This article is for informational purposes only and does not constitute legal, accounting, or tax advice. Depending on your location, this information is subject to change and may alter occasionally. Please get in touch with a professional for business-specific recommendations.
Whether you’ve been in business for years or are just starting, tax laws can appear daunting. We recognize that understanding the intricacies of the various tax laws, what you must do, and when you must do it may seem burdensome, but it need not be.
Canada HST/GST Number
Suppose you have been in business for several years. You have acquired new customers, and your profits continue to rise. A colleague business proprietor suggests you may need to investigate GST registration. But what is it?
What’s a GST Number?
The Canada Revenue Agency (CRA) assigns your business a Goods and Services Tax (GST) number, also known as a business number, to monitor the collection, reporting, and remittance of GST or Harmonized Sales Tax (HST). However, a GST number is also required for other business dealings with the Canada Revenue Agency.
For instance, you report your corporate income tax using a GST number if your business is structured as a corporation. Moreover, if your company has employees, you use the GST number when reporting and remitting payroll deductions. After obtaining your GST number, you must also include this number on all future invoices.
However, does your enterprise need a GST number? How do you know this?
Do You Need a GST Number?
The majority of Canadian enterprises must register for a GST number. All Canadian businesses must register for a GST number unless the Canada Revenue Agency classifies them as minor suppliers.
According to the CRA, a small supplier can be a sole proprietorship, a partnership, or a corporation if the company’s quarterly taxable revenues are less than $30,000 (before expenditures). Not included in this calculation are provincial sales taxes and capital gains.
Nevertheless, you should be aware that, depending on the nature of your business, you may be required to register even if you meet all other requirements of this Small Supplier rule. Taxi and limousine services are required to register for a GST number. Additionally, you must register for a GST number if you are a speaker, vocalist, or other performer who does not reside in Canada but sells tickets for performances or seminars taking place in Canada.
As of July 2021, regardless of their physical location, all businesses operating a marketplace or other platform that offers digital products to Canadian citizens, such as online music streaming, must register for GST. These digital marketplaces must collect and remit the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST), whichever applies to the province where the digital products or services are sold.
Despite Being a Small Supplier, Should You Register?
According to the CRA, if you qualify as a minor supplier, you are not required to register for a GST number, but doing so can be advantageous. For instance, if you are registered, you can claim all the GST or HST you paid on purchases for your business through Input Tax Credits at the end of the year. If you’re starting a business, it’s wise to register for GST to claim the GST/HST you pay on supplies or purchases for your business’s launch.
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 takes care of these figures and payments if your business is in Québec or does business there. If you do business in Québec and other parts of Canada, you must pay Revenu Québec and the CRA. A financial expert or accountant can help you manage these situations.
When should you finish registering for GST?
You might need to get a GST number as soon as possible. And while that doesn’t hurt, the truth is that it rests on what kind of business you run and how much money you expect to make each year. You should register if you think your income before costs will be more than $30,000 per quarter. However, as stated above, businesses with less than this income do not have to register.
But what if you have one or two perfect quarters? Do you have to sign up? No, not always. The Canada Revenue Agency says businesses that have to get a GST number must have made more than $30,000 each of the last four quarters. But it’s important to note that you must add up your previous four quarters. You need to get a GST number if the amount is more than $120,000. But remember: Even if your quarterly and yearly totals are less than the cutoff, you should still sign up as soon as possible if you want to claim those input points we discussed above.
If you make over $30,000 in one calendar quarter, you are no longer a small seller and must sign up for GST/HST collection. You must claim GST/HST on the goods or assets that earned you more than $30,000. Please look at the CRA page for more information.
You’re no longer a small supplier. What does that mean?
If your company makes more than $30,000 in sales in any calendar quarter, the Canada Revenue Agency will no longer consider it a small seller. This means you must sign up for a GST number, start charging these taxes on your products or services, and send the money to the CRA. You must apply for your GST number 30 days after crossing this barrier. On the CRA website, you can learn more about how and when to sign up and start collecting GST/HST.
How do you sign up to get a GST number?
Contact the Canada Revenue Agency to start applying for a GST number for your business. There are three different ways to use, which makes the process very easy:
• By mail
• By phone
You can get your GST number online at BRO, Business Registration Online. Not only is it easy to apply for registration online, but it’s also a good idea because registration isn’t just for GST numbers. You can register for corporate, payroll, and other taxes on this site. Depending on your business’s location, the site automatically sends you to the correct business directory to register for that province’s needs.
You can go to the Canada Revenue Agency website, download a request for a Business Number, fill it out, and send it in by mail, or you can call the CRA at 1.800.959.5525 and talk to an agent about registering over the phone. If your business is in Québec, you can call 1.800.567.4692 to register with Revenu Québec.
After that, the CRA or Revenu Québec will send you a letter of your registration acceptance along with your company’s registered GST number. Make sure to write the number down somewhere safe.
You got your GST number. What’s next?
You should start collecting tax and sending it to the CRA as soon as you get your business number. Keeping your GST money in a different account is a good idea.
When should you file and pay this tax now that you’re getting it?
You can file monthly, regularly, or yearly, depending on how much you make each year. Here are the GST tax filing rules from the CRA:
If your business makes more than $6 million a year, you must file monthly. If your income is between $1.5 million and $6 million, you can still file monthly, but you must file every three months. Companies that make less than $1.5 million a year can file as often as they want but must file at least once a year. You can find more information on the CRA page specific to your type of business.
Depending on your business, there may be times when you don’t have any GST to report. You still have to file, saying that your business hasn’t received any GST. You can file online, by mail, or in person at any banking institution that accepts CRA funds, just like registering for GST.
With this information, you can move forward confidently, whether or not you have to get a GST number.