How to Calculate and Remit GST/HST as a Small Business Owner

Calculating and remitting GST/HST correctly is one of the most important compliance tasks for registered small business owners in Canada. The basic process involves tracking the tax you collect from customers (output tax) and the tax you pay on business purchases (input tax), then remitting the difference to the CRA on your filing deadline. Your filing frequency and calculation method depend on your annual revenue and which province you operate in, so understanding these rules helps you stay compliant and avoid penalties. When you register for GST/HST, you become responsible for two main tax flows: Output Tax (GST/HST you collect) This is the tax you charge customers on taxable supplies. If you're in a GST province and sell $1,000 of goods, you collect $50 in GST (at 5%). In an HST province like Ontario, you'd collect $130 (at 13%). Input Tax (GST/HST you pay) This is the tax embedded in your business purchases. You claim back the GST/HST you pay on eligible business expenses like office supplies, equipment, rent, and utilities. Your net remittance is the difference between output and input tax. If you collect more than you pay, you remit the difference to the CRA.

Frequently Asked Questions

What's the difference between output tax and input tax?

Output tax is the GST/HST you collect from customers on sales. Input tax is the GST/HST you paid on business purchases. You remit the difference to the CRA, or claim a refund if you paid more than you collected.

How often do I need to file and remit GST/HST?

Filing frequency depends on your annual revenue. Businesses under $30,000 typically file annually, those between $30,000 and $500,000 file quarterly, and those over $500,000 file monthly. Your CRA account will show your assigned filing frequency.

Can I claim input tax on all my business expenses?

No, input tax eligibility varies by expense type. Most supplies, equipment, and professional services qualify, but personal items, meals, entertainment, and some vehicle expenses have limited or no input tax credit. Check the CRA guidelines for specific categories.

What happens if I miss a GST/HST remittance deadline?

Late remittances trigger interest charges calculated daily and a penalty of 6% of the late amount if it's your first miss, rising to 12% for subsequent missed payments. Staying organized with a calendar helps you avoid these extra costs.

Do I need to keep paper receipts or are digital records okay?

Digital records are acceptable as long as they're legible and complete. The CRA requires you to keep all receipts and invoices for six years to support your GST/HST claims and input tax credits.

Steps

1. Gather all sales and invoice records: Collect copies of receipts, invoices, and transaction records from your sales and business expenses for the entire filing period. Organize them by date to make tracking easier.
2. Calculate total taxable sales (output tax): Add up the value of all taxable goods and services you sold during the period. Multiply this total by your provincial GST (5%) or HST (13% or 15%) rate to find your output tax owed.
3. Identify and total eligible input tax purchases: Review your business expenses and identify those with eligible GST/HST. Pull the tax amount from each invoice and add them together to get your total input tax claimable.
4. Calculate your net remittance or refund: Subtract your total input tax from your total output tax. If the result is positive, you owe the CRA that amount. If negative, you're owed a refund.
5. File through CRA My Account or NETFILE: Log into your CRA My Account or use an approved NETFILE service to submit your GST/HST return. Include your calculated net amount and confirm your filing before the deadline.
6. Remit payment by the deadline: Pay any amount owing to the CRA through online banking, credit card, or mail by your filing deadline. Keep confirmation receipts for your records.