GST/HST on commercial rent in Canada is a common issue for small landlords, consultants who lease out spare office space, and sole proprietors who own a mixed-use property. The short version: rent from commercial property is usually taxable for GST/HST, while long-term residential rent is usually exempt. That difference affects whether you charge tax, whether the income counts toward the $30,000 small supplier threshold, and whether you can claim input tax credits.
GST/HST on commercial rent in Canada: the basic rule
If you lease commercial real property in Canada, the rent is generally a taxable supply. That can include an office, retail unit, warehouse, studio, clinic, parking lot, storage space, or a desk area rented for business use. If you are registered for GST/HST, you generally charge GST/HST on the rent at the rate that applies in the province where the property is located.
Example: you own a small commercial unit in Ontario and rent it to a graphic designer for $2,000 per month. If you are GST/HST registered, you would normally charge 13% HST on top of the rent, so the invoice is $2,260. You later report and remit the HST on your GST/HST return.
Residential rent is usually different
Most long-term residential rent is exempt from GST/HST. If you rent an apartment, basement suite, house, or residential condo to someone as their place to live, you usually do not charge GST/HST. Because exempt supplies are outside the GST/HST system, that residential rental income usually does not count toward the small supplier threshold and you generally cannot claim input tax credits on related expenses.
This is where landlords get tripped up: commercial rent and residential rent are not treated the same. If you are unsure whether a rental is taxable, compare the rules in our guide to zero-rated vs exempt supplies in Canada and confirm the facts with a tax professional.
Does commercial rent count toward the $30,000 threshold?
Yes. Because commercial rent is generally a taxable supply, it usually counts toward the CRA's $30,000 small supplier threshold. The threshold is based on taxable worldwide supplies over a rolling four-calendar- quarter period, not simply January to December. Our article on how the GST/HST threshold works explains the rolling calculation in detail.
This matters if rental income is not your only business activity. Say you earn $18,000 from freelance consulting and $14,000 from a small commercial lease in the same rolling period. Even if each activity feels small on its own, together they can push you over $30,000 in taxable supplies. At that point, GST/HST registration may be required.
HST Hero is built for this exact problem: enter your taxable revenue as it comes in and it shows where you stand against the rolling GST/HST threshold before a registration deadline sneaks up on you.
What rate do you charge?
The GST/HST rate is generally based on the location of the real property, not where the landlord or tenant lives. For commercial rent, that means:
- Ontario: 13% HST
- Nova Scotia, New Brunswick, PEI, Newfoundland and Labrador: 15% HST
- Alberta and the territories: 5% GST
- BC, Saskatchewan, Manitoba, and Quebec: 5% GST federally, with separate provincial sales tax rules to check where relevant
If your lease says the rent is “plus applicable taxes,” the tax is usually added on top. If the agreement is silent or says tax is included, ask an accountant or lawyer before changing what you invoice.
Can landlords claim input tax credits?
If you are registered and you make taxable commercial rentals, you may be able to claim input tax credits for GST/HST paid on related expenses. Common examples include repairs, maintenance, utilities, accounting fees, legal fees, commercial insurance fees that include tax, and property management services.
The catch is allocation. If a property has both taxable commercial space and exempt residential space, you generally need to split expenses reasonably between the two. You can usually claim ITCs only on the portion related to taxable activity. For the basics, read our guide to GST/HST input tax credits.
What should be on a commercial rent invoice?
A clear invoice or rent statement should show the landlord's legal name, the tenant, property address, rent period, base rent, GST/HST amount, total due, and the landlord's GST/HST registration number if tax is charged. Keep copies of leases, rent invoices, payment records, and expense receipts for your CRA records.
The bottom line
- Commercial rent in Canada is usually taxable for GST/HST
- Long-term residential rent is usually exempt
- Commercial rental income usually counts toward the $30,000 threshold
- Registered landlords may claim ITCs on taxable rental expenses
- Mixed commercial/residential properties need careful allocation
If you collect commercial rent, do not track it separately from the rest of your business revenue. Add it to your GST/HST threshold tracking so you know when registration, invoicing, and remittance obligations start.