GST and QST: The $30,000 Self-Employed Threshold

When you start out on your own, you invoice your clients without adding a cent of tax. Then a number enters the conversation: $30,000. Past that threshold, a self-employed worker has to charge GST and QST on their sales, then hand that money over to the government. Here is exactly where the line sits, how it is measured, and what registering changes — or does not change — about what you keep at the end of the year.

Small supplier: what the $30,000 threshold measures

As long as your business stays under the line, you are a "small supplier". The phrase sounds harmless, but it is a precise tax category: a business small enough that it is not required to collect sales tax.

The Canada Revenue Agency (CRA) draws the line this way: you remain a small supplier as long as you do not exceed $30,000 over four consecutive calendar quarters.

Two words in that sentence are worth unpacking.

"Calendar quarter": the CRA defines it as a three-month period beginning on the first day of January, April, July or October. The quarters are set by the calendar, not by the date you started your business.

"Consecutive": the measurement covers four quarters in a row, not the calendar year. The window slides from one quarter to the next; nothing resets on January 1.

One last point, the one that catches most people out: the threshold applies to your taxable revenue — what you invoice — not to your profit. A freelancer who invoices $34,000 and spends $12,000 on equipment has crossed the line, even though what actually lands in their pocket is far lower.

Crossing the threshold: two scenarios, two timelines

When you stop being a small supplier depends on how you crossed the line.

The first case is the blunt one: the sale that takes you over the line has to carry the tax itself, and the effective date of your registration is no later than the day of that sale. You can become a tax collector in the middle of a contract, with no warning.

The second case gives you room to breathe: you stay a small supplier until the end of the month following the quarter in which the threshold was passed.

Either way, registration comes with a deadline: 29 days from the effective date of registration.

In Quebec, your contact is not the CRA

This is the Quebec quirk, and the CRA states it itself: if your business is physically located in Quebec, the GST/HST is administered by Revenu Québec. You register, file your returns and use Revenu Québec's forms — including for the federal tax.

So two taxes get added to your invoice. The rate table published by the CRA shows, for Quebec, GST of 5% and a provincial sales tax of 9.975%: that second one is the QST.

One honest caveat, because it changes what you need to check: the threshold described here is the federal one, the figure the CRA states for the GST. The QST falls under a separate registration regime whose rules Revenu Québec publishes itself. Ask them rather than assuming the two taxes behave in exactly the same way.

What registering changes about your income

First thing to absorb: the tax you collect is not yours. You add it to the invoice, the client pays it to you, and you remit it. It passes through your account without ever becoming income. Plenty of self-employed workers move it into a separate account as soon as it comes in, precisely so they do not spend it twice.

In return for that chore, registering opens a door: the input tax credit, or ITC. The CRA sums it up in one sentence: you recover the GST/HST paid or payable on your purchases and expenses related to your commercial activities. Computer, software, rent on a workspace, professional fees — the tax paid on those comes back to you.

There is an accounting trade-off, and it is not widely known. When you claim an ITC, you have to subtract that amount from the expenses you report on Form T2125 — the form where a self-employed worker declares business income. Same logic for a lasting asset: the ITC claimed on the purchase reduces the amount that will serve as the basis for capital cost allowance.

In other words, you do not bank the advantage twice: what the tax gives back, the deductible expense loses. The gain is still real — it is money returned — it is simply smaller than it looks.

And what about income tax itself? It does not move because you registered. Your business income is still taxed at the same rates, and the calculation of your tax instalments does not depend on it either. If you are still weighing the two statuses, the self-employed or salaried comparison lays out the gaps; and to see what a given income leaves you net in Quebec, the Salarium calculator does the math.

Three habits to build before you reach the line

1. Track your revenue by quarter, not by year. Four columns in a spreadsheet will do. It is the rolling total of the last four quarters that decides, and that is the one people forget to look at.
2. Treat the tax you collect as money in transit. From the day you register, it is neither income nor a cushion: it is owed.
3. Keep your purchase invoices. No receipt, no ITC — and that is the only part of this whole exercise that pays you back.

Not at the threshold yet? Registering is still an option: the CRA notes that you may choose to register voluntarily if you make taxable sales in Canada. When your clients are businesses, they recover the tax you charge them and you recover yours, so registering early becomes a clear gain. When your clients are individuals, the added tax shows up on the invoice — and that is a different conversation.