After registering your corporation, trade name or partnership, you’re ready to officially launch your business and open your doors. Depending on the size and type of business you’re operating, this could also be the time to apply for a goods and sales/harmonized sales tax (GST/HST) number.
About your business number
At the time you registered your Alberta business, you were assigned a nine-digit business number from the Canada Revenue Agency (CRA). Unless your business is sold or your business structure changes, your business will only ever have one business number, which you can use to access CRA programs and register for a variety of federal programs and services, including a GST/HST number.
Do I need to collect and remit GST/HST?
For the majority of small businesses, whether or not the government requires you to collect and remit (pay) GST/HST depends on whether or not you are considered a “small supplier”. If your business revenue is equal to or less than $30,000 every calendar quarter for the last four consecutive calendar quarters, you are considered to be a small supplier. Small suppliers do not have to collect and remit GST/HST, but may choose to do so.
Artem’s traditional pierogies sell for $15/bag in his restaurant, which is open six days per week. On average, he will sell between 30 and 45 bags per day. By the tenth week of Artem’s first fiscal quarter, he will have reached the $30,000 threshold and therefore must begin charging GST/HST.
Morgan finds pieces of worse-for-wear furniture on online marketplaces, then repairs and resells them. They make between $150 and $3000 in any given month, depending on the number of projects they are working on. Morgan’s revenue doesn’t hit the threshold in any recent fiscal quarter, therefore they are considered a small supplier and do not have to collect or remit GST/HST.
For the past four calendar quarters, sales of Salma and Noor’s handmade hijabs have been consistent but just under the total remittance threshold for small suppliers. They decide to voluntarily collect and remit GST/HST at the start of their business’ next fiscal year.
Corinne operates a mobile smoothie bowl stand at markets seven months of the year. Most quarters she is over the small supplier threshold, with the exception of market off-season. She’s decided to collect GST/HST on every sale she makes and remit quarterly.
Registering for a GST/HST account
If you’re confident collecting and remitting GST/HST is something your business needs to do, you’ll first need to register for an account with CRA. Registration can be completed online by visiting the Business Registration Online program page on the Canada Revenue Agency website. Ensure you have the following information ready before you begin:
- Effective date of registration. If you are registering because you have stopped being a small supplier, the effective date of registration is the day you stopped being a small supplier (or earlier, if you so choose). If you are a small supplier voluntarily registering for a GST/HST account, your date of registration will be the day you register (or up to 30 days earlier, if you so choose).
- Your fiscal year. Some businesses align their corporate fiscal year with the calendar year, while others use a non-calendar tax year. Whether you’ve chosen to begin your fiscal year on January 1 or another date, you’ll want to make sure your GST/HST fiscal year is aligned with your corporate income tax fiscal year.
- Total annual revenue. Calculate your total annual revenue before starting the registration process. If you’re just starting your business, provide an estimate based on your cash flow projections.
- Personal information. In order to verify you (the applicant) and your business, CRA will require personal information including your last name, social insurance number (SIN), personal postal code and date of birth.
- Business information. To complete the application, you’ll need to provide information including your business name, business number, business structure (sole proprietor, partnership, corporation, etc), names and SINs of all owners, physical address of the business (as well as mailing address if different), and a description of the primary business activities.
When selling products or services within the province of Alberta, you will only need to collect five per cent GST. Selling products or services outside of the province of Alberta will mean applying GST/HST based on the place of supply—that is,the place to which you will be supplying your product or service:
- Five per cent GST in Alberta, British Columbia, Saskatchewan, Manitoba, Yukon, Northwest Territories, Nunavut and Quebec
- For provinces with a separate provincial sales tax (PST) and GST (not HST), only collect the GST. You do not need to collect PST from the place of supply. Use CRA’s GST/HST calculator if you’re unsure what you need to collect.
- 13 per cent HST in Ontario
- 15 per cent HST in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island
- Zero per cent on exports, which are zero-rated
Stella lives in St Paul, AB. Her business sells candles wholesale to independent shops. When Stella ships to her customer in Banff, she will charge five per cent GST on that order. When she ships to her customer in North Bay, Ontario, she will charge 13 per cent HST on that order. When Stella ships to her customer in Billings, Montana, she will charge 0 per cent GST.
Depending on the type of business you’re operating, your invoicing system or online payment portal may be able to calculate the GST/HST you need to collect automatically based on the purchaser’s address.
Collected GST/HST should be held in a separate bank account from your regular operating account, as these amounts are considered to be held in trust—in other words, your business is acting as an agent of the government to collect GST/HST on its behalf.
Remitting and filing your GST/HST return
Once you have collected GST/HST, you will need to remit these collections to CRA—monthly, quarterly or annually. You can send payments through your bank, through your CRA My Business account or by mail. If you haven’t collected any GST/HST, you will still need to file a report. Ensure you keep proper documentation of your collection of GST/HST for a minimum of six years.
If you’re concerned about setting up your GST/HST account properly or have questions about remitting, work with a professional bookkeeper or accountant. As one of the crucial members of your startup team, alongside your lawyer and banker, your accountant can work with you to manage these important financial aspects of your business. Your banker can also ensure you have the right bank accounts set up to hold your funds in trust until you need to remit.