In this article, we will discuss the GST/HST your business collects.
Most businesses in Canada must register GST/HST numbers with the CRA. Businesses collect GST/HST from their customers, and they deduct the GST/HST they pay for their business expenses, then pay the balance to the CRA.
You can download the CRA tax guide below.
https://solidtax.ca/wp-content/uploads/2022/09/rc4022-21e-HST-Registrants.pdf
What is GST/HST?
GST/HST is a tax customers must pay for most goods and services in Canada. In Ontario, the HST tax rate is 13%.
Should I charge GST/HST from my customers?
There are three types of supplies – taxable supplies, zero-rated supplies, and exempt supplies. The CRA guide uses the word ‘supplies’ to refer to products or services.
Taxable Supplies
Most products and services made or imported into Canada are subject to GST/HST. A few examples of Taxable Supplies are below:
- Sales and rentals of commercial property
- Car repairs
- Taxi (Uber) transportation
- Legal and accounting services
- Clothing and footwear
Zero-rate Supplies
The GST/HST applies at a rate of 0%. This means that you do not charge your customers GST/HST, but you may claim input tax credits for the GST/HST you paid on your business expenses, and you will get a GST/HST refund from the CRA. A few examples of Zero-rate Supplies are below:
- Basic groceries such as milk, bread, and vegetables
- Agricultural products
- Most farm livestock and fishery products
- Certain medical devices
- Exports
Exempt Supplies
No GST/HST applies to exempt supplies. This means that you do not charge GST/HST from your customers, and you can not register for the GST/HST or claim input tax credits. A few examples of Exempt Supplies are below:
- Long-term rentals of residential accommodation
- Most health, medical, and dental services
- Many educational services
- The issuance of insurance policies by an insurer and the arranging for the issuance of insurance policies by insurance agents
If you are unsure if your business products or service are taxable, contact the CRA at 1-800-959-5525.
Should I register for a GST/HST number?
If you are a taxi or Uber driver, no matter the size of your sales, you need to register a GST/HST number.
If you provide taxable products and services and your annual sales are more than $30k, you must register a GST/HST number.
If you provide taxable products and services and your annual sales are less than $30k, you can choose to register or not to register a GST/HST number. But once you get the HST number from the CRA, you have to collect HST from your clients until you close your HST account. Before closing your HST account, you are required to collect HST, even though your annual sales are less than $30K.
If you provide GST/HST exempt products or services, such as residential property rentals, insurance or financial services, day-care services, you should not register for a GST/HST number and you are not allowed to charge your customers GST/HST or to claim input tax credits for your business.
