Registering For and Charging GST/HST
Owning your business is a huge responsibility and a constant challenge. As of the end of 2017, there were 1.18 million employer businesses across Canada, according to the official website of the Government of Canada. Of those, nearly 98% were small businesses. If you are a business owner or are in the process of setting up your company in Canada, you might be concerned about the potential tax implications. One of your concerns may be, “When to register for and start charging the GST/HST?” In Canada, businesses that meet a certain threshold must charge their customers the goods and services tax (GST). In some provinces, companies must charge the harmonized sales tax (HST). If you need help understanding the requirements to register for the GST/HST in Canada, consider speaking with our tax lawyer at Jeremy Scott Law. Call 902-403-7201 to schedule a consultation.
What Are the Exceptions for Businesses Charging the GST/HST in Canada?
There are two exceptions to charging the goods and services or harmonized sales tax in Canada. If your business qualifies for any of the following exceptions, you will not have to charge and remit GST/HST:
- You sell zero-rated or tax-exempt goods or services. If your business is selling goods or services that are classified as zero-rated or tax-exempt, you are not required to charge your customers the GST/HST. Some examples of tax-exempt or zero-rated goods in Canada include prescription drugs, basic groceries (bread and milk), and certain agricultural products. You can see a more detailed list of zero-rated or tax-exempted products on the website of the Government of Canada.
- You are a small supplier. Depending on your annual or quarterly revenue, your business may qualify as a small supplier for tax purposes in Canada. Your gross revenue cannot exceed $30,000 CAD in the last 12 months or in a single calendar quarter to be classified as a small supplier. You may need to consider sales made by related parties when determining if you are a small supplier.
If you do not know when to register for and start charging the GST/HST in Canada, the first thing you should do is check whether or not your business qualifies for any of the above-mentioned exceptions.
When Should You Start Charging the GST/HST in Canada?
As mentioned earlier, whether or not you are required to register for and start charging the GST/HST depends on the total amount of revenue your business has earned in the past four consecutive quarters and a single calendar quarter. If your business earns more than $30,000 CAD in gross revenue, you will have to start collecting GST/HST from your customers.
There are three scenarios in which you might register for GST/HST in Canada:
- You register for a GST/HST number right away. If you anticipate your business to earn more than $30,000 CAD within the next quarter or four consecutive quarters, you can voluntarily register for a GST/HST number as soon as you set up your business.
- You earn $30,000 CAD within a calendar quarter (90 days). Even if you did not register for GST/HST right away when setting up your business, you would still be required to register for a GST/HST number if your business makes more than $30,000 CAD within a calendar quarter. You no longer qualify as a small supplier the day your gross revenue within a quarter exceeds $30,000 CAD. If this happens, you will have to charge your customers the GST/HST on the sale that exceeded the threshold and on any subsequent sales.
- You earn $30,000 CAD over the course of four consecutive calendar quarters (12 months). If the gross revenue of your business exceeds $30,000 within a 12-month period, you are no longer considered a small supplier for tax purposes. You will have to register for and start charging the GST/HST within one month of the end of the 12-month period in which you made more than $30,000 CAD.
As mentioned previously, care must be exercised when completing the $30,000 threshold calculation as you may be required to include sales made by related parties in the threshold calculation.
Trying to figure out when to register for and start charging the GST/HST can be confusing, which is why you might want to consult with an experienced tax lawyer who is familiar with Canadian tax laws. At Jeremy Scott Law, a knowledgeable tax lawyer is prepared to review your particular situation to help you understand your tax obligations.
How to Register for GST/HST?
If you meet the threshold to charge your clients the goods and services tax or harmonized sales tax, you need to know how to register a GST/HST account in Canada. The process of registering for GST/HST is relatively straightforward. In order to get a GST/HST number, you need to prepare the following information:
- Your basic information (your own name, your date of birth, your business name, mailing address, etc.);
- The effective date of registration (the date when your revenue exceeded the $30,000 threshold in a calendar quarter or year);
- The fiscal year for tax purposes; and
- Your total annual revenue (this is merely an estimate of how much your business earns in a year).
If you need assistance registering for the GST/HST, consider speaking with a tax lawyer at Jeremy Scott Law. As a knowledgeable tax lawyer in Canada, I will review your unique situation and help you understand when to register for and start charging the GST/HST in your specific case. Call 902-403-7201 to get a case review.
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Please note the content above and throughout this website is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. I urge you to seek specific legal advice by contacting me (or your current legal counsel) regarding any legal issues you may face. I do not warrant or guarantee the quality, accuracy or completeness of any information found on this website and will not be held liable for anything contained in this document or any use you make of it. Finally, accessing the information on my website does not create a lawyer-client relationship.