GST, HST and QST for a Canadian pressure washing business explained

What to take away

When a pressure washing business must register for GST/HST

The Canada Revenue Agency expects you to register and start charging tax on the next sale after the quarter in which you exceed the threshold. Most new operators begin as small suppliers, working without charging tax while revenue stays modest.

The Canada Revenue Agency administers GST/HST under the Excise Tax Act. Provinces set the HST rate when they harmonize a sales tax with the GST, but they do not audit GST/HST themselves. A municipal business licence has nothing to do with registration. It lets you trade in a city; the CRA decides when you register and collect.

The threshold counts taxable supplies, not profit. A $40,000 driveway season with $35,000 in fuel, chemicals and repairs still counts as $40,000 for this test.

Volunteer work, insurance payouts and sales of used personal property do not count. Residential pressure washing does count, even though some homeowners assume otherwise.

A sole proprietor's threshold covers combined business revenue. A side landscaping contract can push you over while washing alone stays under.

Once registered, you charge tax on every taxable job, issue invoices showing your number, and file returns. You keep the same business number.

Registering early has an upside. You can claim input tax credits on some equipment bought before registration, and commercial clients who expect a GST/HST number read your invoices as professional.

Registration starts with Form RC1, Request for a Business Number. Have these items ready:

Sole proprietors give a social insurance number. Corporations use the business number from incorporation. No fee applies to GST/HST registration.

Online registration through CRA My Business Account is typically immediate. A mailed RC1 form typically takes two to four weeks. The CRA assigns a filing frequency once the account is open, and most new registrants start as annual filers. Your account number is your business number plus RT.

Skip registration past the deadline and the CRA can assess the tax you should have collected plus interest, whether or not you charged the customer. Failing to register also carries its own penalty, charged on top of the interest.

Build the tax line into your forecast before the first invoice goes out. Any business plan needs to set aside cash for tax collected, not only for startup equipment.

The small-supplier threshold and how seasonal revenue counts toward it

The small-supplier rule is the one most Canadian washers misread. It is not a calendar-year test. The CRA looks at taxable revenue over the last four consecutive calendar quarters. The federal threshold has not moved from $30,000.

That rolling window matters in a seasonal business. A strong May to September can carry you over the limit even if January and February brought nothing.

Take four quarters of taxable sales, add them, and compare the total with $30,000. Once the total passes it, you charge tax on sales made after that quarter ends. Earlier invoices stay as they were.

A worked example helps. Say a sole proprietor bills $12,000 in the spring quarter, $11,000 in summer and $9,000 in the fall. The running total reaches $32,000 in the fall quarter, which is where the threshold is crossed. Tax applies to sales made after that quarter ends, and the spring and summer invoices stay as issued.

The same rule applies if you start a second business under the same ownership, such as gutter cleaning. Revenue from both counts toward one threshold.

Seasonal operators often cross the line mid-summer and only notice in November. If you follow the pressure washing operations guide, the crossing point shows up early enough to register before the next invoice goes out.

Keep a running total of taxable sales by quarter. A spreadsheet with four columns is enough, and it removes the guesswork when you file.

If revenue drops back under the threshold later, you do not automatically lose your registration. You can ask the CRA to cancel it, but most operators keep it once they have commercial clients.

Place-of-supply rules for washing services sold across provinces

Place-of-supply rules decide which tax applies to a sale. For services, the general rule ties the supply to where the customer, or the customer's business, is situated.

Pressure washing is usually a property-related service when you work on the customer's land or building. The tax then follows the location of the property, not the customer's head office.

That means a Toronto company washing a Sudbury storefront charges Ontario HST. A Calgary operator hired by a BC property manager generally charges GST plus whatever BC applies to the service.

This trips up contractors who serve border regions. A Gatineau crew washing driveways in Ottawa is working on Ontario property, so Ontario HST applies to those jobs.

Mobile work adds a wrinkle. Wash fleet vehicles at a yard in Manitoba for a Saskatchewan company and the service is performed in Manitoba, so the Manitoba treatment applies.

Get the customer's address right on every invoice. The CRA expects a reasonable effort to confirm where the customer or property is located, and your invoice is the record of that effort.

Quebec is the exception that catches people. Revenu Quebec administers QST separately. The trigger is a Quebec threshold of $30,000, measured on the taxable supplies you make in Quebec rather than on your nationwide revenue. A supplier with no physical presence in Quebec may still have to register there once Quebec sales cross that figure.

Settle the rate before you send the quote. When Setting pressure washing prices spans two provinces, a wrong rate is hard to recover later.

When in doubt, document your reasoning. A short note on the file explaining why you charged a given rate is worth more than a vague memory two years later.

Which rate to charge: GST, HST and Quebec's QST province by province

The table below sets out the rate that applies to a taxable washing job in each province and territory.

Three provinces come up in most quotes: Ontario at 13 per cent HST, British Columbia at 5 per cent GST, and Alberta at 5 per cent GST with no provincial sales tax.

Rates differ by province, and some provinces apply no provincial sales tax to services at all. Use the CRA's GST/HST calculator and rate list before you quote a cross-border job.

British Columbia, Saskatchewan and Manitoba apply provincial sales tax to many services, but whether pressure washing is taxable varies. Check the provincial ministry before you add PST to a quote.

Alberta has no provincial sales tax, so a Calgary or Edmonton job carries GST only. Alberta quotes look cheaper to out-of-province clients even when your costs are similar.

Quebec's QST rate is 9.975 per cent, applied to the selling price. Do not calculate QST on top of GST. Each tax is calculated separately on the same base.

Atlantic Canada charges HST in all four provinces. New Brunswick, Prince Edward Island and Newfoundland and Labrador charge 15 per cent. Nova Scotia charges 14 per cent. Confirm the current numbers before you quote, because provincial budgets move these rates.

The territories follow the GST only. A Yellowknife or Whitehorse job carries 5 per cent, with no territorial sales tax on services.

Get the rate right and pressure washing pricing and profit holds up when a customer compares your quote with one from across a border.

Ontario HST and the provincial portion of the harmonized tax

Ontario HST is 13 per cent, made up of the 5 per cent federal part and an 8 per cent provincial part. You charge it as one line on the invoice, not two.

The province explains how the tax applies to businesses in its guide to the Harmonized Sales Tax. The point that matters for contractors is that the provincial portion is not yours to keep.

You collect the full 13 per cent and remit it, minus any input tax credits. Treat the tax as money held in trust, not as revenue.

Residential pressure washing in Ontario is taxable. Some homeowners assume services to a primary residence are exempt, which is true for certain renovation work but not for washing a driveway or siding.

Condominium corporations and property managers are used to HST on invoices. They will ask for your GST/HST number, so have it printed clearly near the top of every invoice.

Buy a used trailer or washer from another registrant and you may be charged HST on that purchase. That tax becomes an input tax credit you claim on your next return.

Ontario's WSIB coverage is separate from HST, but both show up in your cost structure. Neither is optional once you have workers or cross the registration threshold. Classification and premium questions go to WSIB, not to this page.

Invoicing, collecting and calculating tax on each job

A clean invoice prevents most tax problems. It needs your business name, your GST/HST number, the date, and the customer's name and address. It also needs a description of the work and the tax shown separately.

The CRA sets out when registration and charging begin in its rules on when to register and charge the GST/HST. Read it once before your first taxed invoice.

Here is a worked example for a $1,200 driveway and siding job in Ontario:

The job price before tax is $1,200. HST at 13 per cent adds $156.00, and the customer pays $1,356.00. You keep the $1,200 and hold the $156.00 for the CRA, less any input tax credits you claim.

If you quote tax-included prices, work backwards. Divide the total by 1.13 in Ontario to find the pre-tax amount, then subtract to find the tax.

Keep records the same way. For each job, file the invoice you issued, the supplier receipt for chemicals and fuel, and the payment record. The CRA can review six years of them.

Sample pressure washing quotes should show the tax line explicitly. Customers who see it separate rarely argue about it, and your records stay clean.

For commercial clients, note the payment terms and whether they are a registrant who will claim the tax back. It changes how they read your price.

Never absorb the tax to win a job. That money belongs to the government, and paying it out of your own pocket erodes a margin a busy season already leaves thin.

Filing deadlines, reporting periods and penalties when seasonal cash is tight

Your reporting period depends on revenue. Small registrants usually file quarterly or annually, while larger operations move to monthly filing.

Quarterly filers generally have one month after the quarter ends to file and pay. Annual filers have three months to file, though interim payments may be required.

Seasonal cash makes this hard. A big summer pushes you into a higher revenue band, and the tax you collected in July is due long before a slow January invoice arrives.

Open a separate account for tax collected. Move the tax portion there the day each payment lands, and the filing deadline stops being a cash crisis.

Late filing is expensive. The CRA's rules on GST/HST filing penalties set a penalty of 5 per cent of the balance owing, plus 1 per cent for each full month the return is late.

Repeated late filing raises the penalty to 10 per cent plus 2 per cent per month. Interest also runs on the unpaid balance from the due date.

If you cannot pay, file anyway. The penalty for not filing is separate from interest on what you owe, and filing on time limits the damage.

Set two reminders per quarter: one a week before the deadline and one on the day. A phone alarm costs nothing and prevents the most common penalty.

Rebates and input tax credits a contractor can claim on equipment

Input tax credits are how registration pays for itself. You claim back the GST or HST you paid on business purchases, which lowers your real cost on every piece of gear.

A $6,000 hot water pressure washer bought in Ontario carries $780 in HST at 13 per cent. Registered and using it only for business, you claim that $780 back.

Fuel for the truck, replacement nozzles and hoses all carry recoverable tax when bought for the business. So do detergent, insurance, cell service and accounting fees.

You need the supplier's invoice showing their GST/HST number and the tax amount. A debit card slip with no tax breakdown is not enough.

Mixed use needs a reasonable split. If the truck is used 80 per cent for business, claim 80 per cent of the tax on fuel and repairs, and keep a log to support it.

Some purchases are restricted. Certain passenger vehicles and club memberships are limited or excluded, so check before you claim.

Quebec works differently. GST is claimed through the CRA and QST through Revenu Quebec, using the same input tax credit logic but two separate returns.

Rebates exist for specific situations too, such as tax paid in error or on certain non-resident purchases. They are the exception, not the plan, so build your pricing around input tax credits instead.

Before you buy a major item, check whether the seller is registered. A private sale with no tax charged means no input tax credit, which can wipe out the apparent saving on a used machine.

Keep every receipt for six years. The CRA can review your input tax credit claims long after the season ends, and a missing invoice turns a valid credit into a disallowed one.

Common questions

Do I charge GST or HST on residential pressure washing?

Yes. In provinces with HST you charge the combined rate, and residential washing is a taxable service, unlike some renovation work on primary residences. The rate follows the province where the property sits.

What if I only work a few months a year?

The small-supplier threshold still uses four consecutive calendar quarters, so a short season can push you over. Register once you cross it and charge tax on sales made after that quarter ends.

Can I charge tax before I am registered?

No. You cannot charge GST/HST until your registration is effective, and you cannot keep tax you were not entitled to collect. Register first, then invoice.

Do I need a separate Quebec registration?

Often yes. QST is administered by Revenu Quebec, and revenue from Quebec customers counts toward your registration obligations there. Confirm your own position with Revenu Quebec.

What happens if I file late?

The CRA applies a 5 per cent penalty on the balance owing plus 1 per cent per month, with interest added. Filing on time, even without full payment, limits the cost.

Can I claim the tax back on a used truck?

Only if the seller charged GST/HST and gave you an invoice showing it. A private sale with no tax charged produces no input tax credit, so a lower asking price is not always the cheaper machine.