GST/HST registration, collection and remittance

Businesses that have $30,000 or less in annual worldwide taxable sales are not required to register and collect tax. However, to determine if your business meets this threshold, the worldwide revenues of associated entities are included in measuring annual taxable sales. Associated businesses can include related parties, such as shareholders, corporations, partnerships, trusts or individuals. If their combined taxable revenues exceed the $30,000 threshold, all of the businesses making any taxable supplies must be registered.

A business that is not required to register because, together with its associated persons, it has less than $30,000 in annual worldwide taxable sales is called a small supplier. Such businesses can volunteer to register and collect tax as this enables them to claim ITCs for any GST/HST they pay on supplies purchased for use in their commercial activities (see topic 47). This is generally advisable if the recipient of the supply is also registered for the tax.

Separate thresholds are used to determine whether charities and public sector bodies are required to register.

New businesses

Starting a new business? In most cases, it’s generally a good idea to register for GST/HST as soon as your business is established. Provided that your business makes (or will make) taxable or zero-rated supplies, early registration ensures that GST/HST paid on costs incurred is recoverable since tax paid prior to registration is generally not recoverable except on the purchase of inventory, capital property and prepaid services still on hand at the time of registration. Be sure to register early because, in many situations, registering late can result in the loss of recoverable GST paid before registration.

When to report

Every business has a reporting period based on the revenue of the associated group. Most businesses are required to report quarterly. However, large businesses (over $6 million in annual taxable supplies for the associated group) must report monthly, while smaller businesses (under $1,500,000 in annual taxable supplies for the group) are generally put on an annual filing frequency. However, they can elect to file either on a quarterly or monthly basis. New GST/HST registrants with annual taxable supplies of under $1,500,000 for the group are automatically assigned an annual reporting period unless they choose to file more frequently.

Tax tip: You can elect to report more frequently than required. This is advisable if you’re generally in a net refund position, as businesses that sell a large percentage of zero-rated goods (e.g., businesses that export goods to customers outside Canada) often are.

Registrants with a “threshold amount” greater than $1.5 million must file their GST/HST returns electronically. In addition, any registrant that is not required to file electronically is now able to do so if it chooses. Although there are generally three filing options that can be used to electronically file GST/HST returns, certain registrants of Ontario and Prince Edward Island are required to use GST/HST NETFILE.