When Do You Charge the GST/HST?
When Do You Charge the GST/HST or Is Your Business Exempt?
Every Business Needs to Charge the GST/HST Unless...
Basically, if you sell goods and services in Canada, you must charge customers the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST) unless your business qualifies as an exception (see below).
The GST is a federal tax, currently 5% and is charged in all provinces and territories in Canada on both products and services, either by itself or included as part of the HST.
Depending on Your Province of Business, You May Need to Charge Either GST, HST, or GST+PST
In the provinces of Ontario, Nova Scotia, New Brunswick, PEI and Newfoundland and Labrador you must charge HST because these provinces have combined the GST with their Provincial Sales Taxes to create a Harmonized Sales Tax (HST).
Other provinces, such as BC, Saskatchewan, Quebec, and Manitoba, have kept their Provincial Sales Taxes (PST/QST/RST) separate from the federal GST tax system, so in those provinces, your business must charge, collect and remit both GST and PST/RST/QST (and fill out two sets of forms to do so).
Still other provinces and territories, such as Alberta, Northwest Territories, Nunavut, and Yukon, have no Provincial Sales Taxes; in those provinces, your business only has to charge, collect and remit GST.
|British Columbia||5%||7% Provincial Sales Tax (PST)|
|Saskatchewan||5%||6% Provincial Sales Tax (PST)|
|Manitoba||5%||8% Retail Sales Tax (RST)|
|Quebec||5%||9.975% Quebec Sales Tax (QST)|
|Prince Edward Island||15%|
|Newfoundland and Labrador||15%|
Some Businesses Don't Have to Charge the GST/HST
If your Canadian business fits one of the exceptions, it won't have to charge, collect and remit GST/HST.
The two possible exceptions are:
1) If you are selling goods or services that are zero-rated (such as exports, medical devices or basic groceries) or goods or services that are exempt (such as music lessons or child care), you don't have to charge GST/HST.
2) Being classed as a small supplier depends on how much money your small business makes in a year. Your business will qualify as a small supplier if "your total taxable revenues before expenses from all your businesses are $30,000 or less in the last four consecutive calendar quarters and in any single calendar quarter" (Canada Revenue Agency).
If exception #1 doesn't apply and you make over $30,000 you have to register for and charge GST/HST.
Note that there are exceptions to the exceptions, too. For instance, taxi and limousine operators and non-resident performers have to charge GST/HST even if they are small suppliers.
You may want to register for the GST/HST even if you don't have to because of potential tax benefits.
Before you can charge the GST/HST, you'll need to register to collect and remit it through the Canada Revenue Agency (CRA). They make registration easy for Canadian businesses; you can register by phone (call the Canada Revenue Agency at 1-800-959-5525), online, by mail or even in person at a tax office.
(Note that if your business is in Quebec, you need to contact Revenu Quebec instead at 1-800-567-4692 as they deal with GST/HST in that province rather than the federal government.)
If your small business starts out as a small supplier and you make more than the small supplier limit ($30,000) you'll want to register for GST/HST right away; in the eyes of the Canada Revenue Agency, you are now a GST registrant and you:
- have to collect GST/HST on the supply that made your revenue go over $30,000;
- have to register within 29 days of the day that you made the supply that made your revenue go over $30,000.
It's the first point that often trips up small businesses who don't realize they've gone over the limit until some time later when they're doing the books and then discover they didn't charge the GST/HST when they should have. If your small business is classed as a small supplier, you'll want to watch your revenue carefully.
When you register to collect GST/HST, your business will be assigned a business number; this is the number that you and the Canada Revenue Agency will use to identify your business.
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