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Accounting encyclopedia · GST/HST

GST/HST

GST/HST is a consumption tax administered under Canada's federal sales-tax system. A registered business may need to charge tax on taxable supplies, report tax collected or collectible, and account for eligible input tax credits. Registration, the treatment of a supply and the tax rate require their own checks.

Sora Accounting & Tax · General information
Updated · 2 min read

The tax on sales and the tax on purchases

Keep sales tax records separate from ordinary operating revenue and costs.

Visual labels: Tax on sales; Tax on purchases; Reporting period.

Start with the transaction

A customer's location, the nature of the supply and the place-of-supply rules can affect the treatment. Being based in Ontario does not mean every invoice should automatically receive the same tax code. Exempt and zero-rated supplies also have different consequences.

Ask how unusual sales, cross-border work, deposits and mixed invoices should be recorded. A default software setting cannot resolve every fact pattern.

Keep the sales-tax position visible

Sales tax collected is not simply additional revenue available for the owner to spend. The records should distinguish sales from the related tax and track eligible purchase-tax amounts separately. The resulting net position depends on the applicable rules and method.

For illustration, an invoice can include both payment for the business's work and a tax amount. The fact that both arrive in one bank deposit does not make them the same category of money.

Reconcile before filing

Compare the sales ledger, tax-code reports and supporting purchase records before preparing the return. Review adjustments, credits and unusual transactions. Track the reporting period and payment due date separately from corporate income tax.

A separate reserve can help with cash planning, but it does not calculate the return or prove that the required amount has been set aside. Resolve the books and confirm the filing requirements.

Sources & editorial notes

Sources checked October 23, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.

Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.