How to Register as a GST/HST Registrant in Canada
Stepping into the world of entrepreneurship as a new health professional in Canada? Congratulations! As exciting as it is, running a health business comes with its own set of responsibilities, like navigating the complex world of taxation. But fear not, as we're here to guide you through the maze of GST/HST registration and compliance. By the end of this blog post, you'll have gained valuable insights into the registrant process, reporting, exemptions, and more.
Ready to unlock the secrets of GST/HST registration in Canada for your new health business? Let's dive right in!
But first, did you know that you can register for GST/HST early? Get our free guide “What New Health Professionals Need To Know About Registering Early for GST/HST” to learn if you should register early now!
Short Summary
GST/HST registration is a legal requirement for businesses with revenue from taxable and zero-rated sales exceeding the $30,000 threshold over a single calendar quarter or four consecutive calendar quarters.
To register for GST/HST, one must determine eligibility, choose a registration method and prepare the necessary information accurately.
Proper record-keeping is essential to ensure compliance with tax regulations and maximize success when managing a GST/HST account.
Understanding GST/HST Registration
Goods and Services Tax (GST) is a type of tax imposed by the federal government of Canada. It is applicable to most sales and purchases; in certain provinces, GST has been combined with the provincial sales tax, resulting in the Harmonized Sales Tax (HST). Businesses in Canada must register for a GST/HST if their revenue from taxable and zero-rated sales exceeds $30,000 over a single calendar quarter or four consecutive calendar quarters.
Why does this matter?
Registering for GST/HST is not only a legal requirement for qualifying businesses but also offers financial benefits. Registering allows you to claim input tax credits (ITCs) on business expenses, reducing your tax liability and providing access to certain government programs.
When registering for GST/HST, you have two options, one is to register when you are required to register, and the other is to register early. If you choose to register early, you do not need to worry about or track the $30,000 GST/HST mandatory registration threshold, which helps you avoid any potential penalties or interest charges that you might have if you fail to register on time.
Who Needs to Register for GST/HST?
Generally, businesses generating revenue from taxable and zero-rated sales exceeding $30,000 over a single calendar quarter or four consecutive calendar quarters. However, certain individuals, including small suppliers, those selling exempt sales, and non-residents not carrying on business in Canada, may be exempt from registration.
Small supplier category
To determine whether your business falls under the category of a small supplier, check if your revenues from taxable sales are less than $30,000 over a single calendar quarter or four consecutive calendar quarters. If so, you would not need to register for GST/HST. Note that if you have exempt sales, even if your revenue exceeds $30,000 over a single calendar quarter or four consecutive calendar quarters, you do not need to register for GST/HST.
Benefits of Registration
Now that you know whether you need to register, it's time to explore the advantages of registering for GST/HST. As we mentioned earlier, you can claim ITCs on expenses related to earning your revenue from taxable and zero-rated sales. These credits can help reduce your GST/HST payable and even result in a refund for any GST/HST paid on business expenses.
Claiming ITCs
GST/HST registration can provide a financial advantage by allowing you to claim ITCs, which can significantly benefit your business's financial health by reducing your tax payable. You're able to better manage cash flow and allocate resources to other essential aspects of your business.
While registering for GST/HST may seem like a daunting task, the benefits it provides to your business far outweigh the effort involved in the registration process. By understanding the advantages and ensuring compliance, you're setting your business up for success in the long run!
Steps to Register as a GST/HST Registrant
Now that we've covered the basics of GST/HST registration, it's time to dive into the steps involved in the process. First, determine your eligibility by considering your revenue from taxable and zero-rated sales and the nature of your business activities. If you're not sure whether you qualify, be sure to enroll in GST/HST For New Health Businesses: The online course to understand and meet your GST/HST requirements for your new Canadian health business. Learn More!
Determine Your Eligibility
Determining your eligibility for GST/HST registration is a crucial first step. As mentioned earlier, if your revenue from taxable and zero-rated sales exceeds $30,000 over a single calendar quarter or four consecutive calendar quarters, you're required to register.
Choose Your Registration Method with CRA
Once you've determined your eligibility, the next step is to choose your registration method. You need to register for Business Number (BN) to register for a GST/HST account. There are three options to register for a BN: online, by mail, or by phone. Each method has its benefits, so it's essential to choose the one that best suits your needs and preferences.
Registering for BN online is both convenient and advantageous since, depending on the province in which your business is located, the site will automatically direct you to the relevant business registry to register for the province's requirements for GST/HST registration.
Regardless of the method you choose, it's crucial to store your BN in a secure location once you receive it. This will ensure you have easy access to the number when needed for reporting and remittance purposes.
Prepare Necessary Information
Before beginning the registration process, gather all the required information. To register for GST/HST, you'll need to provide your business name, business number, contact information, and the total amount of revenue from taxable and zero-rated sales within Canada.
During the registration process, double-check all the information you provide since any discrepancy can lead to potential complications with the CRA and delays in your registration.
Stay in the loop
It's essential to be aware of your business's revenue and stay on top of any changes that might affect your eligibility. This will help prevent any compliance issues and ensure a smooth registration process.
Remember, even if your business is not required to register for GST/HST, you may still choose to do so voluntarily to take advantage of ITCs and other benefits. The choice is yours, but it's essential to weigh the pros and cons of registration based on your business's unique circumstances.
Managing Your GST/HST Account
Once you've successfully registered for GST/HST, it's essential to properly manage your account. This includes reporting and remitting GST/HST, claiming ITCs, and maintaining accurate records. Staying on top of these tasks will ensure your business remains compliant with tax regulations and can take full advantage of the benefits associated with GST/HST registration. You can access your GST/HST account through CRA My Business Account.
In this section, we'll explore the various aspects of managing your GST/HST account and provide guidance on how to handle each task effectively.
Reporting and Remitting GST/HST
The process of reporting and remitting GST/HST is a very important part of managing your account. To comply with regulations in Canada, you must file a GST/HST return with CRA. Depending on your revenue from taxable and zero-rated sales, your requirement for reporting, filing deadline, and payment deadline are different. The most common is the annual reporting requirement for revenue of $1.5 million or less from taxable and zero-rated sales. The due date for filing the GST/HST return is June 15th for businesses with December 31st year-end and 3 months after fiscal year-end for businesses with any other year-end. The payment due date for businesses with December 31st year-end is April 30th, while for businesses with any other year-end is 3 months after fiscal year-end.
Filing a GST/HST return can be done either online or via mail. The preferred method of payment for the amount owed can be made by credit card, cheque, or direct debit. It's essential to file your return on time and remit the appropriate amount to avoid penalties and interest.
Input Tax Credits (ITCs)
Input Tax Credits, or ITCs, are an essential component of managing your GST/HST account. These credits allow businesses to claim a deduction for the GST/HST paid on purchases and operating expenses related to earning your taxable business income. By claiming ITCs, you can reduce your tax liability and potentially receive a refund for any GST/HST paid on business expenses.
Here is a list of common ITCs for health professionals:
Advertising
Professional fees
UtilitiesTelephone
Office expenses
Meals and entertainment expenses - the 50% rule applies here as well
Business-related capital expenditures such as computers, massage tables, and leasehold improvements
Any of the Tyagi Group courses you take!
To claim ITCs, it's necessary to collect and retain records of all purchases and expenses to support your claims. By keeping accurate records and understanding the process of claiming ITCs, your business can take full advantage of this valuable financial tool.
Record Keeping
Maintaining accurate, comprehensive, and up-to-date records is crucial for managing your GST/HST account. Proper record-keeping allows you to track the progress of your business, maximize the probability of success, and claim ITCs. It's essential to retain all necessary records and supporting documents for a period of six years from the end of the last tax year to which they pertain. You should also be aware of any health industry-specific regulations or exemptions that may apply to your GST/HST registration.
Remember, proper record-keeping isn't just a legal requirement – it's a crucial aspect of ensuring the financial success and stability of your business.
Compliance and Audits
Now that you have a solid grasp of GST/HST registration and account management, it's important to understand the significance of compliance and audits. Ensuring your business complies with GST/HST regulations is crucial to avoid penalties and interest, as well as ensuring your business can claim all available ITCs.
In this section, we'll discuss common mistakes to avoid when it comes to compliance and provide guidance on how to prepare for a potential audit.
Common GST/HST Mistakes
When it comes to GST/HST compliance, being aware of common mistakes can help your business avoid potential pitfalls. Some frequent errors include claiming input tax credits inaccurately, invoicing issues, and documentation problems. To avoid these mistakes, it's crucial to be organized in your record keeping and ensure that all information submitted is accurate and up-to-date.
We have seen health professionals claim ITCs for expenses which are not related to their businesses more often than not. You can avoid doing that by asking yourself, did you spend on purchases including GST/HST to earn your business income? If not, then you cannot claim ITCs on those expenses.
Additionally, be mindful of other common errors, such as not filing GST/HST returns on time, not maintaining accurate records, and not remitting the correct amount of GST/HST. By staying aware of these potential mistakes, you can help protect your business from penalties, interest, and other negative consequences related to non-compliance.
GST/HST Audits
A GST/HST audit is an assessment conducted by CRA to verify that a business's financial records are in compliance with tax regulations. CRA reviews a business's financial records during a GST/HST audit to verify compliance with applicable tax laws. The selection of returns for audit is based on a combination of risk assessment and random file selection.
To ensure that you are adequately prepared for a GST/HST audit, it's essential to maintain accurate records of all transactions, including invoices, receipts, and other documents. Additionally, it's important to be knowledgeable about the relevant GST/HST legislation and regulations.
Should you receive an audit, it's advisable to contact the CRA to discuss the audit and provide any required documents. By being prepared and proactive, you can minimize the stress and potential consequences associated with a GST/HST audit.
Conclusion
We've reached the end of our journey through the world of GST/HST registration in Canada as a new health professional. By now, you should have a solid understanding of the registration process, the benefits of registration, and how to manage your GST/HST account effectively. Additionally, you should be aware of special cases and exemptions that may apply to your business and the importance of compliance and audits.
As you navigate the world of GST/HST, remember that knowledge is power. By staying informed and diligent in your registration, reporting, and compliance efforts, you'll be setting your business up for success in the long run. So go forth and conquer the world of GST/HST, and watch your business flourish!
To learn about GST/HST, look no further than our online course catered for health professionals like you!
Frequently Asked Questions
How do I register for my GST/HST account?
First, you will need to register for a Business Number (BN) here, and then you can register for your GST/HST account. You can register for your GST/HST account here or by calling CRA Business Number (BN) Enquiries line at 1-800-959-5525. You'll then receive your number electronically or in the mail to confirm your registration.
If you are incorporated or have registered your business, you may already have a BN. Then you can just register for your GST/HST account.
When you register for a GST/HST account, after your 9-digit BN, you will see RT0001.
How do I know if a company is a GST/HST registrant?
You can determine if a company is a GST/HST registrant by checking the CRA's GST/HST Registry online or by calling the CRA’s Business Enquiries line at 1-800-959-5525. Another check would be looking into their receipts as their BN followed by the GST/HST program denotation RT and their 4-digit account number (ex. 0001)
Verifying the number provided by CRA will ensure that your company is dealing with a legitimate GST/HST registrant.
