Table of Contents

What is GST/HST, and how is it different from income tax?

When does a small business have to register for GST/HST?

Should you register voluntarily if you earn less than $30,000?

Do you need GST/HST registration, tax software or both?

Which freelance services are taxable, zero-rated or exempt?

How do you apply GST/HST correctly in invoicing software?

How do you register and manage GST/HST after registration?

How can Intuit QuickBooks help with GST/HST and year-end tax preparation?

GST/HST registration and invoicing FAQs

What is GST/HST, and how is it different from income tax?

These are two separate tax obligations that have to be collected and reported separately. GST is a federal sales tax on goods and services that business owners are responsible for collecting; HST combines it with a provincial tax in some provinces. Income tax is a direct tax on the money you earn, which is reported as part of your T1 when you file your taxes.

Here are the basics of how it breaks down for most freelancers and self-employed people:

When does a small business have to register for GST/HST?

Generally, a small business must register for GST/HST once it loses the status of “small supplier”: a business that earns under $30,000 across any four consecutive quarters. Let’s take a closer look at how it works.

How does the $30,000 small supplier threshold work?

If your business’s total revenue is under $30,000 across any four consecutive quarters, the federal government considers you a “small supplier” and does not require you to register for GST/HST. This is based on total revenue, before expenses, across any four consecutive quarters (not a calendar year). If you’re a sole proprietor, it includes revenue from all your businesses combined.

Because the calculation uses a rolling four-quarter system, one strong quarter can push you over $30,000 even if your typical income is lower. Using freelancer accounting software can make it easier to check your running total regularly and be aware of when you’re approaching the limit.

When must you start charging GST/HST?

A professional accountant can help you determine when it’s time to start charging GST/HST, but here are the basics that every self-employed person or business owner should know:

Why this matters: if you miss the moment you cross the line, you may owe GST/HST on sales you have already invoiced without charging it—including the sale that put you over. For many business owners, going back to collect this tax from a client afterward may not be a realistic option, which can result in having to pay the missed tax yourself.

Should you register voluntarily if you earn less than $30,000?

Some freelancers and small business owners register for GST/HST voluntarily, even if they’re not required to. Here are some reasons why it can be an advantage:

• You can claim input tax credits (ITCs) on business expenses like software and equipment
• It signals stability and firm establishment, especially to business clients
• It removes the risk of getting caught off guard mid-year

On the other hand, there are some increased responsibilities to be aware of before you register:

• You must charge GST/HST on every taxable sale.
• You have to track tax collected separately from income.
• You have to file returns on schedule, even with $0 in sales.

Pricing for customers and clients is another factor to consider. If most clients are GST/HST-registered businesses, they can often claim the tax back. If most clients are individuals and consumers, registering could mean charging them higher prices.

There’s no single right answer, so it’s worth a quick check with a tax professional if you’re on the fence.

Do you need GST/HST registration, tax software or both?

Whether you’re required to register and charge GST/HST is a legal determination based on your revenue. Accounting software addresses a separate problem: keeping accurate records of income, expenses, and tax collected so you’re prepared to register, file, or simply monitor your numbers, whichever applies.

Software can help you track your revenue against the $30,000 threshold, but it won’t register you automatically, and the responsibility to act on that information is still yours. Here are a couple of common scenarios that may apply to freelancers in Canada:

• Unregistered small supplier. You may not be required to charge taxes or file a GST-34. Software can still help by tracking income and flagging how close you are to the threshold.
• Voluntary registrant. You’re charging tax, filing returns, and claiming ITCs by choice. Software can help you calculate tax on invoices and separate collected tax from income.
• Required to register. You have the same obligations as a voluntary registrant, but they’re mandatory. Accurate software is even more important here, since errors can expose you to more serious compliance penalties.

Which freelance services are taxable, zero-rated or exempt?

See the CRA type of supply rules for the most up-to-date and accurate information on how your offerings are classified.

Taxable services

Most freelance work falls into this category. In most cases, design, writing, consulting, programming, and marketing are all taxed at the standard GST/HST rate for your client’s location.

Zero-rated services

These are taxed at 0%, but you may still be able to claim input tax credits on related expenses. For freelancers, this typically applies to services exported to clients outside Canada, though the specific place-of-supply rules determine eligibility, so it’s worth confirming your situation rather than assuming.

Exempt services

No GST/HST is charged on these services, and unlike zero-rated services, you can’t claim ITCs either. This is a narrow category that includes certain healthcare services, child care, and some financial services, among others. Most freelance work doesn’t qualify as exempt. If you’re unsure where your services fall, confirm with the CRA or a tax professional.

How do you apply GST/HST correctly in invoicing software?

The specifics vary by platform, but setting up GST/HST correctly in invoicing software like QuickBooks Online generally comes down to a few foundational steps:

• Set your registration status accurately. If you’re not registered, your invoices shouldn’t include GST/HST at all. Once registered, your GST/HST number should appear on every invoice you issue.
• Apply the correct rate based on your client’s location. Most invoicing software can calculate this automatically once your tax settings are configured, reducing the risk of charging the wrong provincial rate.
• Flag zero-rated and exempt line items explicitly, rather than leaving them blank or untaxed by default, so your records clearly show why no tax was applied.
• Track collected tax separately from revenue. GST/HST you collect is held on behalf of the CRA until you remit it, so keeping it distinct from your earnings makes filing more straightforward.

How do you register and manage GST/HST after registration?

Register and confirm your effective date

You can register with the CRA online, by phone, or by mail. Your effective date of registration determines exactly when you’re required to start charging GST/HST, so it’s worth confirming the date carefully before you finalize it.

Track tax collected and eligible input tax credits

Once registered, keep a running record of the GST/HST you charge on sales and the GST/HST you pay on eligible business expenses. The difference between the two is your net tax: what you owe the CRA, or what you’re owed back.

File returns and remit what you owe

The CRA assigns your filing frequency when you register, based on your annual revenue. You can check or change yours anytime in your CRA My Business Account. If your reporting period began in 2024 or later, returns must be filed electronically, with payment due by the same deadline.

Note that QuickBooks Online does not file your GST-34 with the CRA for you. While QuickBooks Online can help you prepare your GST-34 return, you’ll have to take the final step by filing it yourself.

How can Intuit QuickBooks help with GST/HST and year-end tax preparation?

QuickBooks Online tracks invoicing, expenses, and sales tax together, so your numbers are organized and ready to go when it’s time to file. Ready to keep your sales tax organized year-round? Explore QuickBooks Online plans built for freelancers and small business owners in Canada.