GST/HST & Input Tax Credits (ITCs) — Canada Tax Rules

Register for GST/HST once revenue exceeds C$30,000 and reclaim GST/HST paid on business purchases through Input Tax Credits.

Claimable: Conditionally claimable · Tax authority: CRA (Canada Revenue Agency)

CRA (Canada Revenue Agency) Rules

• Once your total worldwide taxable revenue exceeds C$30,000 in a single calendar quarter or over four consecutive quarters, you must register for GST/HST.
• Rideshare drivers (Uber, Lyft) must register for GST/HST from the first dollar of revenue — the small supplier threshold does not apply.
• Once registered, you must charge GST/HST on all taxable supplies made to Canadian customers.
• As a GST/HST registrant, you can claim Input Tax Credits (ITCs) to recover the GST/HST you paid on business expenses and capital purchases.
• ITCs are claimed on your GST/HST return — not on your T2125 income tax return.
• Exempt supplies (most health services, residential rent, financial services) do not allow ITCs on related expenses.
• Keep all GST/HST-eligible purchase invoices showing the supplier's GST/HST registration number.

Limits

Small supplier threshold: C$30,000 — below this, GST/HST registration is optional. Above it, registration is mandatory. Rideshare: no threshold applies.

Worked Example

Jasmine is a self-employed marketing consultant earning C$60,000/year. Her revenue exceeds C$30,000, so she registers for GST/HST. She charges 5%–15% GST/HST on Canadian client invoices. Her annual business expenses include C$4,000 in GST/HST paid on software, equipment, and services. She claims this C$4,000 as ITCs on her GST/HST return — reducing her remittance to CRA.

Record Keeping

• Keep all purchase invoices that include GST/HST — ensure the supplier's GST/HST registration number is visible
• Maintain a GST/HST register tracking: GST/HST collected from clients and GST/HST paid on purchases (ITCs)
• Keep records for 6 years — CRA can audit GST/HST returns for up to 4 years (longer in some cases)
• Retain all GST/HST return filings and confirmation of remittance to CRA
• If you use the Quick Method or simplified ITC method, keep records of the election and eligibility criteria

Frequently Asked Questions

When must I register for GST/HST in Canada?

You must register for GST/HST once your total taxable revenue from worldwide supplies exceeds C$30,000 in a single calendar quarter or in any four consecutive calendar quarters. Once you cross the threshold, you have 29 days to register with CRA. Note: rideshare drivers must register immediately — the C$30,000 threshold does not apply to passenger transportation services.

What is an Input Tax Credit (ITC) in Canada?

An Input Tax Credit (ITC) is the GST/HST you paid on business purchases that you can recover by claiming it on your GST/HST return. For example, if you pay C$130 (including C$6.50 GST) for business software, you claim C$6.50 as an ITC on your next GST/HST return. ITCs reduce the amount of GST/HST you remit to CRA.

Do I charge GST/HST on services to international clients?

Generally no — services provided to non-resident clients for use outside Canada are zero-rated supplies (0% GST/HST). You do not charge GST/HST on these invoices, but you can still claim ITCs on the related business expenses. Keep records showing the client's foreign address to support zero-rating.

What is the GST/HST Quick Method?

The Quick Method is an election available to eligible small businesses with taxable revenue under C$400,000. Instead of tracking actual ITCs, you remit a fixed percentage of your GST/HST-included revenues to CRA. This simplifies bookkeeping and often results in a lower remittance. You must apply to use the Quick Method before filing your first return using it.