Complete Guide to GST/HST/QST for Canadian Freelancers (2025)

Navigating Canadian sales tax as a freelancer can feel overwhelming. Between GST, HST, QST, and provincial variations, it's easy to make costly mistakes.

This guide covers everything you need to know about Canadian sales tax compliance—from registration thresholds to filing deadlines—so you can invoice correctly and avoid CRA penalties.

What Are GST, HST, and QST?

GST (Goods and Services Tax)

A 5% federal tax applied across Canada on most goods and services.

HST (Harmonized Sales Tax)

A combined federal and provincial tax used in five provinces. Instead of charging GST + PST separately, HST combines them into one rate.

QST (Quebec Sales Tax)

Quebec's provincial sales tax (9.975%), charged in addition to GST. Unlike other provinces, Quebec collects both taxes separately.

Key difference: Most provinces use either GST alone or HST. Quebec is unique with GST + QST.

Tax Rates by Province (2025)

Important: These rates change occasionally. Always verify current rates with the CRA.

When to Register for GST/HST

The $30,000 Threshold Rule

You must register for a GST/HST number if:

• Your total taxable revenue exceeds $30,000 in a single calendar quarter, OR
• Your total taxable revenue exceeds $30,000 over four consecutive calendar quarters

Example: If you earn $8,000/month starting in January, you'll hit $30,000 by April. You must register and start charging GST/HST.

Voluntary Registration

You can register before hitting $30,000 if you want to:

• Claim Input Tax Credits (ITCs) on business expenses
• Look more professional to clients
• Simplify bookkeeping from day one

Pros of early registration:

• Recover GST/HST paid on expenses
• Avoid retroactive registration issues
• Professional credibility

Cons:

• More paperwork and compliance
• Must file returns regularly
• Clients may prefer lower prices (no tax)

When to Charge Tax (And When Not To)

Taxable Supplies

Most services freelancers offer are taxable:

• Web design and development
• Graphic design
• Consulting services
• Marketing services
• Photography
• Writing and content creation

You must charge GST/HST on these services.

Zero-Rated Supplies

Some goods and services have 0% GST/HST:

• Basic groceries
• Prescription drugs
• Medical devices
• Certain exports

You still need to track these for CRA reporting.

Exempt Supplies

No GST/HST charged, and you cannot claim ITCs:

• Residential rent (long-term)
• Most healthcare services
• Educational services
• Childcare

Most freelancers don't deal with exempt supplies.

How to Invoice Correctly

Required Information on Invoices

If your invoice is under $30:

• Your business name
• Invoice date
• Description of services
• Total amount (including tax)

If your invoice is $30 to $149.99:

• All of the above, PLUS:
• Your GST/HST registration number
• Total amount of GST/HST charged

If your invoice is $150 or more:

• All of the above, PLUS:
• Customer's name and address
• Terms of payment
• GST/HST registration number prominently displayed

Sample Invoice Format

ABC Design Services
GST/HST #: 123456789 RT0001

Bill To: XYZ Corp
Date: November 1, 2025

Services:
Website Design - $2,000.00

Subtotal: $2,000.00
HST (13%): $260.00
Total: $2,260.00

Payment due: Net 30

Pro tip: Use invoicing software like Paymavo to automatically calculate correct tax rates based on your client's province.

Input Tax Credits (ITCs)

What Are ITCs?

Input Tax Credits let you recover the GST/HST you paid on business expenses.

Example:

• You charge a client $1,000 + $130 HST (Ontario) = $1,130
• You paid $500 + $65 HST for business expenses
• Net HST owing: $130 - $65 = $65

You only remit $65 to CRA instead of $130.

Eligible Expenses for ITCs

You can claim ITCs on:

• Office supplies and equipment
• Software subscriptions (including invoicing tools)
• Business phone and internet
• Professional services (accountant, lawyer)
• Vehicle expenses (business portion)
• Rent (business portion of home office)
• Travel and meals (50% for meals)

How to Claim ITCs

1. Keep all receipts showing GST/HST paid
2. Track business vs personal use
3. Report on your GST/HST return
4. CRA may audit, so document everything

Missed ITCs = free money left on the table.

Filing Your GST/HST Return

Filing Frequency

Annual filing (most freelancers):

• Revenue under $1.5 million
• File once per year
• Due June 15 (if December 31 year-end)

Quarterly filing:

• Revenue $1.5M - $6M
• File every 3 months

Monthly filing:

• Revenue over $6M
• File every month

How to Calculate What You Owe

Formula:

GST/HST collected - GST/HST paid on expenses = Net amount owing

If negative (you paid more than you collected), CRA refunds you.

Online Filing

File through:

• My Business Account (CRA portal)
• NETFILE (for simpler returns)
• Accounting software (Wave, QuickBooks, etc.)

Deadlines:

• Annual: 1 month after fiscal year-end
• Quarterly: 1 month after quarter-end
• Monthly: 1 month after month-end

Late filing penalty: 1% of balance owing + 0.25% per month (max 12 months)

Common Mistakes to Avoid

1. Wrong Tax Rates

Mistake: Charging 13% HST to Alberta clients (should be 5% GST)

Solution: Use invoicing software that auto-detects provincial rates.

2. Not Registering When Required

Mistake: Hitting $30,000 threshold but not registering

Consequence: Penalties + retroactive registration

Solution: Track revenue monthly and register proactively.

3. Missing Input Tax Credits

Mistake: Not claiming GST/HST paid on business expenses

Cost: Hundreds to thousands in lost deductions

Solution: Save all receipts and track ITCs monthly.

4. Poor Record Keeping

Mistake: No receipts, disorganized invoices

Risk: Failed CRA audit = penalties + interest

Solution: Digital invoicing and expense tracking.

5. Mixing Personal and Business

Mistake: Claiming personal expenses as business ITCs

Risk: CRA penalties for false claims

Solution: Separate business and personal accounts.

Tools to Help with Tax Compliance

Manual Tracking (Spreadsheets)

Pros: Free, full control Cons: Time-consuming, error-prone

Accounting Software (QuickBooks, Wave)

Pros: Full accounting features Cons: Expensive, complex for simple invoicing

Invoicing Tools (Paymavo)

Pros:

• Automatic tax calculation for all provinces
• GST/HST/QST rates pre-configured
• CRA-compliant invoice formatting
• Fast invoice creation (30 seconds)

Cons: Limited full accounting features

Best for: Freelancers who need invoicing + tax compliance without accounting bloat

When to Hire an Accountant

Consider an accountant if:

• Revenue over $100,000
• Complex expense tracking
• Multiple revenue streams
• Time for CRA audit preparation

Cost: $500-2,000/year for basic freelance accounting

Quebec Freelancers: Special Rules

Dual Tax System

Quebec charges GST (5%) + QST (9.975%) separately.

Two Registrations Required

• GST number from CRA (federal)
• QST number from Revenu Québec (provincial)

Two Separate Filings

You must file:

• GST return with CRA
• QST return with Revenu Québec

Different deadlines and forms.

QST Registration Threshold

Same as GST: $30,000 in taxable revenue

Pro tip: Register for both simultaneously to avoid confusion.

Step-by-Step: Register for GST/HST

Online Registration (Recommended)

1. Go to CRA My Business Account
2. Sign in or create account
3. Select "Register for GST/HST"
4. Fill out form RC1:
   • Business info
   • Estimated annual revenue
   • Fiscal year-end
   • Reporting frequency
5. Submit and receive number instantly (or within 5-10 business days)

By Phone

Call CRA Business enquiries: 1-800-959-5525

By Mail

Fill out Form RC1 and mail to your tax center

Processing time: 10-15 business days

Real-World Example

Meet Sarah: Freelance Web Developer

Situation:

• Earned $35,000 in 2024 (exceeded threshold)
• Didn't register for GST/HST
• Clients paid her without tax

Problem:

• CRA retroactively requires GST/HST registration
• Sarah owes tax on all invoices
• Can't recover tax from clients (paid already)
• Penalties + interest for late registration

Cost: ~$2,500 in penalties + $1,750 in uncollected tax = $4,250 loss

Solution:

• Should have registered when hitting $30,000
• Charged GST/HST from that point forward
• Claimed ITCs on business expenses

With Paymavo:

• Automatic tax calculation prevents errors
• Revenue tracking alerts when nearing threshold
• CRA-compliant invoices from day one

Key Takeaways

✅ Register for GST/HST when you hit $30,000 revenue
✅ Charge correct rates based on customer's province
✅ Keep all receipts to claim Input Tax Credits
✅ File on time to avoid penalties
✅ Use invoicing software to automate tax calculations
✅ Quebec freelancers need separate GST + QST registration

Bottom line: Canadian sales tax compliance doesn't have to be complicated. With the right tools and knowledge, you can stay compliant and focus on your work.

Get Started with Compliant Invoicing

Paymavo automatically handles GST/HST/QST for all Canadian provinces:

• Correct tax rates pre-configured
• Province detection
• CRA-compliant invoice formatting
• $15/month flat (no hidden fees)

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Last updated: October 31, 2025