This post is for informational purposes only and does not represent legal, accounting, or tax advice. The information in this document is subject to change and may differ occasionally, depending on your location. Please get in touch with a specialist for particular advice relevant to your business.
Tax regulations can be overwhelming whether you’ve been in business for years or are just starting. Understanding the ins and outs of numerous tax regulations – what you need to do and when can be intimidating, but it doesn’t have to be.
Canada HST/GST Number Assume you’ve been in business for a while. You’ve gained new customers, and your revenues are increasing. A fellow business owner informs you that you should consider GST registration. But what exactly is it?
What exactly is a GST Number? The Canada Revenue Agency (CRA) provides your firm with a Goods and Services Tax (GST) number, often a business number, to manage GST or HST collection, reporting, and remittances. However, a GST number is also required for any other transactions with the Canada Revenue Agency.
For example, you will use a GST number to record your corporate income tax if your organization is established as a corporation. Furthermore, if your company has workers, you must use the GST number when reporting and remitting payroll deductions. Once you have obtained your GST number, you must include it on all future invoices.
But do you need a GST number for your business? And how did you find out?
Is a GST Number Necessary? Most companies in Canada are required to get a GST number. In reality, applying for a GST number is required for all Canadian firms unless the Canada Revenue Agency classifies the company as a small supplier.
The CRA defines a small supplier as a sole proprietorship, partnership, or corporation with taxable revenues of less than $30,000 (before costs) each quarter. It is vital to remember that this computation does not consider provincial sales taxes and profits from capital property sales.
Even if you meet all of the other requirements of this Small Supplier regulation, you should be aware that you may still be required to register, depending on the business you run. You must obtain a GST number if you run a taxi or limousine service. Furthermore, if you are a speaker, singer, or other performer who does not live in Canada but sells tickets to concerts or seminars held in Canada, you must register for a GST number.
As of July 2021, any business operating a marketplace or other platform that offers digital items to Canadian people, such as online music streaming, must register for GST, regardless of where the firm is physically based. These digital marketplaces must collect and remit GST and HST, depending on which province the digital items or services are sold in.
If You’re a Small Supplier, Should You Register Anyway?
According to the CRA, if you qualify as a small supplier, you are not required to register for a GST number – but it can still be helpful. For example, if you’re registered, you may recover all of the GST or HST you paid after acquiring anything for your firm at the end of the year via Input Tax Credits. If you’re starting, getting a GST registration is a good idea since you can collect all of the GST/HST you paid on supplies 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 conducts these computations and payments if your company is located in or does business in Québec. If you do business in Québec or elsewhere in Canada, you will be responsible for Revenu Québec and CRA payments. Working with a financial counsellor or accountant to assist you in navigating these waters is a good idea.
When Do You Need to Finish Your GST Registration?
You may believe that you must apply for a GST number straight away. While it undoubtedly helps, the truth is that it all relies on the sort of business you run and your projected yearly income. Suppose you believe your revenue before costs will be more than $30,000 every quarter. In that case, you should register, but as previously indicated, enterprises taking less than this amount do not need to register.
However, what if you can have a great quarter or two? Do you need to sign up? No, not always. According to the Canada Income Agency, companies required to register for a GST number must have earned more than $30,000 in income in each of four consecutive quarters. It is worth noting, however, that you must sum up your previous four quarters. If the sum exceeds $120,000, you must register for a GST number. However, even if your quarterly and yearly totals are smaller than the threshold and you wish to claim the input mentioned above credits, you should register as soon as possible.
If you earn over $30,000 in a calendar quarter, you are no longer a small supplier and must register for GST/HST collection. It would be best to claim GST/HST on the supplies or inventory that resulted in earnings over the $30,000 limit. Please visit the CRA website for further information.
What Does Losing Your Small Supplier Status Mean?
If your company’s revenues exceed $30,000 in any calendar quarter, the Canada Revenue Agency no longer considers you a small supplier. This means you must apply for a GST number and begin collecting and remitting GST on your goods and services to the CRA. You have 30 days to use your GST number when you reach this level. The CRA website has further information on how and when you must register and begin collecting GST/HST.
How Do You Apply for a GST Number?
Contact the Canada Revenue Agency to begin applying for your business’s GST number. There are three methods to use, making the procedure quite convenient:
• Online
• By mail
• By phone
By going to Business Registration Online or BRO, you may apply for your GST number online. Using registration online is simple and beneficial because registration is not restricted to GST numbers. You may register for corporate, payroll, and other taxes at this site, and the site will immediately take you to the relevant business registration, where you can register for that province’s needs, depending on your firm’s location.
You may either go to the Canada Revenue Agency’s website and download a request for a Business Number, fill out the form, and send it in, or call the CRA directly at 1.800.959.5525 and finish your registration over the phone with a professional. If your firm is in Québec, contact Revenu Québec at 1.800.567.4692 to complete the registration.
Following that, the CRA or Revenu Québec will notify you of your registration acceptance and provide you with your company’s registered GST number. Please make a note of the phone number and put it somewhere secure.
What Should You Do Now That You Have Your GST Number?
Once you have your company number, you may start collecting tax and remitting it to the CRA. Keeping your GST funds in a separate account is a good idea.
When should you file, and when should you remit this tax now that you’re collecting it?
You can file monthly, quarterly, or yearly, depending on your annual revenue. The following are the CRA guidelines for GST tax filings:
You must file monthly if your company’s yearly sales are $6 million or higher. If your income is between $1.5 million and $6 million, you can submit monthly if you choose, but you must file quarterly. Companies with annual revenues of less than $1.5 million may file monthly or quarterly but must file at least yearly. The CRA website has additional precise information related to your sort of company.
Depending on your industry, you may have had no GST collected during specific reporting periods. In that situation, you must submit, noting that your firm did not contain any GST. Filing, like GST registration, can occur online or by mail, but you can also indulge in person at any banking institution accepting CRA payments.
With this knowledge, you may proceed confidently, whether you are required to — or prefer to – register for a GST number.