This article does not provide legal, accounting, or tax advice; it is just for informational purposes. The information in this document is liable to change and may occasionally differ in your area. Please get in touch with a specialist if you need particular assistance for your company.
Tax regulations might be frightening regardless of how long you’ve been in the company or how new you are. It may seem intimidating to understand the ins and outs of the many tax regulations, including what to do and when, but it doesn’t have to be.
Canada HST/GST Number
Consider that you have been in business for some time. Your revenues are increasing, and you’ve attracted new customers. You hear from another business owner that you might want to research GST registration. What is that, though?
What’s a GST Number?
Your company receives a Goods and Services Tax (GST) number from the Canada Revenue Agency (CRA) to track the collection, reporting, and remittance of GST or Harmonized Sales Tax (HST). However, you may use a GST number for other transactions with the Canada Revenue Agency.
For instance, you must declare your corporate income tax using a GST number if your business is a corporation. You must also use the GST number when reporting and remitting payroll deductions if your firm has any workers. You must include your GST number on all future invoices after you’ve obtained it.
But do you need a GST number for your company? How do you know that?
Do You Need a GST Number?
The majority of Canadian enterprises must sign up for a GST number. All businesses in Canada are required to register for a GST number unless the Canada Revenue Agency deems the company a small supplier.
According to the CRA, a small supplier is one whose quarterly taxable revenues are less than $30,000 (before costs) and which is either a sole proprietorship, a partnership, or a corporation. Remembering that this figure does not account for provincial sales taxes or profits from capital property transactions is vital.
But even if you meet all other requirements of this small supplier regulation, you should know that you could still need to register depending on your business. You must apply for a GST number for a taxi or limousine business. Additionally, you must use a GST number if you are a speaker, singer, or other sort of performer who does not live in Canada but sells tickets for entry into shows or seminars that are taking place there.
Regardless of where the firm is physically situated, all companies running marketplaces or other platforms that provide digital items to Canadian consumers, such as online music streaming, must register for GST as of July 2021. These online stores must gather and send the GST and the HST, depending on which tax rate is appropriate for the province where the digital goods or services are sold.
If You’re a Small Supplier, Should You Register Anyway?
You are not obligated to register for a GST number if the CRA determines that you are a small supplier, although doing so may still be advantageous. For instance, if you are registered, you can use input tax credits at the end of the year to recoup all of the GST or HST you paid after making any purchases for your company. When creating a new company, it makes sense to complete a GST registration so that you may later collect all of the GST/HST you paid on the initial supply and purchases for your company.
What’s the difference between GST, PST, and HST?
Abbreviations for GST, PST, and HST are:
The tax on goods and services
The GST is a government sales tax that applies to almost all sales and purchases.
Tax on sales in a province
The PST is a sales tax that most sales and purchases in a province must pay.
Sales Tax Harmonization
The HST is a tax added to almost all sales and purchases. It is made up of the province’s sales tax and the GST.
Revenu Québec is in charge of these computations and payments if your company is based in or conducts business in Québec. You are responsible for paying Revenu Québec and the CRA if you conduct business in Québec and elsewhere in Canada. To assist you in navigating these waters, having a financial counsellor or accountant at your side is a good idea.
When should you finish the GST registration process?
You might believe that you must immediately apply for a GST number. And although that undoubtedly helps, the reality is that it depends on the kind of business you run and your projected yearly income. Companies with takings of less than this amount, as previously indicated, do not need to register. However, you should note if you anticipate that your revenue before costs will be more significant than $30,000 every quarter.
However, what if you suddenly have one or two fantastic quarters? Do you have to sign up? No, not always. According to the Canada Revenue Agency, companies required to apply for a GST number must have earned more than $30,000 over four consecutive quarters. It’s important to note that you must add up the last four quarters. If the sum exceeds $120,000, you must apply for a GST number. But keep in mind: If you wish to claim the input credits indicated above and your quarterly and annual totals are below the threshold, you should register as soon as possible.
You are no longer regarded as a small supplier if your revenue exceeds $30,000 in a single calendar quarter; at this point, you must register for GST/HST collection. You must submit a GST/HST claim for the materials or stock that raised your earnings beyond the $30,000 ceiling. Please visit the CRA website for further details.
What Does It Mean That You Lost Your Small Supplier Status?
The Canada Revenue Agency will no longer classify your company as a small supplier if it generates more than $30,000 in revenue in any calendar quarter. To start collecting these taxes from your customers for your goods or services and remitting them to the CRA, you must first apply for a GST number. You have 30 days from reaching this level to apply for a GST number. On the CRA website, you may discover further details about how and when you must register and start collecting GST/HST.
How Can I Apply for a GST Number?
Contact the Canada Revenue Agency to start the application procedure for a GST number for your company. There are three methods to apply, making the process very convenient:
• Online
• By mail
• By phone
You may submit an online application for a GST number by visiting Business Registration Online or BRO. Because registration is open to more than only GST numbers, applying online is simple and advantageous. This website allows you to register for corporate, payroll, and other taxes. Depending on the province where your firm is located, the website will direct you to the appropriate business registry, where you may complete the necessary registrations.
You have two options for completing your registration: either download the Request for a Business Number form from the Canada Revenue Agency website, fill it out, and send it in, or call the CRA directly at 1.800.959.5525 and speak with a person there. Call Revenu Québec at 1.800.567.4692 to complete the registration if your business is in Quebec.
Following that, you will get a notification from the CRA or Revenu Québec confirming the approval of your registration along with your business’s registered GST number. Keep the number in a secure location.
You have your GST number; what now?
Once you have your company number, you may collect tax and send payments to the CRA. Setting up a separate account to keep track of your GST funds is an excellent idea.
When should you file, and when should you remit this tax now that you are collecting it?
Depending on your yearly income, you can file monthly, quarterly, or annually. The following are the CRA requirements for filing GST tax returns:
If the yearly income of your business is $6 million or higher, you must file each month. You may still submit monthly if you’d like if your revenues are between $1.5 million and $6 million, but you must file quarterly. Companies with annual income under $1.5 million may opt to register monthly or quarterly, although at least yearly filing is required. On the CRA website, you may find additional precise details about your type of company.
Depending on your industry, there may be filing periods during which you haven’t received any GST. You must still submit even when your business hasn’t received any GST in that situation. You can submit online, by mail, or in person at any banking institution that accepts CRA payments, just as with GST registration.
With this knowledge, you may confidently move forward whether you must or want to register for a GST number.