When Do I have to Register for a GST/HST Account?

Every business owner in Canada is required to report business income when they file their taxes each year, and many of these business owners are also required to charge and remit sales tax on these revenues.

To do so, business owners, whether sole proprietorships, partnerships or corporations, are required to open a GST/HST account. 

There are certain situations in which a business owner is not required to register for a GST/HST account and therefore do not have to (and cannot) charge GST/HST.

The following will help you determine whether you are required to open a GST/HST account.

Small Suppliers

Generally speaking, if you make less than $30,000 in taxable sales, leases or other supplies, in any consecutive four quarters (which do not have to be in the same year) you are seen as a small supplier and not required to register for a GST/HST account.

This means that you do not have to charge and remit GST/HST on your sales but it also means that you are not able to claim Input Tax Credits (ITCs), which allows you to recover the sales tax paid/payable on purchases and operating expenses. This does not mean that you cannot apply for a GST/HST account; you can do so voluntarily.

There is one exception to this threshold. If you are a self-employed taxi driver or commercial ride-sharing driver, you are required to register for a GST/HST account even if you make less than $30,000.

Supplier of Tax Exempt Goods and Services

If you sell only tax-exempt supplies or goods, such as legal aid services, music lessons, and child care services, you are generally not allowed to register for a GST/HST account, voluntarily or otherwise.

It is important that tax-exempt not be confused with zero-rated good and services, such as basic groceries and certain medical devices. If you sell zero-rated products or services, you may be eligible for ITCs on property and services incurred to sell these supplies, even if you do not collect taxes on sale. This is not the case for tax-exempt goods or services.

So, when are you required to register for a GST/HST Account?

If you make more than $30,000 within four consecutive calendar quarters then you are required to register for a GST/HST account and, in turn, are required to file GST/HST remittances on a prescribed basis, either monthly, quarterly or annually.

To determine whether or not you hit the $30,000 threshold, you must include the total amount of all revenues (before expenses) from the sale of all the global taxable goods and services of your business.

How to Register for a GST/HST Account

Before registering for your GST/HST account, you must ensure you have three pieces of information:

1. Effective date of registration.
   a.) If you must register, this is usually the day that you cease to be a small supplier (make less than $30,000).
   b.) If you are registering voluntarily, this is the day you register or up to 30 days before that date.
2. Fiscal year-end for the purposes of GST/HST – for most businesses, this is December 31.
3. Total annual revenue.

After gathering this information, you can either register online, call 1-800-959-5525 or fill out and mail a Form RC1.

Once you are registered, whether voluntarily or as required by law, you must now charge GST/HST on taxable goods and services, file your GST/HST returns and pay GST/HST as required.

For more information on remitting GST/HST or for help managing your account, contact us today.