How to Calculate GST on Canadian Invoices (Step-by-Step Guide)

How to Calculate GST on Canadian Invoices (Quick Answer)

To calculate GST, multiply your subtotal by 5%.

Example:

$100 × 0.05 = $5 GST → Total = $105

Step-by-Step: How to Calculate GST

1. Start with your subtotal
   This is the amount before tax.
2. Determine the tax rate
   GST is 5%, but some provinces use HST or additional taxes.
3. Multiply the subtotal by the tax rate
   Example: $100 × 5% = $5
4. Add tax to subtotal
   $100 + $5 = $105 total
5. Display clearly on the invoice
   Show subtotal, tax amount, and total separately

Example Invoice Calculation

GST vs HST in Canada

GST is a federal tax of 5%. Some provinces use HST, which combines GST with provincial tax.

👉 You charge tax based on your customer’s location, not your own.

When Do You Need to Charge GST?

You typically need to charge GST once your business earns:

👉 $30,000 in revenue over 12 months

Before that, you’re considered a small supplier and don’t need to collect GST.

Common GST Mistakes

• Using the wrong tax rate
• Charging tax based on your province instead of your client’s
• Forgetting to include GST on invoices
• Not clearly separating the subtotal and tax

How Lunio Helps

Lunio simplifies GST calculations for Canadian businesses.

• Automatically applies correct GST/HST rates
• Calculates totals instantly
• Generates professional invoices

👉 Use our GST/HST calculator to calculate tax instantly.

👉 Try the invoice generator to create compliant invoices.

FAQ

How do I calculate GST in Canada?

Multiply your subtotal by 5% (0.05), then add it to your subtotal to get the total.

Do I always charge 5% GST?

No — some provinces use HST or additional taxes depending on the customer’s location.

Do I need to charge GST as a freelancer?

Only if you are registered and earn more than $30,000 annually.

Final Thoughts

Calculating GST is simple once you understand the process.

Start with your subtotal, apply the correct rate, and clearly show everything on your invoice.