---

GST 101: GST REGISTRATION RULES

CANADA'S BROAD REGISTRATION RULES FOR ITS GST/HST SYSTEM

This is the first in our series of "GST 101 Reports", written with a view to educating our readers on the basics of Canada's GST/HST system, and building towards more in-depth discussions to come.

This Report Deals with Canada's extremely broad GST/HST Registration Requirements.

What is Canada's “GST/HST”?

Canada’s GST/HST system is a value added tax established by the federal government.  The HST component is tantamount to a provincial or state tax, and applicable based on the Canadian province in which the transactional supply is taking place.

The GST/HST can be both a transactional tax at each point in the supply chain (Division II GST/HST) or apply in other special ways, like on the import of a good to Canada (Division III GST).

Focusing on Division II GST/HST, that tax is paid by each "recipient" of a taxable supply, but collectible by the "supplier".  The recipient pays GST/HST while the supplier withholds GST/HST and holds those monies on trust for the government.   The question for this Report is when must a "supplier" – which could include Canadian residents or non-residents alike – get "registered" to collect GST/HST on its supplies.

ETA 240 – GST/HST Registration Requirements

Under s. 240 of the Excise Tax Act ("ETA") everyone “who makes a taxable supply in Canada in the course of a commercial activity is required to be registered”.  This broad definition captures a wide swathe of activity, including entities not generating a profit.

Registration may be effected either by mail, by fax, by phone or, if online, through “Business Registration Online” (BRO).  The first step, through BRO or by other means, is obtaining a “Business Number” (BN).  After obtaining a BN, it is possible to register for other CRA programs like the GST/HST.

There are three exceptions to the GST/HST registration requirements in section 240.  First, a “small supplier” does not need to register.  Second, no registration is required where the taxpayer’s only commercial activity is the sale of real property “otherwise than in the course of a business”.  Third, where the taxpayer is a non-resident who does not carry out business in Canada.  The first of these concepts is addressed below, while the latter two will be subject to additional Reports, focussing on the specific requirements for the "real property" and "non-residents" exceptions.

What is the Small Supplier Rule?

The small supplier exception has ceilings for private and public sector bodies (e.g., charities).  For private sector bodies, the revenues threshold is $30,000 in any four-quarter period, meaning that businesses over that amount are required to be registered, but if global revenues are at or under that amount, no registration is required.  For public sector bodies, the ceiling is $50,000. 

Notwithstanding registration requirements, many businesses will want to voluntarily register to claim input tax credits.

Takeaways

While some limited exceptions exist to GST registration, most Canadian-based businesses will be required to register for Canada's GST/HST.

For help with non-resident registration, click here.

Download a PDF copy of this Blog here.

For a complete Index of our GST/HST 101 Series Reports, updated as we write them, click here.