One of the many decisions early entrepreneurs in Canada will face is when to register for a GST/HST number. As a business owner, you should want to know if you have to register for GST/HST and, if so, at what point does it become mandatory.
The short answer is eventually you will probably have to, unless you provide only exempt supplies, then you will not have to register.
GST/HST registration becomes mandatory when both of the following arise:
1) You make taxable sales or other supplies in Canada
2) You are not a small supplier ( if you do not exceed 30,000.00 in sales in four consecutive calendar quarters then you are considered a small supplier)
However, you can register for GST/HST voluntarily as long as you make taxable sales or other supplies in Canada. If you choose to register earlier than needed, your effective date of registration becomes the date of your request to open your GST account. The first filing open date generally can be backdated up to 30 days prior your request date for proprietorships or partnerships. If you are a corporation and choose to register voluntarily for GST/HST, your effective date cannot be before your incorporation date.
If you choose to register voluntarily, you will have to do the following:
1) Charge, collect, and remit GST/HST as it applies to your business
2) File GST/HST returns
3) Stay registered for at least one year before cancelling your registration
You can register for a GST/HST number in one of the following ways:
2) By mail or fax
3) By telephone
Once you have registered, a nine digit Business Number is assigned to you that will end with RT0001 to designate your GST/HST number. If you have registered a company name through Nova Scotia registry of joint stocks, verify whether the registry generated an inactive business number prior to opening a new one. We have seen cases where a company ends up with two at the end of the day!
When you register for a GST/HST number with the CRA, there are different reporting periods for filing your reports. When you first register, the CRA usually assigns an annual reporting period. Therefore, if the yearend for your business is December 31, then you must file your GST/HST report by June 15 of the following year.
If you should happen to owe GST/HST, then you must pay the amount owing by April 30 of the following year, but still do not have to file until June 15th. It is also worth noting here that this is the only yearend allowed for sole proprietorship and partnerships.
If you are assigned an annual filing period and your year-end is not December 31 (such as incorporated or limited), then your GST/HST must be filed 3 months after your fiscal year end and must be paid by this time. However, you may choose a more frequent reporting period if it is more convenient. To change your assigned reporting period you must complete Form GST20 .
Below is a list of assigned and optional reporting periods, with their threshold limits:
1) If your annual taxable supplies threshold of 1,500,000 or less, you will be assigned an annual reporting period, but can change it to a Monthly or Quarterly reporting period
2) If your annual taxable supplies threshold is 1,5000,000 up to 6,000,000, then you will be assigned a Quarterly reporting period but you can change it to Monthly
3) If your annual taxable supplies threshold is more than 6,000,000 then you will be assigned a Monthly reporting period with no option to change
Charities are assigned an annual reporting period, regardless of their revenues; they can however choose to file monthly or quarterly returns by completing Form GST20.
Therefore, as you can see, there are a number of options for a GST/HST filing period. In determining the best reporting period for your business, remember when payment is due, there may be other payments due at the same time, so plan and choose wisely. It never hurts to get a second opinion or consultation prior to registering!
~ Douglas Ross~