A goods and services tax (GST) number is a unique tax identification number assigned to a business by the Canada Revenue Agency (CRA). It's also known as a business number (BN), because, in addition to being used to collect, report and remit GST and harmonized sales tax (HST), it identifies other business dealings your company has with the CRA. For example, you will use your GST number for your business's corporate income tax if your business is structured as a corporation, and for your payroll deductions account if your business has employees.
You will also use your GST number in the course of doing business. Once you have been assigned a number, you are required to show it on your invoices.
Mandatory vs. Exempt Business Requirements
Most businesses in Canada are required to have a GST number. GST/HST registration is mandatory for all businesses in Canada except for those deemed small suppliers.
The CRA defines a GST small supplier as a sole proprietor, partnership, or corporation whose total taxable revenues before expenses are $30,000 or less annually. Note that provincial sales tax (PST) or proceeds from the sale of capital property are not included in the threshold amount.
The small supplier GST registration rule doesn't apply to all types of businesses. For example, taxi and limousine operators and non-resident performers who sell admissions to seminars, performances or other events, must always register for the GST.
Even if you qualify as a GST small supplier, you may still want to register for the GST. Doing so allows you to reclaim the GST/HST you've paid on business purchases, on everything from capital property to office supplies to GST/HST input tax credits.
Upon starting a business, it's wise to register for the GST immediately so you can claim the GST/HST on the items you're purchasing for your startup. Because of the way GST/HST reporting and filing works, you won't be able to claim the GST/HST on these business expenses retroactively.
The GST/HST Registration Process
Basically, for GST/HST registration, you apply to the CRA for a GST/HST number. You can do this in one of the following ways:
- Online via Business Registration Online (BRO). BRO online registration has a number of advantages. You can also register for other CRA program accounts including corporation income tax, payroll, and import-export taxes, and, if your business is B.C., Nova Scotia, or Ontario-based, you can transfer directly to the appropriate online provincial business registry when finished with GST/HST registration for whatever other registrations you may require.
- Over the phone by calling the CRA.
Once your GST/HST registration is complete, you'll be ready to collect and remit the GST or HST.
If your business is in Quebec, you need to contact Revenu Quebec, as they deal with GST/HST in that province.
How to Charge and Collect GST/HST
Once your GST/HST registration is complete and you have your GST number, you charge your customers GST/HST on the taxable goods and services you supply to them.
Whether you charge and collect just GST or GST and HST depends on the province in which your business is located, the type of goods or services you are providing and, if the goods are being shipped, their destination. You will also need to know how to charge PST if you have an online business vs. a brick-and-mortar operation.
The GST/HST you collect is remitted to the CRA by completing a GST/HST return identified with your GST number either quarterly or annually. Note that the CRA refers to this number as a business number or BN.
When you are completing your GST/HST return, you can claim input tax credits for the GST/HST you paid or owe on purchases and expenses you use, consume, or supply in your commercial activities, in effect getting back the GST/HST you paid.
When starting a business in Canada, make sure that you understand the process for GST/HST and how it affects your business. The CRA provides many guides and pamphlets with additional information about GST/HST, including guides that are specific to particular types of businesses.