The Canadian Goods and Services Tax (GST) Registration Process
Nothing in this article should be construed as legal, accounting, or tax advice. Warning: the data presented here is dynamic and may differ from what you see in your area at different times. Please consult an expert for guidance unique to your company.
No matter how long you've been in business or how much you know about taxes, they can still seem daunting. We understand that learning the specifics of the various tax laws can seem intimidating, but it doesn't have to be.
Let's pretend you've been running your company for a while. You've attracted new customers, and business is booming. You were recently advised to investigate Goods and Services Tax (GST) registration by a colleague in the business world. I mean, what is that
A GST Number Is What?
To keep tabs on GST or HST collection, reporting, and remittances, the Canada Revenue Agency (CRA) issues a Goods and Services Tax (GST) number, also known as a business number. However, a Goods and Services Tax (GST) number is also required for any other transactions involving the Canada Revenue Agency.
For tax purposes, a GST number is required for certain business structures, such as corporations. If your company has employees, you must also use the GST number when filing payroll taxes. Once you have your GST number, it must appear on all future invoices.
Is it necessary for your company to have a GST number? How do you even know that?
Is It Necessary to Get a GST Number?
The Goods and Services Tax (GST) number is mandatory for most Canadian businesses. To be more specific, unless the Canada Revenue Agency classifies the company as a "small supplier," it is required by law for all businesses operating in Canada to apply for a GST number.
The Canada Revenue Agency classifies any business with quarterly taxable revenues of less than $30,000 (before expenses) as a "small supplier." The calculation does not factor in provincial sales taxes or proceeds from the sale of capital assets.
You should know that the type of business you run will determine whether or not you are required to register, even if you meet all the other criteria for this Small Supplier rule. Taxi and limousine services are among the businesses that are required to obtain a GST number. Further, if you are a non-Canadian resident speaker, singer, or other performer who sells tickets to events in Canada but does not live there, you must apply for a GST number.
No matter where in the world they are located, in July 2021 all marketplaces and other platforms offering digital products to Canadian citizens (including online music streaming) will be required to register for GST. Online marketplaces selling digital goods and services are required to charge and collect goods and services tax (GST) and harmonized sales tax (HST) in accordance with provincial legislation.
Why You Might Want to Register Even if You're a Small Supplier
Getting a GST number is optional if you meet the CRA's criteria for a small supplier, but it may help your business in the long run. For instance, if you are a business owner and you pay GST or HST on any purchases throughout the year, you can get that money back at the end of the year by claiming Input Tax Credits. If you are just getting your business off the ground, it is in your best interest to register for GST so that you can recoup any GST/HST you may have to pay on any supplies or purchases you make in the early stages of operation.
What's the Deal with All These Taxes? GST, PST, and HST
The acronyms GST, PST, and HST stand for:
VAT (Value-Added Tax)
Almost all transactions in Canada are subject to the Goods and Services Tax (GST), a federal sales tax.
Sales Tax in the Province
All sales and purchases within a province are subject to the provincial sales tax, or PST.
Sales Tax Harmonization
In most provinces, the provincial sales tax and the federal Goods and Services Tax (GST) are "harmonized" into a single tax known as the Harmonized Sales Tax (HST).
Revenu Québec is responsible for these tasks if your company is located in or does business in Québec. Payments to Revenu Québec and the Canada Revenue Agency (CRA) will be required if your business operates in both Québec and the rest of Canada. It's wise to have a trusted financial guide like an accountant or financial planner by your side as you make your way through these waters.
The Time to Register for GST
One common misconception is that a GST number must be applied for immediately. And while that helps, the reality is that it depends on the nature of your business and its anticipated yearly revenue. As was previously stated, registration is required if quarterly revenues are expected to be in excess of $30,000, but is optional for businesses with quarterly revenues expected to fall below $30,000.
But suppose you have a fantastic fiscal year or two. Is there a need to sign up Certainly not The Canadian government requires businesses to register for a GST number if their quarterly revenue is over $30,000 for at least four consecutive quarters. It's important to note, however, that you need to add up your results from the past four quarters. A GST number is required if the sum is $120,000 or more. However, if you want to claim those input credits mentioned above, you should register as soon as possible, even if your quarterly and annual totals are below the threshold.
If your quarterly revenue is more than $30,000, you no longer qualify as a "small supplier" and will be required to register for GST/HST collection. If your annual sales are more than $30,000, you must submit a GST/HST claim for the materials or stock that contributed to the increase in revenue. See the CRA's site for more info.
What Does It Mean That Your Small Supplier Status Was Revoked?
The Canada Revenue Agency will no longer classify your company as a small supplier if quarterly sales exceed $30,000. To begin collecting GST from your customers and remitting it to the CRA, you will need to apply for a GST number. A GST application must be submitted within 30 days of the date the threshold is crossed. The Canadian Revenue Agency (CRA) website has more details on how and when you must register to collect GST/HST.
Obtaining a GST Number: How Do I Do It?
Contact the Canada Revenue Agency to apply for a GST number for your company. There are three easy options for applying:
• Via the World Wide Web • Via the Postal Service
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