If you’re starting a business or already running one in Canada, you may be wondering: Do I need a GST or HST number? The answer depends on several factors, including the size and type of your business, and whether you’re selling taxable goods or services. Understanding when and why you need to register for a GST/HST number can help you stay compliant with Canadian tax laws and take advantage of potential tax benefits.
This guide will explain everything you need to know about GST and HST registration, including who needs it, how to apply, and what it means for your business.
Table of Contents
- What is a GST/HST Number?
- Who Needs a GST or HST Number?
- When is it Mandatory to Register for GST/HST?
- What Are the Benefits of Having a GST/HST Number?
- How to Apply for a GST/HST Number
- GST vs. HST: What’s the Difference?
- Filing GST/HST Returns
- Conclusion
1. What is a GST/HST Number?
In Canada, the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) are consumption taxes that apply to most goods and services. A GST/HST number is a unique identifier that businesses use when collecting and remitting these taxes to the Canada Revenue Agency (CRA).
- GST: A 5% tax applied to goods and services in most provinces.
- HST: A combined federal and provincial sales tax applied in provinces that have harmonized their sales taxes (e.g., Ontario, Nova Scotia).
Having a GST/HST number means you’re registered with the CRA and can charge and collect these taxes from your customers. It also allows you to claim back any GST/HST you pay on business expenses.
2. Who Needs a GST or HST Number?
Not all businesses need to register for a GST/HST number. Here’s a breakdown of who typically needs to register:
- Businesses with Revenue Over $30,000: If your business earns $30,000 or more in revenue in a calendar year (or over the last 4 consecutive quarters), you’re required to register for a GST/HST number. This threshold applies to most businesses, including sole proprietors, corporations, and partnerships.
- Small Businesses with Revenue Below $30,000: If your revenue is below $30,000, registration is optional. However, even if you’re under this threshold, you may want to register voluntarily. This allows you to claim input tax credits (ITCs) to recover the GST/HST you pay on business-related purchases.
- Non-Resident Businesses: If you’re a non-resident of Canada but selling goods or services in Canada, you may still need to register for a GST/HST number.
- Certain Types of Businesses: Certain industries or businesses that sell goods or services subject to specific regulations (e.g., digital products, imports, or services for the public sector) may also need to register regardless of their revenue.
3. When is it Mandatory to Register for GST/HST?
You must register for a GST/HST number in the following situations:
- Annual Revenue Exceeds $30,000: As mentioned, businesses with annual taxable revenue above $30,000 in a year (or four consecutive quarters) must register.
- Public Service Bodies: Non-profit organizations, charities, and public institutions must register if their taxable revenues exceed the $30,000 threshold.
- Cross-Border Sellers: If you sell goods or services to customers in Canada but your business is located outside of Canada, you must also register for GST/HST.
If you’re unsure about your registration requirements, it’s best to consult with a tax professional or the CRA.
4. What Are the Benefits of Having a GST/HST Number?
While there are certain responsibilities associated with a GST/HST number, there are also significant benefits:
a. Claim Input Tax Credits (ITCs)
When you’re registered for GST/HST, you can claim back the GST/HST you’ve paid on business-related purchases, such as office supplies, inventory, and even services like marketing or professional fees. This can reduce your overall tax burden and help manage cash flow.
b. Build Credibility
Being registered with the CRA adds credibility to your business. It shows customers and suppliers that you’re legitimate and follow the rules, which can help attract more clients and establish trust.
c. GST/HST Collection
Once you have a GST/HST number, you can start collecting the tax on behalf of the government. You can charge the appropriate tax on your products or services and use that money to cover your tax obligations when filing your returns.
5. How to Apply for a GST/HST Number
Registering for a GST/HST number is straightforward, and you can do it online, by phone, or by mail. Here’s how:
- Online Registration: You can register for your GST/HST number directly on the CRA website using their online registration form. You will need to create a CRA My Business Account if you don’t have one.
- Phone Registration: If you prefer to register by phone, you can call the CRA’s business inquiries line and speak with a representative.
- Mail or Fax: You can complete the GST/HST registration form (Form RC1) and mail or fax it to the CRA.
Typically, your GST/HST number will be issued within 10 business days of your application.
6. GST vs. HST: What’s the Difference?
The main difference between GST and HST lies in the provinces where each tax is applied.
| Tax | Provinces/Regions | Rate |
|---|---|---|
| GST | Applies across Canada (except in harmonized provinces) | 5% |
| HST | Ontario, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island | 13% – 15% |
If your business operates in a province that applies HST, you will collect this tax, which includes both the federal GST and the provincial portion of the tax. If you’re in a non-harmonized province, you will only charge GST.
7. Filing GST/HST Returns
Once you’re registered for a GST/HST number, you must file regular returns to the CRA. The frequency of your filings depends on your revenue:
- Annual filing: For businesses with revenues under $1.5 million.
- Quarterly filing: For businesses with revenues over $1.5 million but less than $6 million.
- Monthly filing: For businesses with revenues over $6 million.
In your returns, you’ll report the GST/HST you’ve collected and the GST/HST you’ve paid on business expenses. The difference is either remitted to the CRA or refunded to you.
8. Conclusion
Do you need a GST or HST number? If your business is generating more than $30,000 in revenue, or if you’re in a specific industry, you are likely required to register. However, even if your revenue is below that threshold, you may still benefit from registering voluntarily.
A GST/HST number allows you to collect taxes, claim input tax credits, and manage your business taxes effectively. If you’re unsure about your obligation or how to apply, it’s always a good idea to consult a tax professional or contact the CRA for guidance.
