Goods and Sales Tax and Harmonized Sales Tax (GST/HST) Registration Requirements – A Toronto Tax Lawyer Analysis

What Is GST/HST?

GST/HST is a consumption tax. HST is collected in provinces where the Federal sales tax and provincial sales tax (PST) have been combined into a single value added sales tax. The provinces which currently collect HST are New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, while the other Canadian provinces collect GST and PST separately, except Alberta which collects only GST and does not charge or collect PST. GST/HST is levied under the Excise Tax Act and generally applies to all taxable supplies, which is the provision (sale) of property or services in any manner whatever that is made in the course of a commercial transaction, subject to some exceptions such as zero-rated and exempt supplies.

Essentially, whenever a good or service is provided commercially, GST/HST will generally apply. While it is the person who purchased the taxable supply that owes the GST/HST to the Canada Revenue Agency, the supplier is the one required to collect and remit the tax. Every person who makes a taxable supply in the course of a commercial activity in Canada is required to be registered unless exempted as set out below. Where a person is a GST/HST registrant, that person will need to collect GST/HST and remit it, effectively increasing the prices/cost of their supplies to the ultimate consumer.

There are 3 exceptions that allow a person not to be registered: 1) where the supplier is a small supplier; 2) where the only commercial activity is the making of supplies of real property by way of sale otherwise than in the course of a business; 3) where the person is a non-resident person who does not carry on business in Canada. Consult with one of our experienced Toronto tax lawyers and determine if you are meeting your obligations regarding GST/HST registration.

Exemptions for GST/HST Registration

hst registration ontario

The first GST/HST registration exemption is for small suppliers. A small supplier has the advantage of being exempt from registering for a GST/HST number and can carry out their commercial activity without collecting and remitting GST/HST. In order to qualify as a small supplier, a person must have revenues below $30,000 in the previous four calendar quarters. Where a person is a public service body, the person must have revenues below $50,000 in the previous four calendar quarters to qualify as a small supplier. Additionally, regardless of how much revenues were earned in the previous four calendar quarters, if in the current calendar quarter, the person earns revenues of $30,000 or greater, or $50,000 or greater in the case of a public service body, then that person will no longer qualify as a small supplier and will be required to become a GST/HST registrant.

The second GST/HST registration exemption applies where a person sells or transfers real property not in the course of a business. Basically, if a person who is not in the real estate business sells real estate, they are exempt from registering for GST/HST purposes.

The third GST/HST registration exemption applies to persons who might carry out a taxable service or transfer goods in Canada, but is a not a resident of Canada and does not carry on their business in Canada and therefore does not need to register for GST/HST purposes..However the 2017 Federal Budget has introduced new rules requiring that ride sharing or ride hailing services like Uber and Lyft will need to collect and remit GST/HST on fares even if they don’t meet the regular $30,000 threshold and would otherwise qualify as a small supplier. This will bring these services more in line with taxi services which are already required to collect and remit GST/HST. Call our top Toronto tax lawyer firm if you have any questions about GST/HST Registration or about the 2017 Federal Budget.

FAQ’s

The amount of tax uber drivers pay in Canada is around $5,652 annually. This amount is mainly based on the federal 1040 income tax levels. The CRA expects every uber driver in Canada to file their returns. An Uber driver, however, the income tax is not deducted from your total earnings accumulated through the entire year. This means that it is every uber driver’s responsibility to pay taxes on time and in full amount. You can have access to all of your tax information through the driver’s dashboard.

If you don’t file your tax returns, you risk getting arrested by CRA authorities. If you are not in a position to pay the taxes due on the total income immediately, you should still file the tax returns as soon as possible, and declare your total income. Failure to do might attract heavier penalties from the Canada Revenue Authority. Make sure you file your returns on time and with accuracy levels required.

It is very risk to run an Uber without the HST number. The Canadian Revenue Authority has warned any uber drivers that operating without a legit HST number can attract serious penalties. As much as you can survive without the HST number, it will be just a matter of time before the authorities catch up with you. The process of getting HST number is easy. Go to your driver’s tax information and request for one, you will be able to access it in two to three days.

Input Tax Credits (ITCs) are the total of the GST/HST you paid on genuine expenses of working together or the reasonable section of the GST/HST paid. Now and again referred to as ITCs in Canada Revenue Agency (CRA) documents, Input Tax Credits are the vehicle for recovering the GST/HST paid out on purchases and costs related to your business operations.

To validate an input tax credit, you need; an invoice, a receipt, a credit card receipt, a debit note, a book of accounts, a written contract of agreement, and records in digital or any form where data can easily be retrieved. While preparing the documents, it is convenient to ensure that they meet all necessities to avoid a renouncing of the ITC.

Director’s liability refers to the responsibility that a director has by virtue of holding his position. They are aside from the basic duties of a director. Such liabilities include financial losses or environmental damage due to business operations. If a directive requires that the director keeps records or give reports, he/she is responsible e for the offense of failing to keep the records