Happy Fall Y’all! The SheDo Squad hopes your 2021 year has been a prosperous one and for our business clients – we hope your businesses are thriving while entering the first few weeks of the fourth quarter of 2021. Quarter four is a time for many of our clients with new businesses to reach out and enquire about their Goods and Services Tax/Harmonized Sales Tax (GST/HST) obligations and if they haven’t already done so, asking… ”When should I be registering for a GST/HST number with the Canada Revenue Agency (CRA) and when should I be charging GST/HST on sales?”
IF you are a small business owner who has been pondering similar questions regarding GST/HST, I hope to provide you with some answers below…
Who needs to register for a GST/HST number?
The CRA expects that once sales meet and exceed $30,000 from worldwide taxable supplies in a given period, then the business is no longer a small supplier and it is mandatory to register for a GST/HST number.
This includes sole proprietors, partnerships and/or corporations with gross worldwide taxable supplies over $30,000, before any expense deductions.
When exactly does your business need to register for a GST/HST number?
Once you meet and exceed the $30,000 threshold, you must register and begin charging GST/HST on sales. The CRA expects that you register within 30 days after you have exceeded $30,000 of sales within a single calendar quarter OR over four consecutive calendar quarters. Once this occurs, you will now be collecting GST/HST on sales from the date of GST/HST registration going forward.
If you are just starting your business, but offer high-value services or products, and expect to exceed $30,000 quickly, you can voluntarily register in advance. It is also a good idea to voluntarily register if you will be incurring many costly expenses to start your business. This is because you can claim the GST/HST paid and get them back as Input Tax Credits (ITC’s) through the GST/HST return.
How do I register for a GST/HST number?
Being registered for GST/HST as a business means you need to acquire a CRA GST/HST Number and need to determine a reporting frequency. A business will be provided this number once registering over the phone or online.
The CRA GST/HST business line is 1-800-959-5525; or, more conveniently, you can register online through the CRA My Business Account using this link:
How do I file a GST/HST return?
Once registered you will be required to complete a GST/HST Return (form GST34) based on your reporting frequency. GST/HST reporting is monthly, quarterly, or annually, and is determined by your gross annual sales. A chart is enclosed below to help you determine your frequency. Most sole proprietors and corporations filing their first GST/HST return will be annual filers, but they may file on a quarterly or monthly basis if they choose to do so. If wanting to be a quarterly or monthly reporter (and is not mandatory), this can be requested at time of registration.
Assigned and Optional Reporting Periods
Annual Sales: $1,500,000 or less
ASSIGNED Reporting Period: Annual
OPTIONAL Reporting Period: Quarterly/Monthly
Annual Sales: More than $1,500,000 up to $6,000,000
ASSIGNED Reporting Period: Quarterly
OPTIONAL Reporting Period: Monthly
Annual Sales: More than $6,000,000
ASSIGNED Reporting Period: Monthly
OPTIONAL Reporting Period: NIL
For most business owners, their GST/HST return will be filed online through their CRA My Business Account or through the Represent a Client portal with their authorized representatives. You are also still able to file your GST/HST returns through the mail with the GST34-2 personalized GST/HST Return.
What is included on your GST/HST Return?
For most businesses, the most common entries on each GST/HST return for any given period include: worldwide sales and other revenue (line 101), sales tax collected or became collectable (total on line 105 with adjustments) and GST/HST paid or became payable on qualifying expenses (total on line 108 with adjustments) which is know as Input Tax Credits (ITC’s).
If you have sales both inside and outside of Canada, all worldwide sales are to be reported on your GST/HST return, regardless if some of your sales are applicable to GST/HST or not. It is important to review your GST/HST requirements on sales and determine which sales may be taxable, exempt or zero-rated. It is also important to review GST/HST requirements between each province and territory and tax requirements of sales out of country.
How do I pay my GST/HST balance owing?
You can remit your GST/HST payment electronically through your business financial institution online, telephone banking service, in person at a bank with a remittance voucher OR by cheque through the mail. You can also remit electronically using the CRA’s My Payment option, which I have linked here for you:
If you find any of this information overwhelming or still have questions regarding registering for GST/HST, the ladies here at SheDo Tax would be more than happy to set up a time to chat. If you have not been tracking your sales this year but expect that you may be nearing the $30,000 threshold, it is important to have your books in order, and we can also help with that. Feel free to reach out to us at email@example.com or call 289-758-9501.
Take care, and stay safe,