Harmonized Sales Tax (HST) is one of those topics that trips up a lot of new and growing business owners in Ontario. You know you need to charge it — eventually — but the rules around registration, filing frequency, and input tax credits (ITCs) aren't always obvious. This guide breaks it down plainly.
When Do You Have to Register for HST?
You are required to register for an HST account with CRA once your total revenues from taxable supplies exceed $30,000 in any single calendar quarter or over four consecutive calendar quarters. This threshold applies to your worldwide taxable revenues, not just Ontario sales.
Once you hit that number, you must register within 29 days. You can also register voluntarily before you reach the threshold, which lets you start claiming input tax credits on your business purchases right away.
Note: If you are incorporated, the $30,000 threshold applies to the corporation, not to you personally. A new corporation starts the clock at zero on incorporation.
Ontario HST Rate
Ontario's HST rate is 13% — 5% federal GST + 8% Ontario provincial component. You collect this from your customers on taxable supplies and remit the net amount (HST collected minus ITCs) to CRA.
How Often Do You File?
Your filing frequency depends on your annual taxable revenues:
- Annual filer: Revenues under $1.5 million/year. One return per year, due 3 months after your fiscal year-end.
- Quarterly filer: Revenues between $1.5 million and $6 million/year. Returns due one month after each quarter-end.
- Monthly filer: Revenues over $6 million/year. Returns due one month after each month-end.
CRA will assign you a filing frequency when you register, but you can request to file more frequently if it suits your cash flow better.
Input Tax Credits (ITCs) — What You Can Claim Back
An ITC is the HST you paid on business purchases, which you get to deduct from the HST you owe. This is one of the most misunderstood parts of HST — many business owners don't realize how much they can recover.
Common eligible ITC items for Ottawa small businesses:
- Office rent (commercial landlords charge HST)
- Accounting and legal fees
- Advertising and marketing
- Equipment and technology purchases
- Vehicle expenses (business portion only)
- Software subscriptions used in the business
Key requirement: You must have a valid receipt or invoice showing the supplier's HST registration number to claim an ITC. No number on the invoice = no ITC.
The Quick Method — Is It Right for You?
CRA offers a simplified Quick Method of accounting for HST, available to most small businesses with annual taxable revenues under $400,000. Instead of tracking every ITC individually, you remit a flat percentage of your HST-inclusive revenues to CRA and keep the rest.
For service businesses in Ontario, the Quick Method rate is 8.8% of total HST-included revenues. If your ITC claims are typically low (few taxable inputs), the Quick Method can save you money and reduce paperwork. If you have significant capital purchases or high input costs, the regular method usually comes out ahead.
It's worth running the numbers with your CPA before electing — the savings can be meaningful, but it's not the right choice for everyone.
Common HST Mistakes to Avoid
- Not registering on time: CRA can assess HST retroactively once you pass the threshold, plus interest and penalties.
- Missing instalment payments: Annual filers with over $3,000 net HST owing in the prior year must make quarterly instalments.
- Claiming ITCs on personal expenses: Mixed-use assets require proration. Claiming 100% ITC on a vehicle used partly for personal driving is an audit risk.
- Exempt vs. zero-rated supplies: Some supplies are exempt (no HST charged, no ITC claimed) and some are zero-rated (0% HST, but ITCs still available). Residential rents and most medical services are exempt; basic groceries and exports are zero-rated. The difference matters for your ITC calculations.
Need Help?
HST compliance is one of the areas where working with a local CPA pays for itself quickly. At CMP Accounting, we handle HST registration, quarterly and annual filings, ITC reviews, and CRA audit support for businesses across Ottawa, Kanata, Stittsville, and Carleton Place.