What is GST/HST, and how do you register for it for your business?

In Canada, the taxation system for consumer goods and services is based on two main taxes: GST (Goods and Services Tax) – a federal tax on goods and services, and HST (Harmonized Sales Tax) – a harmonized tax that combines the federal GST with the provincial PST (Provincial Sales Tax) in some provinces. For residents of Alberta, and Calgary in particular, it is important to know that the province of Alberta does not have its own PST, so entrepreneurs only pay the federal GST of 5%. Understanding these taxes and the rules for registering for them is critical to conducting business legally, avoiding penalties, and taking advantage of input tax credits on goods and services.

The essence of GST

Before considering the registration procedure, it is worth understanding the essence of GST in detail. The federal goods and services tax (GST) was introduced in Canada in 1991 to replace the old production tax system. The basic idea behind GST is that it is levied at every stage of the production and distribution chain, but ultimately falls mainly on the end consumer. If you sell goods or provide services, you are required to collect this tax from your customers and remit it to the federal treasury.

Input Tax Credit

The Input Tax Credit approach avoids double taxation: when you purchase goods or services for your business, you pay GST to the supplier, but you can then deduct this amount from what you have collected from your customers.

For example, if you purchased office supplies for CAD 100 plus 5% GST (CAD 105 total), you would claim the CAD 5 back on your tax return. Similarly, if your sales brought in CAD 200 plus 5% GST (CAD 210), you only transfer the difference—CAD 10—to the government.

HST vs. GST

In provinces with HST (Ontario, Nova Scotia, New Brunswick, etc.), the combined tax rate includes both federal and provincial components. Alberta has retained a pure GST of 5%, so the administration procedure for entrepreneurs in Calgary is simplified: interaction only with the Canada Revenue Agency (CRA).

Exemptions from GST

The 5% rate applies to most goods and services, but there are exceptions:

  • Residential rentals
  • Basic foodstuffs (certain goods)
  • Medical and dental services

If you provide tax-exempt goods or services, you do not need to register, but you lose the right to Input Tax Credits. For significant purchases, it is advisable to register even if sales are low.

Mandatory registration threshold

Businesses with “applicable supplies” exceeding CAD 30,000 for the previous four quarters (or the current year for new businesses) are required to register. If the threshold is lower, registration is voluntary but recommended for input GST refunds.

GST/HST registration procedure

  1. Prepare your information
  • Business name (corporation, partnership, sole proprietorship)
  • Date of commencement of business
  • Business Number (BN) – a nine-digit identifier from the CRA

Obtain your BN online through the CRA web portal or by calling the support service. Prepare information about your business structure and export plans.

  1. Register with the CRA

  2. Log in to My Business Account on the CRA website.

  3. Select Register a business account → GST/HST.

  4. Confirm your BN and specify the start date of your tax obligations (usually the first sale; for voluntary registration, any date within 6 months).

  5. Selecting a reporting period

  • Quarterly – businesses with up to CAD 1.5 million in revenue
  • Monthly – businesses with over CAD 6 million in revenue
  • Annually – by agreement with the CRA

The frequency can be changed later, but the CRA may require justification.

  1. Confirmation of registration Once completed, you will receive confirmation of your GST/HST account activation.

Tax administration

  • Add a line item “GST 5%” with the amount to each invoice.
  • Keep all invoices and receipts to confirm Input Tax Credits.

Filing your GST/HST return

  1. Log in to My Business Account → File return/GST-HST.
  2. Complete the form, indicating:
  • Total sales
  • Amount of exempt supplies
  • Input GST
  • Collected GST
  1. The system will calculate the balance:
  • If the amount payable is > 0, pay online, by card, or at a bank.
  • If there is an overpayment, the funds will be credited to your account or refunded within a few weeks.

Additional support

  • CRA Call Centre (24/7 support)
  • Documentation on the CRA website and online chat
  • Calgary Chamber of Commerce – seminars and free consultations for Ukrainian entrepreneurs

Consequences of late registration

If you exceed the CAD 30,000 threshold without registering, the CRA will charge:

  • A penalty of 1% of the tax amount for each month of delay
  • Additional penalties for inaccurate reports

Business development and HST in other provinces

For sales outside Alberta or digital services to customers in provinces with HST, you must:

  1. Log in to your CRA account.
  2. Add provincial GST/HST accounts.
  3. Collect combined HST at each province's rates (separate license code).

Final steps for entrepreneurs in Calgary

  1. Obtain a Business Number (BN) from the CRA.

  2. Register as a GST payer online or by phone.

  3. Determine the tax start date and reporting period.

  4. Start collecting 5% GST and keep records for Input Tax Credits.

  5. File returns on time and pay the difference or receive a refund.

Understanding the GST mechanism as a redistribution of costs, timely registration, and accurate reporting will ensure the legitimacy of transactions, preserve cash flow, and minimize the risk of penalties.