In the complex world of taxation, whether you’re a seasoned entrepreneur or a newcomer to the Canadian tax system, understanding the Goods and Services Tax (GST) number in Canada is crucial for businesses and individuals alike. The Goods and Services Tax (GST) Number in Canada is a fundamental identification for businesses and organizations operating within the country’s tax framework. The GST number in Canada plays a pivotal role in facilitating tax compliance and financial transactions. 

In this article, we will delve into the significance of the GST Number in Canada and the process involved in obtaining this essential identifier for businesses. 

What is GST?

GST, or Goods and Services Tax, is a value-added tax (VAT) that is imposed on the majority of products and services supplied in Canada for domestic use. It’s an integral part of the Canadian tax system, designed to ensure that tax is paid at every stage of the production and distribution process. Understanding how GST works is essential for anyone conducting business in Canada.

What is a GST Number in Canada?

The Canadian Revenue Agency (CRA) issues a special number called a Goods and Services Tax (GST) number to identify enterprises that have enrolled for the purpose of collecting and submitting Goods and Services in Canada. The registration process is simple and straightforward, and it may be done digitally at the CRA website.

Who Needs a Canadian GST Number?

Most businesses in Canada with annual revenues exceeding $30,000 must register for a GST Number. However, it’s advisable to register voluntarily even if your revenue is below this threshold, as it can be beneficial in the long run.

Importance of a GST Number in Canada

Having a GST number is mandatory for businesses that earn more than $30,000 in annual revenue. It allows them to collect and remit GST/HST to the government. Additionally, it enables businesses to claim input tax credits (ITCs) for the GST/HST paid on their business expenses.

How to Apply for GST Number in Canada?

In Canada, the GST (Goods and Services Tax) number is also known as the GST/HST (Harmonized Sales Tax) number. This unique number is assigned to businesses and individuals who are registered for the collection and remittance of the GST/HST. It is used for tax purposes and helps the government track and manage the collection of these taxes.

To obtain a GST/HST number in Canada, you typically need to follow these steps:

Determine if you need to register

Not all businesses or individuals need to register for the GST/HST. You must check with the Canada Revenue Agency (CRA) to decide if your business or activities require registration.

Gather required information 

Before you apply for a GST/HST number, make sure you have all the necessary information, including your business name, business structure (e.g., sole proprietorship, corporation), contact information, and details about your business activities.

Apply for a GST/HST number

You can apply for a GST/HST number online through the CRA’s Business Registration Online (BRO) service or by filling out Form RC1. The BRO service is the most convenient way to apply.

Wait for approval 

After you submit your application, the CRA will review it and, if everything is in order, they will assign you a GST/HST number.

Start collecting and remitting GST/HST 

Once you have your GST/HST number, you are required to start collecting the tax from your customers as applicable based on your business activities. You will also need to remit the collected taxes to the CRA at specified intervals.

Registering to Collect Tax in Provinces

In addition to federal GST/HST registration, businesses may also need to register for provincial sales taxes (PST) in specific provinces. Let’s explore the registration requirements for British Columbia, Manitoba, Saskatchewan, and Québec.

Registering to Collect Tax in British Columbia

If your business makes taxable sales of goods or services in British Columbia (BC), including software and telecommunication services, you need to register for PST collection if your gross revenue from taxable and exempt sales to BC customers exceeds $10,000 in the previous 12 months or is expected to exceed that amount in the next 12 months. It’s important to maintain accurate revenue records to determine your tax obligations accurately.

To register for PST collection in BC, you can do so online through the appropriate taxing authority. Similar to federal registration, it’s crucial to consult a tax expert if you believe you may owe penalties or back taxes. Once registered, you can begin collecting PST.

Registering to Collect Tax in Manitoba

Canadian businesses outside of Manitoba and businesses in foreign countries that deliver tangible personal property to Manitoba or solicit and accept sales in the province must register to collect Retail Sales Tax (RST). Effective December 1, 2021, Manitoba expanded its taxing authority to include sales of digital services made by out-of-province sellers. If you operate an online accommodation platform, an online sales platform, or provide streaming services, you must be registered to collect RST.

Unlike other provinces, Manitoba does not have economic nexus thresholds for out-of-province sellers. This means that you must be registered from the first sale, regardless of the revenue generated. To register for the RST collection in Manitoba, you can complete the registration process online through the appropriate taxing authority.

Registering to Collect Tax in Saskatchewan

Canadian businesses outside of Saskatchewan and non-Canadian businesses that make retail sales for use or consumption in Saskatchewan must register to collect Provincial Sales Tax (PST). Saskatchewan does not have an economic nexus threshold for non-residents, meaning that a PST of 6% needs to be collected from the first transaction.

This requirement applies to various digital products such as digital audio and video downloads, software, software services, and cloud-based services. To register for PST collection in Saskatchewan, you can complete the registration process online through the appropriate taxing authority.

Registering to Collect Tax in Québec

Non-residents selling in Québec may register under either the specified or general system, depending on their taxable sales in Québec. If your taxable sales in Québec exceed CAD 30,000 in 12 months, you must use the specified system. This applies to sellers outside Canada that sell incorporeal movable property or services in Québec, as well as sellers outside Québec that sell corporeal movable property, incorporeal movable property, or services to Québec consumers.

To register for the Québec Sales Tax (QST) collection, you can complete the registration process online through the appropriate taxing authority. As always, it’s recommended to consult a tax expert if you have concerns about penalties or back taxes.

Conclusion

Comprehending the GST Number in Canada is vital for businesses to successfully navigate the complicated world of taxation effectively. GST Number in Canada is more than just a numerical identifier; it represents an integral aspect of the country’s taxation system and business landscape. Businesses and organizations across Canada rely on their GST/HST account numbers for compliance with tax laws, competitive positioning, financial efficiency, and access to various government programs. Understanding the importance of this unique identifier is vital for any entity operating within the Canadian business environment.

If you want to apply for a GST number in Canada, you can speak with experts from OnDemand International. Our experts will assist you with the GST registration procedure and help you apply for the GST number in Canada.