Tips For Collecting GST/HST

A question I get almost weekly is how to collect GST/HST and if a business should be collecting PST. To answer that properly, you’ll have to take a few things into consideration. This blog is here to help with that.

But first you need to ask yourself… 

Should I be collecting GST/HST?

Well, as you know, that’s not a simple yes or no question. Once you make $30,000 total, gross income, in 4 consecutive quarters, you must register for the GST/HST program. You can, however, voluntarily register for GST/HST early. 

“Taxes are an inevitable part of business in Canada. I recommend creating a new bank account for taxes; one for GST and PST (if applicable) and one for corporate taxes.” - Signal Operations

Why would I register early?

If you believe you will make over $30,000 in the first year OR you have repeating customers, I would recommend registering early. Firstly, it makes it easier and less of a worry over whether you’ve hit that mark yet or not. Secondly, your customers or clients will ultimately see a 5% increase (although mandatory) in your fees and might get a surprise bill. Obviously, we want to avoid that, so if you’re projecting hitting that $30k quickly, it’s usually best to register early. 

Another reason is Input Tax Credits (ITCs). On most items, you are able to claim back the GST/HST amount, thereby reducing the GST/HST collected or even a refund. I love a little cash flow help! There are some restrictions of course, but probably doesn’t apply to most of my readers. 

Do I charge GST or HST? 

You always charge and collect GST/HST based on where the client lives or does business.

For example, my business is British Columbia based, but I have clients in Nova Scotia. So, for my clients in Nova Scotia, I charge and collect 15% HST on their bill. 

On the flip side, one of my clients is based in Ontario but if she were to bill me (in BC), she would only charge me 5% GST on my bill. 

Clear as mud, right? It’s confusing at first, but you’ll get it eventually!

What do I do once I’ve collected the GST/HST?

Once you’ve collected the GST/HST you must remit that amount to the government based on the schedule you have. That schedule could be monthly, quarterly, or annually. 

You can find out your schedule in your CRA My Business Account under ‘View Expected and Filed Returns.’ You can file the return from your CRA My Business Account and then send payment through the CRA or through online banking. 

Do I charge GST/HST without registering?

No, you do not charge GST/HST without registering. If you are doing this right now, you need to register for GST/HST and have the CRA retroactively date your registration. 

What about PST (BC, SK) or RST (MB)? 

It’s important to look into the rules for each individual Provincial Sales Tax or Retail Sales Tax. I’m not a tax expert in each province and listing off what is applicable and not applicable is hard to do. Generally speaking, only products and items are applicable and services are exempt.

I know this can all be a little (or a lot) confusing at first, but you’ll get it eventually. If you have any other questions around collecting, remitting, and eligibility for GST/HST or PST/RST, please reach out to me! 

If you need some more help figuring this all out or need any other bookkeeping/accounting help, book a discovery call.