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GST accounting comes down to one subtraction: the GST/HST you collected from customers, minus the GST/HST you paid on business costs. The CRA calls the gap net tax. If it’s positive you remit it. If the credits are bigger, you get a refund. Everything else in your books exists to make those two totals easy to prove.
What do you track in GST accounting?
Keep the tax out of your revenue and expense accounts. A sale of $1,000 plus $130 of HST in Ontario is $1,000 of income and $130 that isn’t yours. Park that $130 in its own account, often called GST/HST payable. Do the same on the buying side with a second account for the tax you paid, which is your input tax credit balance.
When you hit a receipt with only a total, back the tax out with the reverse tax calculator before you post it. Guessing at 13% of the total instead of dividing by 1.13 is the most common arithmetic slip in small-business books.
How does one quarter look on paper?
Here’s an Ontario business with a quarter of books that we worked out by hand, at 13% HST. Sales were $18,400 before tax, so HST collected is $2,392. Purchases that carry credits were $6,250 before tax, so the credits are $812.50. Net tax to send in is $1,579.50.
| Line | Base amount | HST at 13% |
|---|---|---|
| Sales | $18,400.00 | $2,392.00 |
| Purchases with credits | $6,250.00 | $812.50 |
| Net tax to remit | $1,579.50 |
On the electronic return, the CRA names line 103 for tax collected or collectible and line 106 for tax paid or payable, meaning the credits. Lines 105 and 108 calculate on their own since the May 2024 changes. You can check each invoice in the GST and HST calculator, which covers every province.
Which records do you have to keep?
Six years from the end of the year they relate to. The CRA says it may ask you to hold invoices longer, and that you need written permission to destroy records early. You don’t send invoices in with the return, but to back a credit the invoice has to show the right details about the supplier.
A practical habit: photograph each receipt the day you get it and name the file with the date and supplier. It takes ten seconds and saves a hunt in year five.
Is the quick method easier to book?
The regular method is the one above. The CRA also lets small businesses use the quick method if their yearly taxable supplies, tax included, are $400,000 or less. You remit a fixed slice of sales and skip most credits. Your ledger gets simpler, but you can only pick it if the numbers favour you, and you can’t use it in some professions. Compare both on a real quarter before you elect.
If you’re registered in a province with a separate provincial tax, such as BC, the books need a third tax line. Our GST and PST calculator applies a single 12% rate to everything in BC, which overstates the tax on items that aren’t subject to PST, like restaurant food. Quebec has its own QST, handled through Revenu Québec.
Where do the books usually go wrong?
Three problems crop up. First, the tax is buried in expense accounts, so your net tax figure is a guess. Second, credits are claimed without an invoice. Third, you treat a refund as income. It’s a refund of tax, not profit.
A fourth one belongs to the owner rather than the bookkeeper. The tax you hold isn’t spending money. If you spend it, you’ll be short on the due date, since quarterly filers have a month after each quarter to pay. Move it into a separate account the day you get paid. And remember that income tax on your profit is a separate bill. The self-employed tax calculator gives an estimate, without EI.
Where the numbers come from
The net tax formula, line names, record rules and quick method limit come from Canada Revenue Agency pages on calculating net GST/HST, input tax credits and records, read in September 2026. The worked quarter is our own arithmetic, not a CRA figure. We don’t claim any link with the CRA.
Frequently asked questions
What is net GST/HST?
It's the GST/HST you collected minus the input tax credits you can claim. A negative result is a refund.
Do I send receipts with my return?
No. You keep them and show them if the CRA asks, for six years after the year they relate to.
Should GST sit in my income account?
No. Hold it in a separate payable account so income and expenses show the price before tax.
Can I destroy records early?
Only with written permission from the CRA. Otherwise keep them for the full six years.
Is the quick method easier to book?
Yes, because you skip most credits, but it only fits some businesses and some professions can't use it.
- GST, HST, PST and QST explained for every province
Which GST, HST, PST or QST applies where you shop or sell in Canada, the 2026 rates for every province, who must register and how to add or remove tax
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.