If you are operating a business in Canada, you need to know about the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST) and you MUST charge GST/HST unless your business qualifies as an exception. We summarized general basic rules of GST/HST that each business owners should know. However, type of business and location that you are operating may have different rules and exemptions.
1. GOOD and SERVICES TAX (GST)/ HARMONIZED SALES TAX (HST): GST is a tax that applies to most supplies of good and services which made in Canada. And HST is a combination of federal GST and Provincial Sales Tax (PST) into a single value added sales tax. However, only five Canadian provinces charge HST (Ontario, New Brunswick, Nova Scotia, Newfoundland & Labrador and Prince Edward Island) and each provinces HST rate can vary, all provinces and their GST, PST and HST rates provided below.
2. REGISTRATION: You have to register for the GST/HST account if you provide taxable supplies in Canada and you are NOT a small supplier. If your taxable revenues more than $30,000 in a single calendar quarter or over four consecutive calendar quarters, you are NO longer a small supplier.
However, if you are a small supplier, you CAN still register GST/HST account voluntarily. Once you are registered, you HAVE to charge and remit the GST/HST and you have to stay registered for at least one year before you can request to cancel your registration.
3. PROVINCES THAT CHARGE GST ONLY:
Alberta- GST 5%
Northwest Territories- GST 5%
Nunavut- GST 5%
Yukon- GST 5%
4. PROVINCES THAT CHARGE HST:
Ontario- HST 13%
New Brunswick- HST 15%
Nova Scotia- HST 15%
Newfoundland & Labrador- HST 15%
Prince Edward Island- HST 15%
5. PROVINCES THAT CHARGE GST and PST SEPARATELY:
British Columbia- GST 5% and PST 7%
Saskatchewan- GST 5% and PST 5%
Manitoba- GST 5% and RST (Retail Sales Tax) 8%
Quebec-GST 5% QST (Quebec Sales Tax) 9.975 %
6. REVENUE QUEBEC: Revenue Quebec is the department of the government of the province of Quebec. If your business registered in Quebec, you have to file your return with Revenue Quebec by using its forms.
7. NO NEED TO CHARGE GST/HST: If your business meets one of the following exceptions, you do NOT have to charge, collect and remit GST/HST:
GST zero-rated or exempt: If you are selling goods or services that are zero-rated (such as exports, medical devices, basic groceries) or goods or services that are exempt ( such as music lessons or child care), you do NOT have to charge GST/HST.
Small supplier: If you taxable revenues before expenses from all your business are $30,000 or less in the last consecutive calendar quarters and in any single calendar quarter, your business will considered as a small supplier.
8. CALCULATING YOUR NET TAX: Each reporting period either monthly, quarterly or annually, you have to calculate your net tax for GST/HST return for your business. The Net Tax is difference between two amounts: the GST/HST that you collected on your taxable supplies minus the GST/HST paid and payable on your business purchases and expenses. If the GST/HST paid or payable is more than the GST/HST you charged or collected, you can claim a refund of the difference.
9. GST/HST RETURNS and DUE DATES: GST/HST returns due dates depends on your reporting period that you registered.
Monthly Filers: If you have a monthly reporting period, you have to file your GST/HST return and remit any amount you owe by ONE month after end of your reporting period.
Quarterly Filers: If you have a quarterly reporting period, you have to file your GST/HST return and remit any amount you owe by ONE month after end of your reporting period. For instance, for the first quarter (January, February and March), you need to file GST/HST by April 30 and make payment by that day, otherwise penalty or interest may apply.
Annual Filers: If you have an annual reporting period, you have to file your GST/HST return and any remit any amount you owe no later THREE months after the end of your fiscal year. For instance, if your business fiscal year end is December 31, you have to file and remit any amount you owe by April 30.
10. ONLINE SERVICES: You can file your GST/HST return by mail using GST/HST form and send to CRA or electronically by using CRA online services. And also, authorized representative can file GST/HST returns by using NETFILE behalf of your business.
For the payments, you can use either your financial institution’s online or telephone banking services or the CRA’s my payments services.
Contact us: If you have any questions or inquiries regarding GST/HST, you can contact us at 647-861-2099 or send email to email@example.com.