Introduction
Contractors frequently misunderstand when GST/HST registration is required. Some register too late and face penalties, while others register unnecessarily and create extra administrative burden.
Knowing when registration is mandatory and when it is optional helps contractors stay compliant without overcomplicating their business.
Key takeaways
Registration depends on taxable revenue, not profit
The small supplier threshold is a key factor
Some services are taxable even when clients are not charged
Late registration can trigger penalties
Who this applies to
This applies to independent contractors, tradespeople, construction professionals, and service contractors operating in Canada.
When contractors must register
Contractors must register for GST/HST once taxable revenues exceed the small supplier threshold over a specified period. This includes most commercial services provided in Canada.
Common registration mistakes
Issues often occur when contractors misunderstand thresholds, fail to track revenue properly, or assume that working with registered clients removes their obligation to register.
Charging tax late or failing to charge tax at all can create unexpected liabilities.
Voluntary registration
Some contractors choose to register voluntarily to recover input tax credits. This decision should be evaluated carefully, as registration also creates filing obligations.
Frequently asked questions
Does incorporation affect GST/HST registration?
No. Registration depends on revenue, not legal structure.
Can GST/HST be charged retroactively?
Sometimes, but it can create collection and cash flow issues.
Are all contractor services taxable?
Most are, but exceptions exist.
Closing
GST/HST registration is a compliance requirement, not a planning tool. Understanding the rules early helps contractors avoid penalties and maintain predictable cash flow.