Do I need to charge HST as a sole proprietor or only once I incorporate?
Your HST obligations depend on your revenue, not your legal structure. Whether you operate as a sole proprietor or a corporation, you must register for and collect HST once your taxable supplies of goods and services exceed $30,000 in a rolling four-quarter period. This is called the small-supplier threshold under the federal Excise Tax Act.
If you are below $30,000 in taxable revenue, registration is optional for most suppliers. You can voluntarily register even if you are under the threshold — which lets you claim input tax credits (ITCs) on business purchases, potentially reducing your net HST burden.
Some supplies are zero-rated (taxed at 0%) or exempt (not subject to HST at all), and the rules vary by industry. Medical services, certain financial services, and residential rent have their own HST treatment. If you are unsure whether your services are taxable, zero-rated, or exempt, a lawyer or accountant familiar with your industry can advise.
Incorporating does not reset your HST registration or threshold — the CRA looks at the revenue of the business, and an existing sole prop business that incorporates typically needs to transfer the GST/HST account to the new corporation.
Key takeaways
- The $30,000 small-supplier threshold applies to both sole props and corporations.
- Voluntary registration below the threshold lets you claim input tax credits.
- Some supplies are exempt or zero-rated — confirm your category before assuming.
- Incorporating does not restart your HST counting period.