The GST/HST (Goods and services tax/Harmonized sales tax) applies to most goods and services in Canada. New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island use the HST. Here’s what you need to know about these taxes as businesses or professionals.
How To Register for a GST/HST Account
You don’t have to register for a GST/HST account if your business earns less than $30,000 in four consecutive quarters. Some small suppliers may opt for voluntary registration.
A calendar quarter is a three-month period that starts on the first day of January, April, July or October. GST/HST is charged on the supply of more than $30,000. Registration for the GST/HST account must occur within 29 days.
If earnings exceed $30,000 within the previous four consecutive quarters, but not in a single calendar quarter, the business or professional is no longer a small supplier.
You must apply the GST/HST starting the month after the business or professional stopped being a small supplier. You must register for the GST/HST account within 29 days.
Voluntary GST/HST Registration for Small Suppliers
Small suppliers who opt for voluntary GST/HST registration must:
- Charge, collect and remit GST/HST on all supplies of goods and services subject to GST/HST
- File GST/HST returns
- Stay registered for at least a year unless business ends
Those registered can use ITCs (input tax credits) to recover GST/PST on purchases and operating expenses.
Taxable, Zero-rated, and Exempt Supplies
GST/HST applies to most property and services sold or imported into Canada. Some examples of taxable supplies are:
- Sales of new housing
- Sales and lease of automobiles
- Soft drinks, candies and packaged snacks
- Clothing and shoes
- Taxi and limousine transportation
- Hotel accommodation
- Barber and hairstylist services
Some examples of zero-rated supplies are:
- Agricultural products
- Fish meant for human consumption
- Prescription drugs
- Feminine hygiene products
- Transportation services where the origin or destination is outside of Canada
Exempt supplies include:
- A sale of housing last used as a place of residence
- Long-term rentals of accommodation
- Child-care services for children less than 14 year old, for periods of less than 24 hours
- Music lessons
- Legal aid
- Public services such as public transit and water distribution
Filing GST/HST Returns
GST/HST returns may be filed monthly, quarterly, or annually. Personal due dates are shown on Form GST34-2. GST/HST returns must be filed even if no net taxes apply and no business transactions took place.
Calculate your net tax for each reporting period and report it on GST/HST returns. Calculate it by finding the difference between:
- GST/HST collected or collectible on taxable supplies
- GST/HST paid or payable on business purchases and expenses
GST/HST applies to automobile benefits at different rates according to province. Participating provinces with variable rates are Prince Edward Island, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Ontario. For non-participating provinces and territories, the automobile operating expense benefit GST/HST is calculated at 3 percent.