GST/HST threshold for a new business in Canada is one of the first tax questions sole proprietors ask after landing paid work: if you start in July, do you still get the full $30,000 small supplier threshold, or does the CRA prorate it for the rest of the year?
The practical answer: the threshold is generally not prorated just because your business started partway through the calendar year. But it is also not a simple January-to-December limit. The rule is based on taxable supplies over a calendar quarter or over four consecutive calendar quarters.
GST/HST threshold for a new business in Canada: the basic rule
For most Canadian freelancers and sole proprietors, you are a small supplier until your worldwide taxable supplies exceed $30,000 in either:
- one calendar quarter, or
- four consecutive calendar quarters.
A new business does not usually divide $30,000 by the number of months left in the year. If you start on July 1, the question is not whether you can earn only $15,000 by December 31. The question is whether your taxable supplies cross the CRA threshold in the relevant quarter or four-quarter window.
Example: starting freelance work in July
Suppose you leave employment and start consulting on July 1. You invoice $12,000 in July, $9,000 in August, and $8,000 in September. By the end of the quarter you have $29,000 of taxable freelance revenue. You are still under the $30,000 threshold.
If you invoice another $3,000 in October, your rolling four-quarter total becomes $32,000. That October invoice can be the sale that pushes you over the small supplier limit. You do not restart at zero on January 1, and you do not get a prorated July-to-December limit.
What if you exceed $30,000 in one quarter?
A fast start can trigger registration even sooner. If your new business invoices more than $30,000 in a single calendar quarter, you stop being a small supplier immediately after the sale that pushed you over. You may need to register and begin charging GST/HST on the next taxable sale.
This catches new consultants, contractors, creators, and agency owners who land one large project early. The fact that the business is only a few weeks old does not protect you if taxable sales already exceed the limit. For the detailed timing rule, see our guide to how the $30,000 GST/HST threshold works.
What counts for a new business?
Count taxable supplies made by the business, including many services, goods, digital products, and commercial rent. Do not count employment income from your old job, because T4 wages are not business supplies. Also be careful with zero-rated and exempt sales: they are not treated the same way for GST/HST purposes.
If your income is mixed, read the breakdown of zero-rated vs exempt supplies in Canada. Getting this classification right matters because it can change both registration obligations and input tax credits.
Starting as a side hustle
Many new businesses begin while the owner still has a job. In that case, your salary does not count toward the GST/HST threshold, but taxable side hustle revenue does. If your freelance work grows from $1,000 per month to $8,000 per month, the rolling threshold can arrive before the business feels “full time.”
This is where a calendar-year spreadsheet can mislead you. A side hustle that earns $18,000 from September to December and another $14,000 from January to March has crossed $30,000 over consecutive quarters, even though neither calendar year looked high on its own.
Should a new business register voluntarily?
You can choose to register before hitting $30,000 if you make taxable supplies. This can make sense if your customers are registered businesses that can claim input tax credits, or if you have large startup costs with GST/HST on equipment, software, inventory, or professional services.
The tradeoff is administration: you must charge the correct tax, file returns, keep records, and remit on time. Compare the pros and cons in our article on voluntary GST/HST registration in Canada.
How to track the threshold from day one
The safest habit is to record each invoice with its date, amount, tax status, and customer location. HST Hero is a free Canadian GST/HST threshold tracker built for sole proprietors and freelancers. It helps you monitor the rolling threshold instead of guessing from year-to-date revenue.
The bottom line
- The $30,000 small supplier threshold is generally not prorated for a new business
- The CRA looks at one calendar quarter or four consecutive calendar quarters
- Employment income does not count, but taxable side business revenue does
- A fast first quarter or growing side hustle can trigger registration quickly
- Track taxable revenue from your first invoice, not your first tax deadline