You must create a GST/HST account If you earn more than $30,000 in four calendar quarters, whether they are partnerships or corporations.
Every Canadian Business owner is obliged to disclose business income when filing their taxes each year, and many of these business owners are also obligated to charge and remit sales tax on these earnings.
To do so, company owners must create a GST/HST account, whether they are sole proprietorships, partnerships, or corporations.
In some cases, a company owner is not needed to open a an account and so is not oblige to (and cannot) charge GST/HST.
The information below will assist you in determining if you need to create a GST/HST account.
Small Business Suppliers
In general, if you earn less than $30,000 in taxable sales, leases, or other supplies in any four consecutive quarters (which do not have to be in the same year), you are considered a small supplier and are exempt from registering for a GST/HST account.
This implies you don’t have to charge and submit GST/HST on your sales, but you also can’t collect Input Tax Credit (ITCs), which allows you to recoup sales tax paid/payable on purchases and operational costs. This does not preclude you from applying for a GST/HST account; you may do so independently.
However, this criteria has one exception. Even if you make less than $30,000 as a self-employed taxi or commercial ride-sharing driver, you must register for a GST/HST account.
Tax-Free Goods and Services Supplier
You are typically not permitted to register for a GST/HST account, freely or otherwise, if you exclusively sell tax-exempt supplies or commodities, such as legal aid services, music lessons, and child care services.
Tax-exempt goods and services, such as basic groceries and some medical gadgets, must not be confused with zero-rated goods and services. Even if you don’t collect taxes on sales, if you sell zero-rated items or services, you may be entitled for ITCs on property and services expended to sell these supplies. For tax-exempt products and services, this is not the case.
When must you open a GST/HST Account?
If you earn more than $30,000 in four consecutive calendar quarters, you must register for a GST/HST account and, as a result, file the remittances on a regular basis, such as monthly, quarterly, or yearly.
You must add the entire amount of all revenues (before costs) from the sale of all of your business’s global taxable goods and services to see if you’ve reached the $30,000 level.
How to open a GST/HST Account?
Before enrolling for your GST/HST account, three pieces of information are required.
- The registration’s start date
- If you’re required to register, this is often the day you stop being a small supplier (earning less than $30,000 per year)
- If you’re voluntarily enrolling, this is the day you sign up or up to 30 days before that date
- For GST/HST purposes, the fiscal year ends on December 31 for the majority of enterprises
- Total annual revenue
After collecting these information, the Form RC1 must be filled.
Once registered, you must charge GST/HST on taxable goods and services, submit the returns, and pay as needed.
Contact us today for additional information on remitting GST/HST or for help managing your account.
