First and foremost, all organizations should establish if they have to register to the GST and the QST. Assuming that there are no obligation to do so, then the next question to answer is to whether it is beneficial to register to the GST and to the QST. Do not hesitate to contact us to obtain information on GST – QST registrations.
1. General Principle
The goods and services tax (GST) was introduced by the Canadian government in 1991. It is a value-added tax with a 5% rate.
The province of Quebec operates its own value-added tax, the Quebec Sales Tax (QST), with a 9.975% rate.
Some provinces (called the “participating provinces”) have entrusted the federal government with the responsibility to collect most of their consumption taxes under the Harmonised Sales Tax (HST). The federal government collects the GST and the provincial portion of the tax, called the provincial valued-added tax (PVAT), the total of these two portions being the HST. The participating provinces are Prince Edward Island, New-Brunswick, Nova Scotia, Ontario and Newfoundland-and-Labrador. See the HST rates for these provinces.
Persons carrying on business in Canada are usually required to register for a GST/HST account. Registration for the GST is also a registration for the HST. Persons carrying on business in Quebec are also usually required to register for the QST.
As for the other provinces, other than the Quebec and the participating provinces, information on their provincial sales tax regime is available on the websites of their respective provincial governments:
2. Selected Listed Financial Institutions (SLFI)
It should be noted that any registration of a selected listed financial institution (SLFI) for the a GST/HST account as well as for a QST account will be handled by the Canada Revenue Agency (CRA) even though the SLFI is located in Quebec.
3. Who should register?
As a general rule, any person engaged in commercial activities carried out in the course of operating a business in Canada is required to register for the GST/HST.
For GST/HST purposes, exempt supplies of goods and services are not commercial activities. Non-residents may be required to register for GST/HST.
4. Small suppliers
Small suppliers are not required to register. A small supplier refers to a person whose worldwide revenues (along with the revenue of all persons associated with that person) from the sales of taxable supplies of goods and services does not exceed $30,000 during the course of the current calendar quarter and over the preceding four consecutive calendar quarters.
Taxi or limousine operators must register for a GST/HST account whatever are their revenues from their sales.
In the case of not-for-profit organizations such as charities and public institutions, the small supplier limit amount is $50,000.
5. Voluntary Registration
In some circumstances, a person, while not required to register for the GST/HST, may be eligible for voluntary registration. The GST/HST is a value-added tax system providing for the offset of taxes collected on sales with taxes paid on expenses. So, generally speaking, registered persons will be entitled, when certain legal obligations are met, to claim a refund of the GST/HST paid on business expenses.
6. Non-resident persons
To determine whether a non-resident person has the obligation to register, one of the most important issue is to determine whether that person is carrying on business in Canada. It is a question of fact. In general, a non-resident person must have a significant presence in Canada to be considered to be carrying on business in Canada. It is sometimes difficult to ascertain that status.
In its GST/HST Policy Statement P-051R2, « Carrying on business in Canada », the CRA lists some factors that are considered in determining whether a non-resident person is carrying on business in Canada. These factors are the followings:
- the place where agents or employees of the non-resident are located;
- the place of delivery;
- the place of payment;
- the place where purchases are made or assets are acquired;
- the place from which transactions are solicited;
- the location of assets or an inventory of goods;
- the place where the business contracts are made;
- the location of a bank account;
- the place where the non-resident's name and business are listed in a directory;
- the location of a branch or office;
- the place where the service is performed; and
- the place of manufacture or production
7. Legal obligations for GST/HST registrants
GST/HST registrants must meet certain legal obligations. Generally they must collect the tax on taxable supplies of goods and services they make in Canada and remit any resulting net tax owing. They must file GST/HST returns on a regular basis and claim input tax credits (ITC) to recover the GST/HST paid or payable on expenses from their commercial activities.
8. QST Registration
The Quebec sales tax system is similar to the GST/HST system, however one must be aware that some rules may be different and that it is a distinct system, contrary to the HST.
As a general rule, any person carrying on commercial activities in Quebec must register to the QST. Rules are similar to the GST/HST regarding the obligation to register, except that the obligation applies only for commercial activities in Quebec rather than in Canada.
If you want to know whether your organization is required to register to the GST/HST or the QST, and if you want to know what could be the benefit of a voluntary registration, and if you need that we take care of registering your organization, don’t hesitate to contact us, we will be pleased to help you.Contact Us