GST/HST registration is one of the first compliance questions Canadian IT contractors face as contract revenue grows. The rules are specific, and the retroactive liability risk is not widely understood.
The CAD $30,000 Small Supplier Threshold
Self-employed Canadians are required to register for GST/HST once their taxable supplies exceed CAD $30,000. This threshold is measured across any single calendar quarter, or across four consecutive quarters.
The threshold applies to total taxable supplies, not net income. Revenue from exempt supplies (certain financial services, healthcare, and residential rent) does not count toward the threshold.
Once you cross CAD $30,000, you are required to register. You are also required to begin collecting GST/HST immediately, before registration is complete.
The Retroactive Liability Problem
The most misunderstood aspect of the registration threshold is that your obligation to collect GST/HST begins on the day you exceed the threshold, not on the day you register.
If you invoice a client for CAD $6,500 that pushes your total over CAD $30,000 mid-quarter, you owe GST/HST on that invoice and every invoice after it, even if you have not yet registered with CRA.
Registration through CRA’s Business Registration Online portal can take time. The collection obligation does not wait.
Clients in business can recover GST/HST they pay through input tax credits, so the late charge is typically not a relationship issue. The problem is yours: if you did not collect it, you still owe it.
What Registration Requires
Once registered, you are required to:
- Collect GST/HST on taxable supplies at the applicable rate (5% GST federally, 13% HST in Ontario, with varying rates in other provinces)
- File GST/HST returns on the frequency assigned by CRA (annual for small businesses, quarterly or monthly for larger operations)
- Remit the net amount after claiming input tax credits on eligible business expenses
- Maintain records to support your returns
Input Tax Credits
Registration is not purely a cost. Once registered, you can claim input tax credits (ITCs) on GST/HST you pay on business expenses: software subscriptions, office supplies, professional fees, and other inputs.
If your clients are other businesses, they recover the GST/HST you charge through their own ITCs. For business-to-business service providers, registration is often cost-neutral from the client’s perspective and generates ITC refunds on your side.
Voluntary Registration Before CAD $30,000
You can register voluntarily before reaching the threshold. This makes sense when:
- Most of your clients are GST/HST-registered businesses who will claim back what you charge
- You have significant business expenses with GST/HST you want to recover
- You expect to cross the threshold soon and want to avoid the retroactive liability risk
Voluntary registration commits you to all the same filing and remittance obligations as mandatory registration.
Exempt vs. Zero-Rated vs. Taxable Supplies
Not all self-employment income attracts GST/HST.
Exempt supplies do not attract GST/HST and registrants cannot claim ITCs on related expenses. Examples include most health services, long-term residential rent, and most financial services.
Zero-rated supplies are taxed at 0%, which means GST/HST is charged at zero but you can still claim ITCs on related expenses. Examples include exports and certain agricultural and fishing products.
Most professional service income for IT contractors and tech consultants is taxable unless a specific zero-rating rule applies. The treatment depends on the client, the service, and where the service is supplied.
Filing Frequency
CRA assigns filing frequency based on annual taxable supplies:
- Under CAD $1.5 million: annual (with the option to elect quarterly)
- CAD $1.5 million to CAD $6 million: quarterly
- Over CAD $6 million: monthly
Annual filers are required to make quarterly instalment payments for the first year after mandatory registration.
Multi-Province Considerations
If your clients are in provinces without HST, the rate is 5% GST. HST applies in Ontario (13%), New Brunswick (15%), Newfoundland and Labrador (15%), Nova Scotia (15%), and Prince Edward Island (15%). Quebec has a separate QST system.
If you work with clients across multiple provinces, the place-of-supply rules determine which rate applies.
GST/HST obligations interact with income tax planning and, for incorporated contractors, the corporate return. For IT contractors with multi-province clients, U.S. client income, or questions about ITC claims on specific expenses, working with a CPA who handles GST/HST alongside the personal and corporate return ensures the filings reconcile and the compliance obligations are tracked together.