Understanding The Basics GST & pst for Canadian Business Owners

Today, let’s try to understand GST and PST for our Canadian business owners.

If you are making sales, you are obligated to collect GST and PST.

Generally, you charge GST on all of your sales made within Canada. GST/HST rates vary across provinces.

For instance, in BC, GST is 5% and PST is 7%, and in Ontario, they have something called the Harmonized Sales Tax (HST), which is a flat 13% that combines both. 

Now, if you’re a business based in BC, you’ll charge whatever the rate is based on where your clients are.

  • If your clients are in BC, you charged the 5% GST and 7% PST.
  • For your Ontario clients, you’ll charge the HST, which is 13%.
  • International clients? No GST or PST for them.

But, and it’s a big but, before you start collecting GST, you need to register for it. Your corporate business number is not your GST number. Register with CRA online or give them a call

When Should You Register For GST?

Do you need to register right away? Short answer: No, not necessarily. 

It becomes mandatory once your total annual revenue hits $30,000 in a consecutive 12-month period. 

However, you can voluntarily register before hitting this threshold. But why would anyone one want to do that? Well, consider this.

If you are starting a trucking business and are making large purchases, say a Freightliner, it would be beneficial for you to register for GST right away, as you’re eligible to GET BACK that GST paid on the truck.

Another example would be restaurants. They need leasehold improvements and equipment just to get started. You can get that GST paid back, especially if you have not officially opened up yet. 

So If you’re starting up and incur significant setup costs, you can claim back the GST you spend on those expenses.


Crunching The Numbers

Let’s walk through some calculations to see how GST works.

Say you are a BC business owner and you billed clients $100,000 for the year, you would collect 5% GST on all sales. 

Simultaneously, you spent $20,000 on subcontractors, incurring 5% GST. 

Sales: $100,000

GST Collected: $5,000 – 5% of sales

GST Paid: ($1000) – 5% paid for subcontractors

GST Owing:  5000-1000 = $4,000

The GST filing at the end of the year is the collected amount minus the paid amount. So, if they collected $5,000 but paid $1,000, they owe $4,000 in GST.

Some items are GST exempt, like groceries and medicine. There’s also a link below with detailed lists. If your business isn’t there, call CRA for a ruling.

GST List, click here.

PST List, click here.



The default period for filing and remitting GST is annually. The deadline to do this is 3 months after the year end date.

If you will owe more than $3,000 in GST, quarterly remittances are required. If they’re not made, CRA may assess some interest charges.

Invoicing and Getting Paid

Now that you’re getting it, let’s talk about making that sale and getting paid. While you can create invoices in Word or Excel, it’s recommended to start with accounting software. Check out Xero.

Xero basically takes out a lot of the unnecessary date entry. For example, when invoicing,you can add a friendly reminder for timely payments. As well, it keeps your accounts receivable in check.

And there you have it, a crash course on GST and PST for Canadian business owners.

FREE Download: What You Need To Know When Starting A Business In Canada

1 in 5 small businesses in Canada will fail within three years of starting. That’s why it’s important to start out on the right foot. We want to help new (and existing) business owners succeed, so that’s why we wrote an eBook on the accounting basics that ALL Canadian business need to know.

Download your free eBook here.

Stay up to date on all things accounting, business, tax-related topics on our newsletter.

Couldn't Find What You Were Looking For?

Give us a call and let’s see if we can get you in the right direction.

We Put Our Clients First and It Shows


Rocket Accounting
Based on 53 reviews
powered by Google
Alicia PutinskiAlicia Putinski
18:09 13 Apr 23
Every tax season Kam helps me super efficiently. It’s amazing having an accountant you can trust and make the process easy! Thanks!
Jackson TongJackson Tong
22:51 29 Mar 23
Kam was super helpful and knowledgeable! Would recommend!
Rowan CheungRowan Cheung
17:44 24 Mar 23
Kam and his team are exceptional. They expertly handled all my financial questions regarding my business and made the whole process stress-free. Highly recommended!
Alexandria DhillonAlexandria Dhillon
00:24 24 Mar 23
I use Rocket Accounting for my business & personal taxes and I am beyond happy with their services. Kam and his team are on-top of everything leaving me worry-free and able to focus on growing my business. I would definitely recommend Rocket Accounting to anyone!
Johnny DoanJohnny Doan
16:49 16 Nov 22
Kam, Christine and the team here at rocket accounting have been amazing! We've been with them for over 4 years, they've always been so helpful in assisting us with any questions or problems that we had.We would highly recommend them to any small businesses whom are looking to offload their accounting. They have saved us a ton of time and money with the diligent work that they do.Thank you team Rocket!
Stuart MortonStuart Morton
22:39 21 Jul 22
Kam and his team have been a great asset to me and my business. He is clear and concise, helps me understand my options, and his billing has been transparent. It has taken a huge load off my shoulders bringing them on to do my personal and business accounting. Strongly recommend.
Stephen MajeticStephen Majetic
22:39 20 Nov 20
I have used Kam Gosal and his services, and I am extremely pleased with his advice and the value I have received at a very fair price.More importantly I want to comment on his ability to help service my clients. I have my own financial planning practice and I have consistently referred my clients to Kam over the years.The reason I can consistently refer to Kam is because every single time I do my clients have reached back out to me thanking me for doing so.There is a great deal over overlap in the clients Kam and I work with, especially when it comes to self employed individuals. Kam can help them in so many areas that really compliment my offerings. Kam is exceptional at assisting my clients with bookkeeping, tax filings, payroll, corporate structure as well other areas of advice.If you are a professional like me who is in wealth management, law, etc. I would highly suggest you speak with Kam. He will be a great compliment to you and your ability to properly serve your clientele.