yours.
I need you to really absorb that.
When a client pays you $1000 plus $130 in HST, that $130 belongs to the CRA. You are just holding onto it temporarily until it is time to send it in.
You are essentially a middleman between your client and the government.
The CRA figured out a long time ago that the easiest way to collect sales tax is to make businesses do the work. So instead of chasing down every individual who bought a service, they put the responsibility on you, the seller, to collect it and remit it on their behalf.
Fair? Debatable.
Reality? Absolutely.
And here is the thing; the CRA does not care that your business is small. They do not care that you are a one-person operation running a creative side hustle from your kitchen table. If you meet the criteria for collecting sales tax, you are expected to do it correctly.
They also don’t care if you don’t know the rules.
Ignorance is not a defence when it comes to sales tax. If you should have been charging HST and you weren’t, you’re still on the hook for the amount you SHOULD have collected, plus penalties and interest.
So yeah. The CRA cares about your tiny creative business because sales tax is how the government funds things, and every dollar counts to them.
The good news is that once you understand what you’re actually dealing with, this becomes a lot less intimidating.
The $30k threshold and the sneaky ways you might hit it faster than you expect
Here’s the rule: you don’t have to charge GST/HST until you have made $30,000 in sales in any consecutive 12 month period.
Sounds simple enough.
But this is where a lot of people get tripped up.
That $30,000 is REVENUE. Not profit. Not what is left after you pay for your subscriptions and software and that new camera lens. It is the total amount of money that clients have paid you before you subtract anything.
So if you made $35,000 this year and had $12,000 in expenses, your profit is $23,000, but your revenue is still $35,000. You crossed the threshold.
The other sneaky part? It’s not based on the calendar year.
The CRA looks at any rolling 12 month period, broken into quarterly chunks. So you can’t just check your January to December numbers and call it a day.
Let me show you what this actually looks like.
Say you made:
- $8,000 from June to August 2025
- $9,000 from September to November 2025
- $7,500 from December 2025 to February 2026
- $6,000 from March to May 2026
That is $30,500 in 12 months. You have crossed the threshold, even though none of those individual quarters felt like a huge income spike.
This is why staying on top of your bookkeeping matters so much.
If you’re only looking at your numbers once a year, you might not notice that you quietly zipped past $30k back in February. And by the time you realize it, you’re already months behind on registration.
The CRA gives you a 30 day grace period from when you cross the threshold to when you need to be registered and charging sales tax.
30 days.
That’s not a lot of wiggle room if you’re not tracking your revenue closely.
And here is the part that catches people off guard: once you cross that line, everything you invoice AFTER the $30k mark needs to have sales tax on it. And if you forget? You can’t go back and retroactively charge clients. But the CRA will still expect you to pay the tax you SHOULD have collected.
That money comes out of your pocket.
So yeah. The threshold sounds generous until you realize how quickly project fees and retainer payments add up, especially if you had a busy quarter or two.
Why registering early might save you headaches even if you are nowhere near $30k
Here’s something I did that I actually recommend.
I registered my business for GST/HST when I had made about $22,000 in revenue. Nowhere near the threshold.
Why would I do that?
Because I know myself. And I know how easy it is to let your own bookkeeping slide when you are busy doing bookkeeping for everyone else.
I could see where my contracts were headed. I knew I would probably hit $30k sometime in the spring. Right in the middle of income tax season when I am already stretched thin and definitely not in the mood to deal with CRA registration.
So I got ahead of it.
Here is the thing nobody tells you: registering early is allowed. You can sign up for a GST/HST number anytime you want, even if you have only made $500, even before you’ve made a single dime.
And there are some real advantages to doing it before you technically have to.
- You never have to worry about accidentally crossing the threshold and scrambling to register in 30 days
- You don’t have to awkwardly notify existing clients that you are suddenly charging sales tax mid-project
- Your invoicing stays consistent from the start; same format, same expectations
- You can claim Input Tax Credits on your business expenses right away
That last one matters more than people realize.
When you are registered for GST/HST, you can claim back the sales tax you paid on business expenses. Software subscriptions. Equipment. Professional development. All that HST you have been paying out? You get to subtract it from what you owe.
If you wait until you hit the threshold, you miss out on those credits for all the months you were buying things before you registered.
Now, is early registration right for everyone?
Not necessarily.
If you’re brand new and genuinely unsure whether your business will even hit $30k in the next few years, waiting makes sense. There’s no point adding extra filing obligations to your plate if you don’t have to.
But if you’re already seeing steady income and you can feel the momentum building?
Just do it now.
Future you will be grateful you didn’t leave this until you were stressed and behind.
Provincial tax rates across Canada and what you actually need to charge
Okay so you know you need to charge sales tax. But how much?
This is where it gets a little messy.
Canada doesn’t have one universal sales tax rate. What you charge depends on where you are and where your client is located.
Here is the breakdown by province:
- Alberta: 5% GST
- British Columbia: 5% GST + 7% PST
- Manitoba: 5% GST + 7% PST
- New Brunswick: 15% HST
- Newfoundland and Labrador: 15% HST
- Northwest Territories: 5% GST
- Nova Scotia: 14% HST
- Nunavut: 5% GST
- Ontario: 13% HST
- Prince Edward Island: 15% HST
- Quebec: 5% GST + 9.975% PST (QST)
- Saskatchewan: 5% GST + 6% PST
- Yukon: 5% GST
If you only work with local clients in your own province, this is pretty straightforward. You charge the rate where you operate. Easy peasy.
But if you’re an online service provider working with clients across the country?
Things get trickier.
The general rule for services is that you charge based on where your client is located. Not where you live.
So if you’re a brand designer in Alberta working with a client in Ontario, you need to charge 13% HST on that project. Not 5%.
If your client is in Nova Scotia? 15% HST.
If they’re in BC? You are dealing with both GST and PST, which is a whole separate headache.
And if your client is outside Canada entirely? You typically don’t charge Canadian sales tax at all because our tax rules do not apply to them. BUT you have to make sure that you track this income separately so that it doesn’t get flagged by the CRA.
What if a client won’t give you their address?
Ideally you need to get one. You can’t accurately calculate sales tax without knowing where they are.
But if for some reason that is truly impossible, you default to charging the rate for YOUR province. It’s not perfect, but it keeps you compliant.
Here’s why this matters so much.
If you charge the wrong rate, too low, you’re still responsible for remitting the correct amount to the CRA. That difference comes out of your pocket.
If you charge too high, you have awkward conversations with clients and potentially need to issue refunds.
Neither situation is fun.
This is one of those areas where a simple spreadsheet tracking client locations can save you a lot of stress. Know where your clients are. Charge accordingly. Document everything.
Yes, it’s annoying. But once you have a system it becomes automatic.
What happens when you get it wrong: Charging without registering, or not charging when you should
This is where the stakes get real.
There are two main ways people mess this up. Both are common. Both are fixable. But both come with consequences you want to avoid.
Let me walk you through each one.
Scenario One: You should have been charging HST but you didn’t.
This is the more painful situation.
Say you crossed the $30k threshold back in March and didn’t realize it until November. You’ve been invoicing clients for eight months without collecting any sales tax.
The CRA doesn’t care that you didn’t know.
They will assess you for the HST you SHOULD have collected on every invoice after you crossed the threshold. That’s not money you can go back and ask your clients for. It’s money you now owe out of your own pocket.
Let me put some real numbers on this:
If you invoiced $25,000 after crossing the threshold and you’re in Ontario, that is $3,250 in HST you should have collected. Except you didn’t. So now you owe the CRA $3,250, plus penalties and interest because they consider it late.
YIKES.
And the longer you wait to catch it, the bigger that number gets.
Scenario Two: You registered and started charging HST but you were not supposed to yet.
This one is less catastrophic but still messy.
If you registered voluntarily and started charging sales tax before you hit $30k, that’s totally fine. You are allowed to do that.
But if you started charging HST without actually registering for an HST number? That’s a problem.
You cannot collect sales tax without a valid registration. If you do, you are collecting money under false pretenses and the CRA has opinions about that.
The fix here is to register immediately and sort out the paperwork. But it creates confusion for your clients, messy records, and potential questions from the CRA about what you were doing.
The bottom line?
Stay on top of your numbers. Know when you’re approaching that $30k mark. Register before you need to if you want to avoid the scramble.
And if you realize you messed up?
Don’t ignore it. The sooner you fix it, the smaller the damage. The CRA is a lot more forgiving when you come to them proactively than when they come to you.
This isn’t meant to scare you. It’s meant to show you why this stuff matters.
Once you have a system for tracking your revenue and you know your obligations, this becomes routine. But getting there requires paying attention, especially in those early growth years when your income can surprise you.
Frequently Asked Questions
Can I go back and charge clients for HST I should have collected before I registered?
No, and this is the painful part. Once an invoice has been sent and paid without sales tax, you can’t retroactively go back to that client and ask them to pay the HST portion. That ship has sailed. But the CRA will still expect you to remit the tax you should have collected, which means that money comes directly out of your pocket. This is exactly why staying on top of your revenue tracking matters so much.
Do I have to charge sales tax if my client is in a different province than me?
Yes, and this is where it gets a bit annoying for online service providers. For services, you generally charge based on where your client is located, not where you live. So if you’re in Alberta but your client is in Ontario, you charge 13% HST, not your local 5% GST. Keep a simple record of where each client is located so you always know what rate to apply.
What if I am pretty sure I will hit $30k this year but I have not crossed the threshold yet. Should I wait or just register now?
If you can see the momentum building and you know you are headed toward that threshold, registering now is usually the smarter move. It means you avoid the scramble of trying to register within 30 days while also notifying clients mid-project that you are suddenly charging sales tax. Plus you can start claiming Input Tax Credits on your business expenses right away instead of missing out on months of potential credits.
So where does this leave you?
You now know more about GST/HST than most small business owners figure out in their first few years. That’s not an insignificant thing.
The threshold. The rolling 12 month calculation. The provincial rates. What happens when you mess it up.
You’ve got the foundation.
From here it is really about staying on top of your numbers so nothing sneaks up on you. Whether that means setting a monthly date with your bookkeeping or finally admitting that you would rather hand it off to someone else entirely.
Both are valid options.
If you are still in the figuring-it-out phase, that is okay. Bookmark this and come back when you need it.
And if you’ve hit the point where tracking revenue and calculating sales tax and keeping the CRA happy feels like too much on top of actually running your business?
That is exactly what I do.
You can check out how I work with creative business owners whenever you are ready. No pressure. Just one less thing on your plate when the time is right.
