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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.
Now flip it. Say a new shop spends $20,000 before tax on fixtures and stock in its first quarter and makes only $10,000 of sales, still at 13%. Credits are $2,600 and tax collected is $1,300, so the credits are bigger by $1,300. That’s a refund, not a bill. A first quarter with a refund is common for a business that’s just opening, and it’s a good reason to keep every receipt from day one.
Which GST 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 GST 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 Quebec.
Which GST credits can you claim, and which purchases do not qualify?
A GST/HST registrant recovers the tax paid on business purchases by claiming input tax credits on line 106 of the return. The CRA says you may claim them only to the extent that a purchase is for use in your commercial activities. Common purchases that may qualify include rent, delivery and freight, fuel, legal, accounting and other professional fees, maintenance and repairs, office expenses, telephone and utilities, motor vehicle expenses and travel. Meals and entertainment count only in part.
Some purchases do not qualify. The CRA lists certain capital property, supplies bought to make exempt supplies, memberships in clubs whose main purpose is recreation, dining or sport, and anything bought for personal use. The expense also has to be reasonable in quality, nature and cost for your kind of business.
You may claim a credit only if you were a registrant in the reporting period when the tax was paid or became payable, you hold sufficient documentary evidence before you claim, and you claim it in a return filed within the time limit. Post each purchase with its credit amount from day one, because the books need that evidence to back the claim.
When do you report and pay the GST you owe?
Once you are registered, you must file a GST/HST return for each reporting period, and your books should close each period the same way. The CRA requires registrants, except charities and selected listed financial institutions, to file electronically, and it charges a penalty on paper returns. Your due dates and reporting periods show in your CRA account, and the CRA assigns a default period based on revenue.
- Monthly or quarterly filers file and pay 1 month after the end of the period. A quarter ending March 31 is due April 30.
- Most annual filers file and pay 3 months after the fiscal year-end.
- A sole proprietor with a December 31 year-end and business income pays by April 30 and files by June 15.
If a due date lands on a Saturday, Sunday or CRA-recognized public holiday, the return or payment is on time when received the next business day. The CRA can charge penalties and interest on anything it has not received by the due date.
You must file even in a period with no sales, no net tax to remit or a closing account. That is called a nil return, and the books still need to show the period was empty. For payment steps, see the CRA instructions for making a payment.
Where do GST 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.
What if you only sell a few things on the side?
Then the books can stay light, as long as you stay under the small supplier limit and aren’t registered. Once you register, even a few bucks of tax collected has to be tracked and reported on time. Our guide to GST, HST and PST explains when registration starts and how the provincial taxes fit in.
Official page on this topic: Canada Revenue Agency: Charge and collect the GST/HST.
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.
Should GST sit in my income account?
No. Hold it in a separate payable account so income and expenses show the price before tax.
Is the GST 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