Do I pay HST on top of income tax as a self-employed person in Ontario?
Yes — HST and income tax are separate obligations. As a self-employed person in Ontario who is registered for HST, you collect HST from your clients and remit it to the CRA through your HST return. Separately, you report your business income and pay personal income tax (and CPP contributions on net self-employment earnings) through your personal T1 tax return.
A common misunderstanding is that the HST you collect is part of your income. It is not — HST collected is the government's money held in trust, and you should never include it in your business income on your T1. Your taxable income is your revenue before HST (your net fees), minus your deductible business expenses. The HST you pay on those expenses may be partially recovered through ITCs on your HST return.
The practical result is two separate year-end deadlines: your HST return due date (based on your filing frequency) and your personal income tax return due date (April 30, or June 15 if you or your spouse have self-employment income, though payment is still due April 30). Keeping HST money in a separate bank account makes both obligations easier to manage.
Key takeaways
- HST and income tax are completely separate obligations with separate filings.
- HST collected from clients is not your income — do not include it in T1 business revenue.
- Self-employed people also owe CPP contributions on net self-employment income.
- A separate bank account for HST makes remittance and bookkeeping much easier.