If you run a business in Alberta, you deal with exactly one sales tax: the federal Goods and Services Tax, at 5%. There’s no provincial sales tax and no HST, which makes Alberta one of the simplest places in Canada to handle sales tax.
Simple isn’t the same as automatic, though. You still need to know when to register, what to charge, which receipts to keep, and when to file. This guide walks through each, in plain English.
Do you need to register for GST?
Not every business has to. You’re a small supplier, and registration is optional, as long as your taxable sales stay at $30,000 or less in any single calendar quarter and over the last four consecutive quarters.
Once you go over $30,000 in a single quarter, you need to register within 29 days. Seasonal businesses should watch this closely, because one strong quarter can cross the line even if the full year looks small.
You can also register voluntarily before you reach the threshold. Some businesses do, so they can claim back the GST they pay on startup costs and supplies. Whether it makes sense depends on your customers and your costs.
Charging GST
Registering is done with the CRA, and once you’re registered you’ll have a GST registration number to show on your invoices. From then on, you charge 5% GST on your taxable sales and show it on your invoices. If your customers are registered too, they’ll need your GST number on any bill of $100 or more to claim their own credits.
The GST you collect isn’t your money: it’s held for the CRA until your return is due. Setting it aside as it comes in, in a separate account if that helps, is the simplest way to avoid a nasty surprise at filing time.
How often you file
Your reporting period depends on your annual taxable sales. The CRA assigns it, and you can usually choose to file more often than required:
- $1.5 million or less: annual by default, with monthly or quarterly available if you prefer
- More than $1.5 million, up to $6 million: quarterly, with monthly available
- More than $6 million: monthly
When your return is due
Due dates depend on your reporting period:
- Monthly and quarterly filers: file and pay one month after the end of the period
- Most annual filers: three months after the end of the fiscal year
- Sole proprietors with business income and a December 31 year-end who file annually: pay by April 30 and file by June 15
- If a due date falls on a weekend or holiday, it moves to the next business day
Instalments for annual filers
If you file annually and your net tax for the previous fiscal year was $3,000 or more, you may need to pay quarterly instalments in the current year instead of one payment at the end. It’s worth checking your CRA account each year, because it’s easy to cross that line as a business grows.
Input tax credits: getting GST back
The GST you pay on business purchases can generally be claimed back as input tax credits (ITCs), which reduce what you owe. The catch is documentation: you need the right details on file before you claim, and the requirements grow with the purchase:
- Under $100: the supplier’s name, the date and the total amount
- $100 to $499.99: all of that, plus the GST charged (or a statement that it’s included) and the supplier’s GST registration number
- $500 and over: all of that, plus your name, a description of what you bought and the payment terms
Filing late
If you file late and owe GST, the penalty is 1% of the amount owing plus 0.25% of that amount for each full month the return is late, up to 12 months. There’s no late-filing penalty if you owe nothing or are due a refund, but the return still has to be filed.
Most registrants now have to file electronically: the old $1.5 million threshold for mandatory e-filing was removed for reporting periods starting on or after January 1, 2024.
A simple example
Say you’re registered, and during a quarter your taxable sales are $100,000. You charge 5% GST on them, so you collect $5,000. During the same quarter you buy $36,000 of taxable supplies and pay $1,800 in GST, with proper receipts for all of it.
Your return reports $5,000 collected and claims $1,800 in input tax credits. The difference, $3,200, is what you send the CRA. If the numbers were the other way round, the CRA would owe you the difference instead.
That’s the whole idea. The work is in making sure both numbers come straight from reconciled books, with a receipt behind every credit.
Common GST mistakes
These are the problems I see most often:
- Spending the GST you collected, then scrambling when the return is due
- Claiming input tax credits without the receipts to back them up
- Not noticing when sales cross $30,000 in a single quarter
- Skipping a return because nothing happened. Nil returns still have to be filed.
- Letting the GST account in your books drift away from what was actually filed
What about the quick method?
The quick method is a simplified way of calculating the GST you remit, available to businesses with annual taxable sales (including GST) of $400,000 or less. Instead of tracking every input tax credit on operating expenses, you remit a set percentage of your sales; for many service businesses where GST is 5%, that rate is 3.6%.
Whether it saves you money depends on your costs, so it’s a question for the CRA or your tax preparer. Either way, the books have to support whichever method you use.
Keep your records
The CRA generally expects you to keep business records, including the receipts behind your input tax credits, for six years after the end of the tax year they relate to.
If you’d rather not think about any of this, that’s what my GST filing service is for: your GST reconciled to the books every period, every credit backed up, and the return filed on time.