How to Manage GST/HST in Accounting Software in Canada

Setting up sales tax correctly in accounting software is a one-time task that prevents errors on every invoice and every GST/HST return you file. Get it wrong once and you will be correcting client invoices and CRA filings for months.

What Your Accounting Software Needs to Do

Once you are registered for GST/HST, your software must:

1. Add the correct GST/HST rate to invoices sent to Canadian clients
2. Track zero-rated sales (services to international clients) separately from taxable sales
3. Record ITCs on business purchases (the GST/HST you paid)
4. Generate a GST/HST summary report showing net tax owing or refundable

Setting Up GST/HST in FreshBooks

FreshBooks handles GST/HST through the Tax Settings section:

1. Go to Settings → Taxes → Add Tax
2. Enter your province’s rate (e.g., Ontario HST: 13%) and your 9-digit RT registration number
3. Set the tax to apply automatically to all invoices, or add it manually per invoice
4. For international clients: create a “Zero-rated” or “Export — 0%” tax option to flag these transactions correctly
5. When entering expenses, mark the GST/HST amount paid to track ITCs

FreshBooks generates a GST/HST Summary Report under Reports → Tax Summary. The report shows total HST collected and total ITCs — the difference is your net remittance amount.

Setting Up GST/HST in QuickBooks (Self-Employed or Online)

QuickBooks has built-in Canadian tax functionality:

1. Go to Settings → Taxes → Sales Tax
2. Add your GST/HST account: enter your province, rate, and registration number
3. QuickBooks will prompt you to set up tax agencies — select “Canada Revenue Agency” and enter your filing frequency (annual/quarterly)
4. QuickBooks tracks collected tax and ITCs as you record sales and expenses
5. The “Sales Tax” section in the left navigation shows your current period’s collected tax minus ITCs

QuickBooks can also file your GST/HST return directly through its integration with CRA’s NETFILE for businesses. This is one of its most time-saving features for registered businesses.

Setting Up GST/HST in Wave (Free)

Wave supports Canadian sales tax but requires more manual setup:

1. Go to Settings → Sales Tax → Add a Tax
2. Enter the tax name (e.g., “Ontario HST”), rate (13%), and your registration number
3. Apply the tax to products/services on your invoices
4. For expenses, manually enter the HST amount paid to track ITCs
5. Wave’s Tax Report (Reports → Sales Tax Report) shows collected tax and paid tax by period

Wave does not integrate with CRA for direct filing — you will need to transfer the numbers manually to your CRA My Business Account to file.

Tracking Zero-Rated Sales to International Clients

All three platforms support zero-rated sales. Create a separate tax code at 0% for international clients — label it “Zero-rated export” or “GST/HST 0% — export.” Apply this to invoices for clients outside Canada. The transactions are recorded in your books and appear on reports separately from domestic sales.

Preparing for Your GST/HST Return

Before filing, run your tax summary report for the reporting period and confirm:

• Total GST/HST collected from Canadian clients
• Total ITCs: GST/HST you paid on business expenses
• Adjustments (GST/HST rebates, bad debts if on accrual basis)
• Net tax owing or refundable

File through CRA My Business Account (canada.ca) using the numbers from your software report, or through QuickBooks’ direct filing feature if available.

Frequently Asked Questions

Does accounting software file my GST/HST return for me?

QuickBooks Online for Canada includes direct GST/HST filing to CRA in some plans. FreshBooks and Wave generate the numbers you need but do not file directly — you enter them manually in CRA My Business Account. Some third-party add-ons integrate Wave with CRA filing, but most Wave users file manually.

What if I use the Quick Method?

If you elected the GST/HST Quick Method, configure your software to track total revenue (including HST collected) and apply your Quick Method remittance rate (8.8% for Ontario-based service providers). The Quick Method simplifies your remittance but requires a separate setup from the regular ITC-tracking method. FreshBooks supports the Quick Method — check the tax setup options for your province.

Do I need to separately track PST if I am in BC, Manitoba, or Saskatchewan?

Yes. PST in BC, Manitoba, and Saskatchewan is a separate provincial tax with its own registration, filing, and remittance. Your accounting software tracks GST separately from PST. BC PST (7%), Manitoba PST (7%), and Saskatchewan PST (6%) are filed with the respective provincial governments, not the CRA. Set up separate tax codes for each in your software.