If you’re self-employed, freelance, or run any kind of business in Canada, you’ve probably heard that you have to register for the HST/GST once you make more than $30,000.
But what exactly does that mean, what income counts toward the limit, and how do you do it?
When do you have to register?
As most people who are self-employed, freelance, or running a business in Canada, there is an income limit below which you don’t have to be registered for the GST/HST. That limit is $30,000 in a 12-month period, below which you are considered to be a ‘small supplier’ and therefore not obliged to register.
Once you cross that $30,000 threshold in any 12-month period, you must get a GST/HST number and start charging your customers and clients.
Please note that when we say a 12-month period, that doesn’t mean it has to be a calendar year. For example, if you make a major $15,000 sale in December and another in January, you have just crossed the threshold, even if you don’t expect to make that much money for the rest of the calendar year. December and January fall into a single 12-month period, so it’s time to register.
Video: GST 101
What counts toward the limit:
- Your gross income (meaning, before deducting business expenses) from freelance or self-employment.
What doesn’t count:
- Income that isn’t from self-employment (i.e., salary from a job, investment income, or social support);
- Grants that do not require you to create a work and give it back to the grantor;
- Revenue from sales that are not subject to GST/HST, such as groceries, sales outside of Canada, or music lessons.
Once you cross that threshold, it is your responsibility to register voluntarily. The government won’t send you a notice or a warning – not right away, at least.
If it’s time (or past time) for you to register for the GST/HST, the good news is that it’s easy to do. You can call CRA’s business inquiries line at 1-800-959-5525 and do it in five minutes on the phone. You’ll actually get your GST/HST number on the spot.
Just be ready when you call to tell the agent what kind of business you do, a ballpark idea of how much you expect to bill annually, and how often you would like to file a GST/HST return (we generally advise clients to file annually, for simplicity’s sake).
We have just said that the government doesn’t send you a warning, which is why the onus is on you to register. The more accurate thing to say is that the government doesn’t come after you right away. If they eventually notice that you’re unregistered when you should be registered – and this happens a lot – the consequences can be very expensive.
Contact us at firstname.lastname@example.org to set up an appointment. Or call 587-754-2910 and we’re ready to assist.