Navigating Canada’s Goods and Services Tax (GST) and Harmonized Sales Tax (HST) can be complex for business owners. Understanding the fundamentals of these taxes is essential to stay compliant and avoid costly penalties. In this blog post, we’ll break down everything you need to know about GST/HST, from registration to filing and key exemptions.

What is GST/HST?

In Canada, businesses are required to charge, collect, and remit GST or HST on taxable supplies of goods and services:

• GST (Goods and Services Tax): A 5% federal tax applied in most provinces.
• HST (Harmonized Sales Tax): A combined federal-provincial tax that replaces GST and provincial sales tax (PST) in specific provinces. The HST rate varies depending on the province.

Current HST Rates by Province

Province	HST Rate (%)
Ontario	13%
New Brunswick	15%
Newfoundland & Labrador	15%
Nova Scotia	15%
Prince Edward Island	15%

Other provinces, like British Columbia, Manitoba, and Saskatchewan, only charge the 5% federal GST alongside their own PST systems.

Who Needs to Register for GST/HST?

Small Supplier Exception

• If your business earns less than $30,000 in total revenue over four consecutive calendar quarters, you are considered a small supplier and are not required to register for GST/HST.
• Once your revenue exceeds $30,000, you must register within 30 days of crossing the threshold.

Mandatory Registration

You must register for GST/HST if:

• You provide taxable goods or services in Canada.
• You are a non-resident business supplying goods or digital services to Canadian consumers.

Voluntary Registration

Even if you’re below the $30,000 threshold, registering voluntarily has benefits:

• You can claim Input Tax Credits (ITCs) to recover GST/HST paid on business expenses.

GST/HST on Taxable, Zero-Rated, and Exempt Supplies

Not all goods and services are treated equally under GST/HST rules:

1. Taxable Supplies: Subject to GST/HST at the applicable rate. Examples:
   • Retail products
   • Professional services
   • Consulting services
2. Zero-Rated Supplies: GST/HST applies at a rate of 0%. Examples:
   • Basic groceries (e.g., bread, milk)
   • Prescription drugs
   • Exported goods and services
3. Exempt Supplies: These are not subject to GST/HST, and businesses cannot claim ITCs. Examples:
   • Residential rental accommodation
   • Healthcare services
   • Financial services (e.g., loans, insurance)

How to Charge and Collect GST/HST

1. Identify the Customer’s Location: GST/HST is determined based on the customer’s province.
   • Example: A business in Ontario selling goods to a customer in Nova Scotia must charge 15% HST.
2. Issue Invoices with GST/HST: Your invoices must include:
   • Business name and GST/HST number
   • Invoice date
   • Amount of GST/HST charged
   • Total payable amount
3. Collect and Track GST/HST: Keep detailed records of all sales and taxes collected for accurate reporting.

Filing and Remitting GST/HST

Once registered, businesses must file GST/HST returns and remit the collected taxes to the CRA. Here’s what you need to know:

• Filing Frequency:
  • Annual: Revenue ≤ $1.5 million
  • Quarterly: Revenue between $1.5 million and $6 million
  • Monthly: Revenue > $6 million
• Input Tax Credits (ITCs):
  • Claim ITCs to recover GST/HST paid on eligible business expenses (e.g., office supplies, equipment, rent).
• Filing Deadlines:
  • Monthly/Quarterly: One month after the reporting period.
  • Annual: Three months after the fiscal year-end.

Penalties for Non-Compliance

Failing to comply with GST/HST regulations can result in:

• Late filing penalties
• Interest on unpaid taxes
• Audits and assessments by the CRA

To avoid issues, ensure you:

• File returns on time.
• Remit the correct GST/HST amount.
• Keep organized and accurate records.

Tips for Managing GST/HST

1. Use Accounting Software: Tools like QuickBooks or Xero simplify tracking and reporting GST/HST.
2. Monitor Your Revenue: Keep an eye on the $30,000 small supplier threshold.
3. Consult a Professional: Tax laws are complex, and professional advice ensures compliance and maximizes ITC claims.

Conclusion

Understanding GST/HST rules is critical for businesses operating in Canada. Whether you’re registering for the first time or managing your ongoing filings, staying compliant will save you time, money, and stress.

If you need help with GST/HST registration, filing, or tax planning, contact us today! Our team of experienced accountants will ensure your business meets all CRA requirements seamlessly.