GST Number in Canada

Sep 13, 2023

A unique tax identification number called the Goods and Services Tax (GST) number is given to businesses by the Canada Revenue Agency (CRA). This number, also known as the business number (BN), serves multiple purposes. It is used to collect, report, and remit GST and harmonized sales tax (HST). Additionally, it helps identify any other interactions your company has with the CRA. For instance, if your business is structured as a corporation, you will utilize your GST number for corporate income tax purposes, and if you have employees, you will require it for your payroll deductions account.

Furthermore, your GST number is essential for conducting business activities. Once you receive your number, it is mandatory to display it on your invoices.

 

Mandatory vs. Exempt Business Requirements

In Canada, most businesses are obligated to possess a GST number. It is mandatory for all businesses in Canada, except for those categorized as small suppliers.

According to the CRA, a small supplier for GST is defined as an individual proprietor, partnership, or corporation whose total taxable revenues, prior to expenses, do not exceed $30,000 annually. It’s important to note that the threshold amount does not include provincial sales tax (PST) or proceeds from the sale of capital property.

The rule of GST registration for small suppliers does not apply universally to all types of businesses. For instance, taxi and limousine operators, as well as non-resident performers who sell admissions to seminars, performances, or other events, must always enroll for GST registration.

Even if you meet the criteria as a GST small supplier, it can still be beneficial to register for GST. By doing so, you can reclaim the GST/HST paid on business purchases, ranging from capital property to office supplies, through GST/HST input tax credits.

It is advisable to promptly register for GST when starting a business to ensure you can claim the GST/HST on the items you purchase for your startup. Due to the reporting and filing procedures of GST/HST, you cannot retrospectively claim the GST/HST on these business expenses.

 

The GST/HST Registration Process in Canada

To register for GST/HST, you need to obtain a GST/HST number from the CRA. There are a couple of methods you can use:

1. Apply online through Business Registration Online (BRO). Registering online through BRO offers several advantages. It allows you to apply for other CRA program accounts, such as corporation income tax, payroll, and import-export taxes. Additionally, if your business is based in B.C., Nova Scotia, or Ontario, you can seamlessly transfer to the respective online provincial business registry once you’ve completed your GST/HST registration and any other required registrations.

2. Contact the CRA by phone to register.

After successfully registering for GST/HST, you will be all set to collect and remit the applicable GST or HST.

If your business operates in Quebec, it is necessary to get in touch with Revenu Quebec, as they handle GST/HST matters in that province.

 

How to Charge and Collect GST/HST

Once you have finished the registration process for GST/HST and obtained your GST number, you are required to levy GST/HST on the taxable goods and services you provide to your customers.

The choice between charging only GST or both GST and HST relies on the province where your business is situated, the nature of the goods or services you offer, and, if applicable, the destination of the goods during shipping. It is also essential to understand how to charge PST, depending on whether you operate an online business or a physical store.

The GST/HST you collect needs to be remitted to the Canada Revenue Agency (CRA) by submitting a GST/HST return associated with your GST number on a quarterly or annual basis. The CRA refers to your GST number as a business number or BN.

While completing your GST/HST return, you have the opportunity to claim input tax credits for the GST/HST you have paid or owe on purchases and expenses used, consumed, or supplied in your business activities. This essentially allows you to recover the GST/HST you have previously paid.

 

When you’re launching a business in Canada, it’s vital to grasp the procedure concerning GST/HST and its implications for your business. The CRA offers various guides and brochures that furnish extra details on GST/HST, which also include specific guides tailored for different business categories.

 

 

Need more information? CBES is here to assist you; feel free to contact us for expert guidance.

 

 

 

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