GST/HST Account Registration, Collection, and Remittance
A goods and services tax (GST) number is a unique tax identification number assigned to a business by the Canada Revenue Agency (CRA). It’s an extension of your business’ business number, which also addresses payroll taxes, corporate income tax, and miscellaneous issues such as information returns.
You have to register for a GST/HST account if you make taxable sales on supplies and services used in the course of your business, leases, or other supplies in Canada related to operating your business.
“Small suppliers” are exempt from registration and are not required to obtain a GST/HST number. One loses their status as a small supplier after one has a four-quarter period in which one makes total international sales of $30,000 or more. A similar concept applies to charities and public institutions, but with a threshold $250,000 or less.
Small suppliers may choose to register for a GST/HST account voluntarily. Businesses who choose to register for a GST/HST account have to
- Charge, collect, and remit GST/HST that applies on your taxable supplies and services
- File GST/HST returns on a regular basis
Once registered, you may be eligible to claim input tax credits to recover the GST/HST paid or payable on your purchases and operating expenses. Input tax credits allow you to recover the GST/HST paid or payable on purchases and expenses related to your commercial activities. Be sure to claim your ITC within the time limit, which is 4 years for most registrants and obtain sufficient documentary evidence to substantiate the ITC prior to making the claim in a GST/HST return. Click here to find out what information requirements are need for sale invoices to claim input tax credits.
Before You Register GST/HST
When registering for a GST/HST number, have the following information on hand:
- Effective date of registration: Your effective date of registration is usually the day you stop being a small supplier. If you request your GST/HST account when you are still a small supplier, your effective date of registration is usually the date of your request. It may also start up to 30 days before that day.
- Fiscal year for GST/HST purposes. Usually, your fiscal year for GST/HST purposes is the same as your tax year for income tax purposes, but this is not set in stone and you do not need to choose the same period.
- Total annual revenue from your taxable sales, leases, and other supplies including those that are zero-rated, as well as the taxable supplies of all your associates. If you are a new business, you may give a reasonable estimate of your income for the year. This will be used, in part, to determine the frequency of your reporting.
- Basic information includes personal information, such as your last name, SIN, date of birth, and address, as well as business information, which includes your business name, BN, type of business or organization (sole proprietorship, partnership, corporation, or registered charity), name and SIN of all owners, physical and mailing address, and description of your business activity.
How to Register GST/HST Account
With the above information on hand, you are ready to register for a GST/HST account. You can register by the following methods:
- Online: For simple registration requirements, you can use the Business Registration Online Service. Registering online allows you to also register for other CRA accounts you may need, such as payroll deduction account, import-export program account, corporation income tax program, registered charity program account, and information returns.
- Mail:Print Form RC1 and mail it to your nearest tax service office or tax centre.
- Telephone at 1-800-959-5525
As a GST/HST registrant, you are required to charge GST/HST on your taxable supplies and services. The rate that you charge will depend on the province or territory in which the supply is made. The current rates are:
5% (GST) in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon
13% (HST) in Ontario
15% (HST) in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island
For example, your store in Vancouver, B.C. delivers a mattress to your customer in Toronto, Ontario. You charge 13% HST on the sale because the place of supply is Ontario.
What to do with collected GST/HST
You are responsible to hold the GST/HST in trust until you send it to the CRA. This includes the collectible tax that you charged and have not collected yet.
At the end of each reporting period, you need to complete and file a GST/HST return and remit the net amount of GST/HST to the CRA.
You must keep the records that will support the information you provide on your GST/HST returns.
Your records must include:
- the amount of GST/HST you collected
- the amount of GST/HST paid and payable on your eligible business purchases and expenses
- the amount of tax to be refunded, rebated, or deducted from your net tax
- a description of the goods and services in enough detail to determine whether or not GST/HST applies.
GST collected from customers is deemed to be held “in trust” for the Canadian government. Usually, you must keep your records for 6 years from the end of the last year to which they relate. However, the CRA may ask you to keep the invoices longer than 6 years.
Due Dates for Filing a GST/HST Return
You must file your GST/HST return on the due date, which is determined by your reporting period. Your personalized return will indicate the due date at the top of the form. The CRA can charge penalties and interest on any returns or amounts that have not been received by the due date. They will hold any GST/HST refunds or rebates you are entitled to until they receive all outstanding returns and amounts. If you are a sole proprietor or partnership, your personal income tax refund will also be held.
The due date for an HST return depends on your reporting period. For monthly and quarterly periods, the return is due one month after the end of the period.
For annual returns, the return is due three months from the end of the year, with the exception of sole proprietors whose reporting period is the calendar year, who have until June 15th.
Filing a GST/HST Return
To help you prepare your GST/HST return, use the GST/HST Return Working Copy and keep it for your own records. The working copy lets you calculate amounts and make sure that everything is correct before completing your personalized return.
For instructions about how to complete each line of your return, see Instructions for completing a GST/HST return.
You can file your GST/HST return with any of the following methods:
GST/HST NETFILE is an online filing service that allows registrants to file their GST/HST returns and eligible rebates directly to the Canada Revenue Agency (CRA) over the internet.
- My Business Account
My Business Account is a secure online portal that allows you to interact electronically with the CRA on various business accounts. Business accounts include GST/HST (except for GST/HST accounts administered by Revenu Québec), payroll, corporation income taxes, excise taxes, excise duties, and more.
- Represent a Client
Represent a Client is a service that provides you with secure and controlled online access to tax information on behalf of individuals and businesses, including your employer.
- Electronic Data Interchange (EDI)
EDI lets you pay the net tax you owe electronically through a participating Canadian financial institution.
- GST/HST TELEFILE
GST/HST TELEFILE is a fast, free, and easy-to-use filing option that allows qualifying registrants to file their GST/HST returns in a matter of minutes, using their touch-tone telephone and a toll-free number.
- GST/HST Internet File Transfer
GST/HST Internet File Transfer is an internet-based filing service that allows eligible registrants to file their GST/HST returns directly to the CRA over the internet using their third-party accounting software.
If you are not required to file online, you may be eligible to file a paper return. To use this method, you can either mail your GST/HST return to the address on your return or file in person at a participating financial institution. You cannot file in person at a participating financial institution if
you are claiming a refund, you are filing a nil return, or if you offset the amount owing on your return with a rebate or refund.
When starting a business in Canada, make sure that you understand the process for GST/HST and how it affects your business. The CRA provides many guides and pamphlets with additional information about GST/HST, including guides that are specific to particular types of businesses.
To ensure that you remit all of your GST/HST to the CRA and avail yourself of all allowable tax credits, contact a tax specialist at Kalfa Law. You work hard for your money – we work hard for you to keep it.
-Shira Kalfa, BA, JD, Partner and Founder
© Kalfa Law, 2020
The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.