How To Cancel GST/HST Account

by Brian
(Ottawa, Canada)

I volunteered to register for GST number. I have a lawn cutting business and will make well under the mandatory 30K.

I have not had any business yet and as a result haven't collected any GST - my income will be well under 30 K.

How do I cancel my GST number that I volunteered for?

Thanks, Brian



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How To Cancel Your GST/HST Account


Hi Brian,

To close out your GST account, you must fill out CRA's form RC145 Request to Close Business Number (BN) Accounts.

The form can be mailed or faxed to your tax services office.



There are a few things you need to be aware of before you cancel your GST/HST account as there will be a financial impact.

  1. When you are a small supplier, you must have your GST/HST account open for at least twelve months before you can close/cancel your registration.

  2. When you cancel your registration, any non-capital property held in supply is deemed to be sold/disposed of at fair market value (FMV). You will be responsible for collecting GST/HST on these items ... and reporting/remitting it to CRA on your last return.

  3. Any capital property the business owns is considered / deemed sold under change of use rules. You must self assess and pay GST/HST at that time because you have changed the primary use from commercial to non-commercial.

    For example ... you bought a lawn mower that cost $400. The GST paid at time of purchase was $20. The $20 input tax credit is claimed on your GST/HST return. Now the mower is a year old with a FMV estimated at $320. You will have to pay GST/HST using CRA's formula upon de-registering of ($20 - $0) x ($320 / $400) = $16.

  4. If you have any prepaid arrangements, you must adjust your final return for any input tax credits provided after you close your account.



Brian, I am uncertain as to whether CRA lets you opt out of registration if you intend to continue operating your business. You will have to call them to find out.

I am also puzzled as to why you would want to. GST/HST is a neutral tax to business. It is an effective way to reduce your total taxes paid.

It goes without saying that if you haven't had any business yet, your income will be under $30,000. Many small businesses operate at a loss the first few years, so being able to claim your input tax credits helps you reduce taxes and manage your cash flow.



Where To Go For More Information


You can find out more information on how to close your GST/HST account on the CRA website*.






*I like to give my readers the CRA path so they can learn how to find information on the website ... and because every time the site gets reorganized, I have trouble ... sometimes ... finding my reference source again.

Comments for How To Cancel GST/HST Account

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Sep 19, 2012
De-Registering for GST
by: A Shy Canadian Visitor

I registered for GST when my sales were in excess of $30,000 some 3 years ago.

In 2009 and 2010 my sales did not exceed $30,000 and I would like to de-register. How do I do this and when does it take affect?



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Check out the previous posting above by a business owner who had a similar question, How To Cancel Your GST/HST Account.

As you have been a GST/HST registrant for more than one year, you should have no problem deregistering. Where it hurts your pocket book is paying the GST/HST you have to self-assess on deregistering assets and inventories.

So before you send in Form RC145 Request to Close a Business, make sure you read up on "What happens to your previously claimed ITCs when closing a GST/HST account?" that I chat about in the posting referred to above.






P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

Feb 23, 2013
I would like to be a small supplier
by: Anonymous

Hello,

My husband and I manufacture 4 organic cleaners and registered for GST years ago.

As you know, running a business is a full time job and then some. I find collecting, recording and remitting GST so time conuming and the government does not pay me for my time.

Our business averages under $60,000 every year.

I would like to know if we could split the company in 2, so the manufacture & wholesale side does under $30,000 and then the retail side would do under $30,000. This way both would become a small supplier. Wonder if we could do this?

Thanks for any input.

Jan 06, 2014
HST
by: Anonymous

Hi,
I am HST registered for a commercial property purchased about 15 years ago. We registered in order not to pay the GST on the property when we purchased. Since our rental income is less than $30,000 per year can we now de-register. What would be the implications if any?

Sep 09, 2014
Help
by: Anonymous

My boy friend is painting. He applied for a GST number and I want him to cancel it. (Owing money at the end of the year is hurting us because he doesn't put the GST away.)

He makes over $30 thousand. Is he allowed to cancel it? Once cancelled, he plans to work under someone and not for himself anymore. What are the penalties and what does he need to do.

Sep 10, 2014
Painter's Woes
by: Lake

I'm sorry to tell you that as long as he self-employed and has sales over $30,000, he must be registered for GST. It is required.

It sounds like he is an annual filer. I recommend he switch to quarterly filing (must get CRA's permission to switch your filing period). This way he has to account for his GST every three months and is less likely to run into trouble.

The best practice is to have a savings account where he deposits / transfers the GST collected after every sale. Once he files his return he can remove the ITC's from the savings account for his own personal use.

See my tip on funds collected in trust.

As long as he is an employee when he begins to work for someone else, as opposed to a sub-contractor, he should be able to shut down his business and close his GST account once it is paid in full.

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