Do I charge HST on my services?

Short Answer

Yes, marketing and advertising services are taxable supplies in Canada. Taxable supplies are revenues from commercial activities. If your agency’s gross revenue exceeds $30,000 over four consecutive calendar quarters, you must register for GST/HST and charge the applicable rate (5% GST or 13-15% HST depending on your province) on your services. Below $30,000, registration is optional but often beneficial.

The Rule / General Rule

The $30,000 Small Supplier Threshold:

• If your total worldwide taxable supplies are $30,000 or less over four consecutive calendar quarters, you’re considered a “small supplier” and registration is optional
• Once you exceed $30,000, you must register and begin charging GST/HST immediately—not at the start of the next quarter
• The threshold is based on revenue, not profit
• You must register within 29 days of exceeding the threshold

What’s Taxable:

• Marketing strategy and consulting services
• Advertising and creative services
• Digital marketing, SEO, and social media management
• Website design and development
• Branding and graphic design
• Media buying and placement (your agency fee—see note on pass-through below)
• Video production and content creation

GST/HST Rates by Province:

• 5% GST: Alberta, British Columbia, Manitoba, Saskatchewan, Northwest Territories, Nunavut, Yukon
• 13% HST: Ontario
• 15% HST: New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island
• 5% GST + 9.975% QST: Quebec (separate registration with Revenu Québec required)

Place of Supply Rules:

• Generally, you charge the rate based on where your client is located, not where your agency is based
• For services, the place of supply is typically where the client’s business address is located
• If you’re an Ontario agency serving a BC client, you’d generally charge 5% GST, not 13% HST

Voluntary Registration:

• Even below $30,000, you can register voluntarily
• This allows you to claim Input Tax Credits (ITCs) on your business expenses
• Once registered, you must charge GST/HST on all taxable supplies regardless of revenue

Why It Matters

Legal Compliance:

• Failing to register when required can result in CRA assessing the GST/HST you should have collected—out of your own pocket
• CRA actively reviews T1 and T2 returns to identify businesses that should be registered but aren’t
• Penalties and interest apply to late registration and missed remittances
• Ignorance of the rules isn’t a valid defence

Cash Flow Implications:

• If you register, you collect GST/HST from clients and remit it to CRA (minus your ITCs)
• If you don’t register when required, you may owe CRA significant amounts without having collected from clients
• Proper planning ensures you’re never caught short

Input Tax Credits:

• Registered businesses can claim back the GST/HST paid on business expenses
• Common agency expenses eligible for ITCs: software subscriptions, office supplies, professional services, advertising, equipment
• ITCs can significantly reduce or eliminate your net GST/HST remittance
• If you have high startup costs, voluntary registration can result in refunds

Client Perception:

• Most business clients expect to see GST/HST on invoices from established service providers
• Not charging GST/HST might signal you’re a very small operation
• Being registered is often a requirement for working with larger corporate clients or government contracts

Pricing Considerations:

• If you’re not registered, your effective price is 5-15% lower than registered competitors
• Once you register, you need to decide whether to add GST/HST on top of existing rates or absorb it
• Clients paying HST can claim it back as an ITC, so it’s often not a real cost to them

Best Practices

Track Revenue Carefully:

• Monitor your cumulative revenue from day one
• Set up a system to alert you when you’re approaching $30,000
• Remember: the threshold is based on when revenue becomes due or is paid, not when you invoice
• Include all taxable supplies from all your businesses if you’re a sole proprietor

Register Proactively:

• Consider registering voluntarily before hitting $30,000 if you have significant startup expenses
• Calculate whether ITCs on your expenses would exceed the GST/HST you’d charge clients
• Many agencies find voluntary registration beneficial from the start

Invoice Correctly:

• Show GST/HST as a separate line item on invoices
• Include your GST/HST registration number on all invoices
• Clearly state the rate being charged and why (e.g., “HST 13% – Ontario”)
• For pass-through ad spend, show the agency fee and GST/HST separately from the media spend

Understand Place of Supply:

• Know where your clients are located for tax purposes
• For services to non-residents not carrying on business in Canada, you may be able to zero-rate (charge 0%)
• When in doubt, confirm the tax status and the place-of-supply/zero-rating conditions and keep documentation supporting the tax treatment. If tax was charged in error, you may need to adjust/refund the tax and issue appropriate documentation.

File and Remit on Time:

• Most small businesses file annually or quarterly
• Set calendar reminders for filing deadlines
• Keep organized records of all GST/HST collected and ITCs claimed
• Use accounting software that tracks GST/HST automatically

Separate Pass-Through from Fees:

• When you’re acting as an agent for ad spend, only charge GST/HST on your agency fee
• The pass-through ad spend portion is not your supply—it belongs to Google, Meta, etc.
• Document your agency relationship clearly in contracts

Examples

New Agency Below Threshold

A freelance marketing consultant in Calgary started their business in January and has billed $22,000 by September. They’re below the $30,000 threshold and aren’t required to register. However, they’ve spent $8,000 on a new computer, software subscriptions, and professional development—all with GST included.

If they register voluntarily, they can claim back approximately $400 in ITCs (5% of $8,000) on their first return. Going forward, they’ll charge 5% GST on their invoices to Alberta clients. Since most of their clients are businesses that can claim ITCs, the GST doesn’t increase their real cost.

Growing Agency Crossing Threshold

A Toronto digital marketing agency started in March and has been growing quickly. By October, their cumulative revenue reaches $32,000. They exceeded the $30,000 threshold and must register immediately.

The agency registers online through CRA’s Business Registration Online portal and begins charging 13% HST on all invoices to Ontario clients. For their Vancouver client, they charge 5% GST instead. They claim ITCs on their office rent, software, and contractor payments, reducing their net HST remittance significantly.

Agency With Mixed Provincial Clients

A Montreal agency serves clients across Canada. They’re registered for both GST and Quebec QST. When invoicing, they apply different rates based on client location: 5% GST + 9.975% QST for Quebec clients, 13% HST for Ontario clients, 15% HST for Nova Scotia clients, and 5% GST for Alberta clients. Their accounting software (Xero) handles the different rates automatically based on client province.

Tools

• Xero – Automatically calculates and tracks GST/HST by province, generates HST returns, and maintains audit-ready records of all transactions.
• QuickBooks Online – Built-in GST/HST tracking with provincial rate management, ITC tracking, and electronic filing capabilities.
• Dext – Captures receipts and extracts GST/HST amounts automatically, ensuring you claim all eligible ITCs.
• CRA My Business Account – For filing GST/HST returns, viewing account balances, and managing your registration online.

Sources

• CRA – When to register for and start charging the GST/HST
• CRA – General Information for GST/HST Registrants
• CRA – Register for a GST/HST account
• CRA – Small suppliers
• CRA – Place of Supply rules

Pro Tip

If you’re approaching the $30,000 threshold mid-year, don’t wait until you cross it—register a month or two early. This gives you time to update your invoicing process, notify clients, and adjust your pricing if needed. Scrambling to add HST to invoices after you’ve already exceeded the threshold creates confusion and can lead to awkward conversations with clients who weren’t expecting the increase.

Need Help?

GST/HST registration and compliance can be confusing, especially when you’re serving clients in multiple provinces. At Back Office Stars, we help Canadian marketing agencies set up proper GST/HST tracking in Xero or QuickBooks Online, file returns on time, and maximize ITCs on eligible expenses. Book a call and we’ll make sure you’re charging—and claiming—the right amounts.