HST Tax
In Ontario
HST Tax in British Columbia
What
is the GST/HST Number?
GST/HST is a tax that applies on most supplies of goods and services
made in Canada. The GST rate is 5% across Canada and the HST rate varies
from province to province.
As of July 01, 2010, much of Canada has now harmonized their provincial sales tax with GST to create the harmonized sales tax (HST). This rate is 13% in Newfoundland, New Brunswick and Ontario, 12% in British Columbia and 15% in Nova Scotia.
HST registrants who make taxable supplies (other than zero-rated supplies) in one of these participating provinces collect tax at the provincial HST rate. Registrants collect tax at the 5% GST rate on taxable supplies made in the rest of Canada (other than zero-rated supplies).
Who pays GST/HST?
Almost everyone has to pay GST/HST on purchases of taxable supplies of
goods and services (other than zero-rated supplies). However, Indians
and some groups and organizations, such as many provincial and territorial
governments, do not always pay GST/HST on their purchases.
Generally, GST/HST registrants have to collect GST/HST on all taxable (other than zero-rated) supplies of goods and services they provide to their customers. However, there are some exceptions for sales of taxable real property.
What
is the Federal Business Number (BN)?
The BN is issued by the Canada Revenue Agency (CRA) and is used to unify
all accounts a business may have with the federal government. The BN is
used to operate corporate income tax, import/export accounts, payroll deductions
and GST/HST.
When
should I apply for the Federal Business Number (BN)?
Registration should take place after the company has been registered. We
can assist you with both, the business registration and the GST/HST registration
at the same time.
General
Information about GST/HST
Most goods and services sold or provided in Canada are taxable at the rate
of 5% (GST) or 12% to 15% (HST). Certain items, such as sales of basic
groceries and prescription drugs are taxable at a rate of 0%. These are
referred to as zero-rated goods and services. A limited number of goods
and services are exempt from the GST/HST.
The GST/HST applies to most transactions from manufacturing to marketing
and sales. Businesses and organizations registered for the GST/HST are
referred to as registrants.
A Business must register to obtain a Business Number with a GST/HST account.
Registrants can claim a credit to recover the GST/HST that is paid or payable
on purchases used to provide taxable goods and services. This credit is
called an input tax credit and can be claimed for the GST/HST paid or payable
for goods or services acquired or imported for use, consumption or supply
in their commercial (taxable) activities.
GST/HST registrants who provide taxable goods or services have to charge
and collect the GST/HST on their sales. If the GST/HST collected is greater
than the GST/HST paid or payable, the difference is sent to the CRA. If
the GST/HST collected is less than the GST/HST paid or payable, a refund
can be claimed.
Do
I need to register for GST (Goods and Services Tax)?
While you are not required to register for GST/HST until your
annual gross revenues exceed a minimum threshold (currently $30,000) we
generally recommend that any business register as soon as possible.
Three
reasons to register:
1. Unless you are a GST/HST registrant you cannot claim GST/HST input tax
credits (GST/HST paid on business expenditures). If you are a GST/HST registrant
and your input tax credits exceed GST/HST collected on sales, you may claim
a refund of the excess from Canada Revenue Agency. If you're not a registrant
the GST/HST paid on expenses is included as part of the expense when computing
net income.
2. Not being registered for GST/HST tells everyone that you are running a truly small business. (Your sales are below $30,000 per year) If your customers are other businesses, they expect to pay GST/HST.
3. Companies that are required to register for GST/HST must remit the GST/HST tax to Canada Revenue Agency - even if it has not been collected from the customer. By registering for GST/HST upon starting your business you will eliminate the possibility of inadvertently surpassing the $30,000 threshold and being exposed to penalties and interest charges for noncompliance
You
have two options when registering for GST/HST number:
Option # 1
You can always visit your local Canada Revenue Agency
office and complete the registration form. Please make sure that
you fully understand the questions on the registration form and
answer them correctly. It is quite difficult to change certain
information once it is recorded. (You may have to wait for up
to one year). Also, be prepared for delays due to the workload.
Option # 2
We can easily assist you with registration. You can visit our office
or submit your information online. If you are wondering
why should you let us help you with registration, the answer is simple.
- You do not have to take any time from your busy schedule to do the registration.
- If you are located in a small town, there is no need to travel, just order online.
- We have the expertise to complete the registration in the way that best suits your needs.
- We work for you, not the government.
- For a small fee of $39.95 we will do all the necessary work for you.
- We can help you with the next step - GST/HST report preparation.
Download
Consent form in pdf format.
As always, it is up to you to decide to do the work the easy way or the hard way. In any case, we are always available to answer your questions. Feel free to contact us by e-mail or telephone, at the numbers listed below.
