What You Need to Know About Obtaining a Canadian HST Number
One day, if you're self-employed, a sole proprietor, or run a small business, you might find yourself wondering how to apply for a Harmonized Sales Tax (HST) number. A lot of folks get worked up about having to collect and remit HST, but it's actually for the better. More tax revenue indicates greater financial success.
Nonetheless, I can appreciate the trepidation that surrounds obtaining an HST/GST number because of the additional documentation that it necessitates come tax time. In addition, the circumstances under which an HST number registration is mandatory are not always obvious. Instructions on applying for a HST number are included below.
How do you get an HST number?
In order to begin collecting Harmonized Sales Tax (HST) as a contractor, sole proprietor, or business owner, you must first obtain a unique HST identification number. You can't start collecting HST from customers even if you're eligible to do so because you won't have your HST number until you formally apply for it.
Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island residents are all subject to HST. A GST (Goods and Services Tax) number is required if you live in Alberta, British Columbia, Manitoba, the Northwest Territories, Nunavut, Saskatchewan, Yukon, or Quebec. But if you're a local of Quebec, you'll also need to fill out an application for QST. Furthermore, obtaining a provincial sales tax (PST) number may be necessary in some provinces.
When Should You Apply for a GST or HST Number?
It's not always clear when you need to apply for an HST number, and the government website doesn't help matters. To put it simply, if your annual income from freelancing, self-employment, or a small business is more than $30,000, you must register for a GST/HST number within 29 days.
The $30,000 cap applies exclusively to your side gig earnings and NOT to your regular job salary. If you prefer, you can always apply for a GST/HST number on your own time.
Obtaining a GST/HST number obligates you to include the applicable tax on all future invoices. You'll need a GST or HST number before you can begin charging taxes on the item that pushes your annual revenue over $30,000. If I were a business owner (and I'm not), I'd get a GST/HST number and start charging taxes the moment I hit the $30,000 mark.
You should apply for a GST/HST number right away if you fall into this one particular category. For the purposes of GST/HST, any company that provides passenger transportation services (such as Uber, Lyft, or limousine services) is classified as a taxi company. Before offering tax preparation services, you must first register with the Canada Revenue Agency (CRA). You shouldn't have to worry too much about GST/HST, as it is already accounted for in the ticket prices.
Unlike Uber Eats deliveries, which are not subject to the mandatory GST/HST registration for ride-sharing services, However, once your annual revenue reaches $30,000, you'll need to apply for a GST/HST number and include it in your rideshare delivery account.
Instructions for Applying for a HST Number
So, you're interested in acquiring a HST number. Although registering for an HST number is a simple process, you will need a few items in order to complete the application.
- Your name, birth date, SSN, home postal code, company name, SSN, mailing address, and other identifying information will be required.
- The beginning of the registration period is typically the date that your annual income exceeds $30,000. Still, cabbies would advertise their service launch date. Date of request would be used for those who voluntarily sign up.
- For GST/HST purposes, most taxpayers will use the previous calendar year's January to December period as their fiscal year. If you're filing your taxes in 2021 and registering for HST at the same time, for instance, it's likely that both years will refer to the same tax year.
- Your yearly income — The Canada Revenue Agency (CRA) requests that you estimate your yearly income. If this isn't 100% accurate, it won't affect your taxes in any way.
During registration, your data will not be saved, so please make sure you only need to do it once. The 30 minutes of inactivity will also result in your being kicked out. The whole application process should take no more than a few minutes of your time.
Obtaining an HST number can be done in one of the following ways:
A GST or HST number can't be applied for without a valid business number. If you don't already have one, don't worry about it; one will be made for you when you apply for a GST/HST number. Get your GST/HST account number and confirmation email immediately so you can begin collecting taxes on your sales right away.
You must contact Revenu Québec if you live in Quebec. You can visit their website or call them at 1 to request a tax identification number. 800 567 4692
Following the issuance of your GST/HST number, what you need to do
Obtaining an HST number will allow you to charge tax to your Canadian clients. What you charge will vary depending on the province in which the Canadian companies are based. These are the current tax rates in Canada:
- Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon: 5% (GST)
- Highest Provincial Sales Tax Rate in Canada: 13% (Ontario)
- Prices in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island are subject to a provincial sales tax of 15% (HST).
To illustrate, say you're a freelancer in Toronto serving a client in Calgary. For your services, you'd charge them 5%. On your invoice, remember to include your GST/HST number, as many customers will ask for it. Don't feel bad about imposing taxes on your customers. It won't make a difference to them financially because the taxes they pay will cancel out the ones they receive.
Regardless of the nature of your business or the nature of your commercial activities, any dealings with clients located outside of Canada (non-residents) are considered tax-free. Which means you don't impose any sort of tax on them. A tax return is still required. You simply don't tack on any sales tax. There will be a split between domestic and foreign earnings when tax time rolls around. Because you'd be disclosing your worldwide earnings, the CRA would know that you owe no taxes. If you make more than $30,000 but will never charge HST because all of your income comes from outside of Canada, you still need to register for an HST number.
A Question of Use for the Collected GST/HST
Remember to set aside any GST/HST money you receive as soon as possible, as it will be repaid to the government at a later date. If you're looking for a high-interest savings account in Canada, I suggest checking out EQ Bank. It's better to earn some interest than none at all.
You should also maintain accurate records of the GST/HST that you have collected and remitted. You can approach this however you like. Some people will use software, while others will use a spreadsheet to do the work manually. It is important to keep track of any international clients who are zero-rated for tax purposes, as this information will be used in the preparation of your tax return. In case you get audited by the CRA, keep these documents for a minimum of six years.
Tax returns (both GST and HST) are filed at the same time each year. If you have more GST/HST receipts than GST/HST payments, you owe the CRA GST/HST. These are referred to as "input tax credits." Assuming your debt is less than $3,000, you should simply make the payment by the due date. However, the CRA will require quarterly payments if your debt is greater than $3,000. Both remittance vouchers and electronic payments through your CRA My Business account can be used to remit GST/HST.
Getting an HST number is simple and only takes a few minutes of your time. After you've officially signed up, it's time to get your accounting in order so that tax time is a breeze. Establish a routine that serves you well and stick to it. Check out my comprehensive guide on freelancer taxes in Canada for more information.
Are you interested in purchasing firearms in Ontario? In Canada, firearms can be classified into three categories:Non-restricted (e.g.: most modern hunting firearms, including rifles and shotguns)Restricted (e.g.: primarily handguns)ProhibitedTo legally obtain non-restricted firearms and ammunition in
The following regulations will take effect on January 1st, 2021 for existing members of the Esso Extra program who joined before October 6th, 2020. For new members who joined on or after October 6th, 2020, these rules will be effective immediately.The regulations outlined below pertain to the Esso
To make a call from a phone in Italy, simply dial 001 followed by your desired number. Many Americans feel apprehensive about dialing European phone numbers, but there's no need to worry. With the help of these guidelines and a comprehensive list of calling codes for Europe, the process becomes quite
If you have ordered an item from another country, you may have to pay shipping duties on your package. These duties are specific taxes and fees that are applied to your package by the Canada Border Services Agency (CBSA) and are usually paid through the shipping company. However, you might be wondering