This piece is informational and does not give legal, accounting, or tax advice. The information here is open to change and may occasionally differ in your area. Please talk to a professional if you want help specific to your business.
Tax rules can seem scary, no matter how long you’ve been in business or how new you are. We know that knowing all the details of the different tax rules, such as what you need to do and when you need to do it, can seem complicated, but it doesn’t have to be.
Canada HST/GST Number
Let’s say you’ve been in business for a while. You have gained new customers, and your earnings keep going up. Someone in business tells you you might want to look into GST registration. What is that, though?
What’s a GST Number?
The Canada Revenue Agency (CRA) gives your business a Goods and Services Tax (GST) number, also called a company number, so that it can keep track of GST or Harmonized Sales Tax (HST) payments, reports, and payments. But you can also use a GST number for any other business with the Canada Revenue Agency.
For example, if you set up your business as a corporation, you’ll need a GST number to file your corporate income tax. If you have workers in your business, you also use the GST number to report and pay back salary deductions. After you get your GST number, you must also put it on every bill you send.
But do you need a GST number for your business? How do you know that?
Do You Need a GST Number?
A GST number is something that most businesses in Canada have to sign up for. All companies in Canada must get a GST number unless the Canada Revenue Agency says the business is a small provider.
The CRA says that a small supplier can be a sole proprietorship, partnership, or corporation if the company’s quarterly taxable sales (before costs) are less than $30,000. It’s important to note that this figure doesn’t include provincial sales taxes or money from selling financial assets.
But even if all the other parts of this Small Supplier rule apply to you, you should know that you may still have to register based on your business type. You must sign up for a GST number if you run a cab or transportation service. Also, if you’re a speaker, singer, or other artist who doesn’t live in Canada but sells tickets to shows or workshops in Canada, you must sign up for a GST number.
As of July 2021, no matter where a business is physically based, it must sign up for GST if it runs a marketplace or other platform that sells digital goods to Canadians, such as online music streaming. These digital platforms must collect and pay GST and HST, depending on which tax applies to the state where the digital goods or services are sold.
If You’re a Small Supplier, Should You Register Anyway?
If the CRA says you’re a small seller, you don’t have to sign up for a GST number, but it can still be helpful. For example, if you’re registered, you can use Input Tax Credits to get back all the GST or HST you paid when you bought something for your business at the end of the year. If you’re starting your business, it’s wise to go ahead and register for GST so you can get back all the GST/HST you pay on goods or purchases for your business’s start-up.
What’s the Difference Between GST, PST, and HST?
GST, PST, and HST are abbreviations for the following:
Tax on products and services
The GST is a federal sales tax levied on all transactions and purchases.
Tax on Provincial Sales
The PST is a provincial sales tax on virtually all purchases and transactions.
Harmonization of Sale Tax
Almost all sales and purchases are subject to the HST, a combination of the province’s sales tax and GST harmonization.
Revenu Québec manages these calculations and payments if your company is located in or operates in Québec. If you conduct business in Québec and elsewhere in Canada, you will be responsible for Revenu Québec and CRA payments. Having a financial advisor or accountant on your side to help you navigate these waters is advisable.
When Must You Finish Your GST Registration?
You may believe that you must immediately register for a GST number. While that undoubtedly helps, the reality is that it depends on the type of business you run and your anticipated annual revenue. As indicated above, if you anticipate that your quarterly revenue will exceed $30,000 before expenses, you must register. In contrast, businesses with incomes below this threshold are not required to do so.
Nonetheless, what if you have one or two exceptional quarters? Do you require registration? Perhaps not necessarily. According to the Canada Revenue Agency, businesses needed to obtain a GST number must have earned more than $30,000 in each of the previous four quarters. However, it’s important to note that you must tally the prior four quarters. You must register for a GST number if your business is worth over $120,000. But remember: Even if your quarterly and annual totals are below the threshold, you must register as quickly as possible to claim the above input credits.
When your quarterly revenue exceeds $30,000, you are no longer designated a minor supplier and must register for GST/HST collection. It would be best to claim GST/HST on the supplies or inventory that caused your income to exceed $30,000. Please visit the CRA website for additional information.
What Does It Mean That You Lost Your Small Supplier Status?
If your company’s quarterly revenue exceeds $30,000, the Canada Revenue Agency will no longer classify you as a minor supplier. This signifies that you must register for a GST number and begin accumulating and remitting GST on your products and services to the CRA. Writing for a GST number is 30 days away from crossing this threshold. On the CRA website, you can find more information on how and when you must register and begin collecting GST/HST.
How Does One Obtain a GST Number?
Contact the Canada Revenue Agency to initiate the application process for a GST number. There are three distinct methods to apply, making the process extremely convenient:
• Online
• By mail
• By phone
Business Registration Online, or BRO, is where you can register your GST number online. Online registration is simple and advantageous because it is not restricted to GST numbers alone. This site allows you to register for corporate, payroll, and other taxes, and depending on the province where your business is located, it will automatically transfer you to the appropriate business registry where you can register for that province’s requirements.
You can visit the Canada Revenue Agency website to download a request for a Business Number, fill out the form, and mail it in, or contact the CRA at 1.800.959.525 to register with a representative over the phone. If your business is in Quebec, call 1.800.567.4692 to register with Revenu Québec.
Afterwards, the CRA or Revenu Québec will send you an acceptance notice and your business’s registered GST number. Make sure to store the number in a secure location.
You Have Obtained Your GST Number — What’s Next?
After obtaining your business number, you must begin collecting and remitting taxes to the CRA. It is advisable to establish a distinct account for your GST funds.
When should you file and remit this tax return now that you’ve begun accumulating it?
You may file monthly, quarterly, or annually, depending on your annual revenue. The following are the CRA’s guidelines for GST tax filings:
You must file monthly if your company’s annual revenue exceeds $6 million. If your revenues fall between $1.5 million and $6 million, you can still file monthly, but a quarterly filing is required. Companies with less than $1.5 million in annual revenues can submit monthly or quarterly returns but must file at least annually. You can discover more specific information regarding your business category on the CRA website.
Depending on your industry, there may be filing periods in which you’ve collected no GST. In such a circumstance, you are still required to file, indicating that your business has not collected any GST. Similarly to GST registration, filing can occur online, by mail, or in person at any financial institution that receives CRA payments.
With this knowledge, you can confidently move forward, regardless of whether you must register for a GST number.