A Goods and Services Tax (GST) number is a unique tax identification number assigned to a business by the Canada Revenue Agency (CRA). It is also known as a Business Number (BN) because, in addition to being used to collect, report and remit GST and Harmonized Sales Tax (HST), it identifies other business dealings your business has with the CRA. For example, you will use your GST number for your business corporate income tax if your business is structured as a corporation, and for your payroll deduction account if your business has employees.
You will also use your GST number in the course of your business activities. Once you have been assigned a number, you must display it on your invoices.
Mandatory and exempt business requirements
Most businesses in Canada are required to have a GST number. GST/HST registration is required for all businesses in Canada, except those that are considered small vendors.
The CRA defines a small GST provider as a sole proprietor, partnership, or corporation whose total taxable income before expenses is $30,000 or less annually. Please note that provincial sales tax (PST) or proceeds from the sale of capital assets are not included in the threshold amount.
The GST registration rule for small suppliers does not apply to all types of businesses. For example, taxi and limousine operators and non-resident entertainers who sell tickets to seminars, performances or other events must always register for GST.
Even if you qualify as a small GST provider, you may want to register for GST. Doing so allows you to claim the GST/HST you paid on business purchases, on everything from capital goods to office supplies and GST/HST input tax credits.
When starting a business, it is advisable to register for GST immediately so that you can claim GST/HST on the items you are purchasing for your start-up. Due to the way GST/HST reporting and filing works, you will not be able to claim GST/HST on these business expenses retroactively.
The GST/HST Registration Process
Basically, for GST/HST registration, you apply to the CRA for a GST/HST number. You can do this in one of the following ways:
- Online through Business Registration Online (BRO). BRO online registration has a number of advantages. You can also register for other CRA program accounts, including corporate income tax, payroll, and import and export taxes, and if your business is based in British Columbia, Nova Scotia, or Ontario, you can transfer directly to the registry. online provincial business office when you are done with GST/HST registration for any other registration you may need.
- By phone by calling the CRA.
Once your GST/HST registration is complete, you are ready to collect and remit GST or HST.
If your company is in Quebec, you should contact Revenu Quebec as they deal with GST/HST in that province.
How to charge and collect GST/HST
Once your GST/HST registration is complete and you have your GST number, you charge your customers GST/HST on the taxable goods and services you provide to them.
Whether you charge and charge GST only or GST and HST depends on the province your business is located in, the type of goods or services you are providing and, if the goods are shipped, their destination. You will also need to know how to collect PST if you have an online business instead of a physical operation.
The GST/HST you collect is remitted to the CRA by completing a GST/HST return identified by your GST number, either quarterly or annually. Please note that the CRA refers to this number as a business number or BN.
When you are completing your GST/HST return, you can claim income tax credits for the GST/HST you paid or owed on purchases and expenses you use, consume or supply in your business activities, in effect recovering the GST/HST you paid. .
When starting a business in Canada, make sure you understand the GST/HST process and how it affects your business. The CRA provides many guides and brochures with additional information on GST/HST, including guides that are specific to particular types of businesses.