GST, HST and QST for Canadian plumbing contractors, explained

What to take away

When the $30,000 line applies to you

The Canada Revenue Agency calls you a small supplier until taxable revenue from plumbing work, parts and related services passes $30,000 over four consecutive calendar quarters. Cross it and registration stops being optional.

Count from your first sale, not from your incorporation date. One strong quarter does not trigger anything on its own. Four rolling quarters do. Bill $32,000 across a year of drain calls and you are in.

Parts count toward the total. So does a service call where you supply a cartridge, a trap or a length of pipe. Drain work billed to a property manager is taxable revenue like any other.

Voluntary registration below the line is allowed and sometimes smart. If you are buying drain machines and camera gear, registering early lets you claim input tax credits sooner. The trade-off is that you charge tax on every invoice from that point forward.

The CRA sets out the small supplier test and the early-registration option on its page covering when to register for and start charging the GST/HST. Read it before you decide, not after.

Registration is free through CRA My Business Account or by mail. You receive a business number with an RT suffix, and that number belongs on every invoice. A corporation registers as a corporation, a sole proprietor as an individual, but the threshold applies to the business either way.

Keep records from day one. The CRA expects you to show how you tracked revenue toward the threshold, and bookkeeping that separates taxable from exempt sales answers the question in one report. Plumbing contractor software is where most owners park that number so it is ready when asked.

Which rate applies where the work happens

Charge the rate at the job site. A Calgary plumber doing an Ontario job charges Ontario tax on that invoice.

Confirm any figure against the CRA's GST/HST calculator and current rates before you send an invoice.

British Columbia, Saskatchewan and Manitoba are the awkward three. You charge GST federally and the provincial sales tax separately, and the PST or RST never enters your GST/HST return. It goes on its own provincial filing.

Set your invoicing software to pull the rate from the job site address. Manual rate selection is where cross-border mistakes start, and a wrong rate on a commercial invoice creates a problem for your customer's books as well as yours.

Quebec: two numbers, two administrations

Quebec never joined the harmonized system. Revenu Quebec administers QST on its own, so a contractor with a Quebec establishment registers for GST and QST separately and holds two numbers.

Both numbers go on the invoice. A commercial client cannot claim what you did not show, and a missing QST number is a common reason a Quebec payment sits in accounts payable.

Drain and service work sits squarely inside the QST net. A sewer backup call in Montreal, a camera inspection in Laval, a repipe in Quebec City: GST at 5%, QST at 9.975%.

Tax registration and trade licensing are separate obligations. Construction work in Quebec also falls under Regie du batiment du Quebec licensing and, on many sites, Commission de la construction du Quebec hiring rules. You need both files in order, and one does not satisfy the other.

Out-of-province contractors generally have to register for QST once they are carrying on business in the province. A single job may not cross that line. Repeat work usually does.

The combined Quebec rate lands near 15%, which startles a customer used to an Alberta invoice showing 5%. Present the tax as a line on the estimate rather than a surprise at the bottom. The same discipline holds everywhere: prices for profit begin with an estimate that separates labour, material and tax.

What is taxable on a drain or service invoice

Labour is taxable. Parts are taxable. Shop supplies charged through to the customer are taxable. So is a trip or dispatch charge, because it is payment for the service you provided, not a courtesy.

A genuine disbursement is the exception. That means you paid a third party on the customer's behalf and passed the cost through with no markup. A municipal permit fee can sometimes qualify. Your own truck charge never does.

Deposits are not taxable when you take them. Tax applies once you apply the deposit to an invoice, and then to the full amount.

Progress billing on a repipe or a commercial job follows the same rule: tax each progress invoice as you issue it, on the value billed at that point.

An invoice needs several details:

Build a template that carries all of it automatically. Sample plumbing contractor quotes show how line items should read before tax lands on top.

Invoicing also protects margin. A job billed at rates that pay the bills but invoiced without tax is a job where you absorb the difference.

Calculating what you remit

Tax collected on sales minus input tax credits on purchases equals your remittance. Getting the two numbers right is the whole job.

GST collected is everything you charged customers in the period. Input tax credits are the GST or HST you paid on business purchases: fittings, tools, fuel, accounting fees.

If collected exceeds credits, you remit the difference. If credits exceed collected, you get a refund. A quiet quarter with a large equipment purchase often produces one.

The CRA's GST/HST for businesses page lays out registration, collection and remittance in one place.

Most small contractors use the regular method, claiming credits on tax actually paid. The quick method is an alternative for firms under the threshold: you remit a set percentage of revenue and stop tracking credits on most purchases.

The quick method cuts paperwork and costs money when your credits are large. Run both calculations across a full year before switching, because the answer flips with how much equipment you buy.

Worked example. A two-truck Ontario firm bills $180,000 in a quarter plus 13% HST, collecting $23,400. It paid HST of $6,200 on parts, fuel and a drain machine. It remits $17,200. Substitute your own quarterly sales, your own rate and your own credit total to see where you land.

Reconcile the tax account every period. A balance that never quite clears usually means a purchase invoice went missing or a credit got claimed twice.

Deadlines, penalties and filing frequency

Frequency follows annual revenue. Under $1.5 million you may file annually, quarterly or monthly. Between $1.5 million and $6 million, quarterly is the norm. Above that, monthly.

Annual filers with a December 31 year end generally have until March 31 to file and pay. Quarterly and monthly filers have one month after the period closes.

The CRA explains payment channels, including online banking and My Business Account, on its page about remitting the GST/HST you collected.

Late filing is expensive. The CRA's GST/HST filing penalties page sets out the structure: a percentage of the amount owing, plus a further percentage for each full month the return is late.

Interest accrues daily on the unpaid balance and stops only when it clears. Repeated late filing pushes the penalty higher, because the CRA tracks the pattern across the year.

If you cannot pay, file anyway. Failing to file and failing to pay are separate penalties, and filing stops the first one from growing.

A compliance checklist for new owners is the right place to record your filing frequency, your tax numbers and your remittance dates in one document.

Input tax credits on equipment and inputs

The rebate is called an input tax credit. It is not a grant or a programme. It is the mechanism that keeps tax from becoming a cost of doing business.

Claim it on GST or HST paid for goods and services used in the commercial plumbing business: hand tools, drain machines, camera reels, fittings, pipe.

You cannot claim it on personal purchases, on tax you were never charged, or on items used mainly for personal benefit. A truck driven 60% for work and 40% personally needs an apportioned claim.

Capital purchases follow the same rule. A sewer jetter bought for the business generates a full credit in the period of purchase, provided you are registered and tax was charged.

Keep the receipts. A credit claimed without a supporting invoice is the first thing an auditor asks about, and a supplier invoice missing a valid GST/HST number is not enough.

Under the quick method most input tax credits disappear. Credits on capital purchases above a set amount survive, which is why the quick method suits service-heavy firms better than equipment-heavy ones.

Timing matters. Claim in the period you paid the tax or the period the invoice is dated, depending on your accounting method, and stay consistent across the year.

Checking a tax number before you rely on it

Confirm a supplier's number before you claim a credit on their invoice. A wrong or invented number can cost you the credit outright.

The CRA runs a GST/HST registry lookup that answers in minutes. Use it on any new supplier issuing large invoices, subcontractors especially.

For your own customers the rule runs the other way. Commercial clients need your correct number to claim their credits, so an error on your invoice becomes their problem and your phone call.

Quebec adds a step, since your QST number is separate and a Quebec client wants both.

When a customer claims exemption, ask for the basis. Most residential plumbing work is taxable, and "we are a charity" or "we are a school" needs checking against the rules rather than accepting at the counter.

Record every number you verify, with the date. It takes seconds and settles the question if the CRA ever asks how you satisfied yourself before claiming.

Common questions

Do I charge GST or HST on a service call in Alberta?

GST at 5%. Alberta has no provincial sales tax, so the federal rate is the entire charge on the invoice.

Can I register before I reach $30,000?

Yes. Registration is voluntary below the threshold and lets you claim input tax credits on equipment and parts sooner. The cost is that you charge tax on every invoice from that date.

Does QST apply to drain cleaning in Quebec?

Yes. Drain and service work performed in Quebec attracts GST at 5% and QST at 9.975%, and you need a QST number issued by Revenu Quebec alongside your GST number.

What happens if my return is late?

The CRA applies a penalty based on the amount owing and how many months the return is late, plus daily interest until the balance clears. Filing stops the failure-to-file penalty from growing even if you cannot pay yet.