If you’re a freelancer, self-employed, sole proprietor, or a small business owner, you’ll likely one day wonder how to get an HST number? While some people freak out about the idea of having to collect and pay HST, it’s a good thing. Paying more taxes means you’re making more money.
That said, I get why some people dread getting an HST/GST number as it requires more paperwork on your end when you need to file your taxes. In addition, not everyone is clear about when you need to register an HST number. Here’s everything you need to know about how to get an HST registration number.
What is an HST number?
An HST (Harmonized Sales Tax) number is a formal number that’s required before you can start charging HST as a freelancer, self-employed individual, or small business owner. Even if you meet the requirements to charge HST, you can’t begin to charge it unless you’ve formally received your HST number.
HST applies to residents of Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. If you live in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Saskatchewan, Yukon, or Quebec, you need a GST (Goods Services Tax) number. That said, you must also apply for QST if you’re a resident of Quebec. Some provinces may also require you to register for a provincial sales tax (PST) number.
When to register for a GST/HST number
Knowing when to register for an HST number can confuse many people since the language on the government website isn’t exactly straightforward. Basically, as soon as you exceed $30,000 in freelance, self-employment, or small business income in a calendar year, you have 29 days to register for a GST/HST number.
That $30,000 threshold only applies to your freelance income and does NOT include any money you make from your regular job. Alternatively, you can voluntarily apply for a GST/HST number whenever you want.
Once you’ve registered for a GST/HST number, you need to start charging GST/HST on all your invoices moving forward. Technically speaking, you also need to start charging taxes on the item that puts you over $30,000, but you can’t start charging until you have a GST or HST number. Generally speaking (and I’m not an accountant), most people will register for a GST/HST number immediately after crossing the $30,000 mark and then start charging taxes.
There is one situation where you would need to apply for a GST/HST number immediately. Anyone who operates ride-sharing services (Uber, Lyft, limousine operators) is considered a taxi business for GST/HST purposes. The CRA requires you to register before you start providing tax services. The collection of GST/HST is built into the fares, so you don’t need to worry too much.
Note that this mandatory GST/HST registration for ride-sharing services does not apply to deliveries such as Uber Eats. That said, once you reach the $30,000 threshold, you need to register for a GST/HST number and add it to your ride-sharing delivery account.
How to register for an HST number
Okay, so you want to know how to get an HST number. The actual process of getting an HST number is easy, but there are a few things you’ll need to prepare before you register.
- Basic information – You’ll need to provide information such as your name, date of birth, social insurance number, personal postal code, business name, business number, mailing address, etc.
- Effective date of registration – This date is typically when you pass $30,000 income in a calendar year. That said, taxi drivers would use the date they start offering transportation services. Those registering voluntarily would use the date they make the request.
- Fiscal year for GST/HST purposes – Generally speaking, most people will use the calendar year for which they’re filing taxes. For example, if you’re registering for HST in 2021, you will likely be filing taxes for the same year.
- Total annual revenue – The Canada Revenue Agency (CRA) wants you to provide an estimate of how much your yearly income is. Don’t worry about this being super accurate, as it won’t affect anything when you do your taxes later.
You must complete your registration in a single setting as information is not saved during the process. You’ll also be booted out if there are 30 minutes of inactivity. Don’t worry, the entire application only takes a few minutes.
To actually register for your HST number, you can do it via one of the following ways:
- Online via the CRA Business Registration Online page.
- By mail or fax (fill out form RC1 and mail or fax it to your nearest tax services office)
- By telephone (1.800.959.5525)
You must have a business number to apply for a GST/HST number. Don’t worry if you don’t have one yet, as one will be created for you at the same time you register for a GST/HST number. You’ll receive a confirmation right away along with your GST/HST account number so you can start charging taxes right away.
If you’re a resident of Quebec, you’d have to go through Revenu Québec. You can get your tax number online via their website, or you can call them at 1.800.567.4692.
What to do after you have a GST/HST number
Now that you know how to get an HST number, you can start charging your Canadian customers tax. How much you’ll charge depends on the province where the Canadian businesses operate. The following are the current tax rates in Canada.
- 5% (GST) – Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon
- 13% (HST) – Ontario
- 15% (HST) – New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island
For example, let’s say you’re a freelancer based in Toronto, but your client is located in Calgary. You would charge them 5% for the services that you provide. Be sure to include your GST/HST number on your invoice, as many clients will require it. There’s no need to feel weird about charging your clients taxes. Any taxes they pay will offset any they collect, so it’s really no big deal for them.
It’s worth mentioning that GST/HST applies even if you don’t sell taxable goods. For example, if you’re a freelance graphic artists, you’d have to charge GST/HST once you’re registered.
Any clients that you have outside of Canada (non-residents) are considered zero-rated for tax purposes regardless of the type of business or commercial activities. As in, you don’t charge them any tax. You still need to claim the income. You just don’t charge any taxes. When you file your taxes, there will be separate sections for domestic and international income. Since you’d be reporting your global income, the CRA would understand that there are no taxes to be collected. Even if all your income comes from international sources, you’d still need to register for an HST number when you reach $30,000 in income despite the fact that you’ll never be charging taxes.
What to do with GST/HST collected
As soon as you start collecting GST/HST, you need to remember to put that money aside, as it needs to be paid back later. I recommend using one of the best high interest savings accounts in Canada, such as EQ Bank. You might as well make some interest for the time being.
You’ll also want to keep detailed records of all the GST/HST you’ve collected and paid. How you do that is up to you. Some people will do things manually with a spreadsheet, while others will use software. If you have any international clients that are zero-rated for tax purposes, you’ll want to note that since it’ll be relevant when you file your taxes. Hang onto all of these records for at least six years in case the CRA ever audits you.
When you file your taxes, you’ll file your GST/HST return at the same time. Basically, if you’ve collected more GST/HST than you’ve paid, then you owe the CRA GST/HST. This is known as input tax credits. If the amount you owe is less than $3,000, you’d just pay it before the deadline. However, if the amount you owe exceeds $3,000, the CRA will put you on calendar quarterly payments. You can pay your GST/HST through your bank (requires a remittance voucher) or via the CRA website My Business account.
Knowing how to get an HST number is easy since it only takes a few minutes to get things done. Once you’re registered, you’ll want to make sure that you’re on top of your bookkeeping, so filing your taxes will be easy. Find a system that works for you and stick with it. For more information on taxes, check out my detailed guide on freelance taxes for Canadians.