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

If you’re flipping a house in Toronto, make sure not to miss out on all the deductions such as acquisition costs, legal costs, carrying cost of the property, material cost, home office expenses, and even advertising.

You have to register for GST if your business or enterprise has a GST turnover of $75,000 or more a year. Businesses that have a turnover of less than $75,000 a year are not required to register for the GST. However, even if you are below the threshold, you can collect GST.

Types of proof of one’s principal residence include utility bills with the occupant’s name and address, a driver’s license with the address, telephone listing, income tax, or a voter registration card.

If you do not file and pay your taxes when they were due, you will be charged interest and penalties by the Canada Revenue Agency. If you owe money and do not file your return on time, you will be charged a late-filing penalty. This penalty is currently 5% of the outstanding balance owing, plus 1% for each full month that your return is late, up to a maximum of 12 months. If you have filed late repeatedly, this penalty may crease to 10% of your balance owing, plus 2% for each full month, to a maximum of 20 months.

Currently, there’s no specific set of rules for online sales in Canada. The same rules apply to any transaction. If your business is in Canada or transfers taxable goods to Canada, you need to charge sales tax for online sales to customers located in Canada (GST or HST for all online sales).

If you are an individual with business income for income tax purposes and have a December 31 fiscal year-end, your return due date is June 15. However, your net tax remittance is due April 30.