GST Registration ... HST Registration ...
Should I Register? Must I Register?

by L. Kenway BComm CPB Retired

This is the year you get all your ducks in a row!

In my last chat, I discussed and answered the  question, "What is GST / HST?"

Now I'll look at the process of  GST registration / HST registration in Canada ... so you can claim your input tax credits.

HST stands for harmonized sales tax ... GST stands for goods and services tax. Get your cup of tea (bring the whole darn pot!) and meet me back here so we can start learning the ins and outs of GST/HST registration.

HST GST registration is mandatory if a business's taxable sales exceeds $30,000 annually.

If you are registered for GST, you are automatically registered for HST as well. I discuss how to file your GST/HST return in part two of this series.

The exceptions (there are always exceptions) are taxi or limousine operators. They must register regardless of their sales volumes.

Bookkeeping-Essentials.ca

A Guide to Understanding GST HST in Canada
Links below open to a page on Bookkeeping-Essentials.ca.

Notice to Visitors

Before I begin I would like to remind you there is a difference between information and advice. The information provided in this article or on this site should not be construed as advice. Please make yourself familiar with my disclaimer.

GST Registration - HST Registration
A Tax Planning Opportunity

Put More Money In Your Pocket - The Benefits to You

It is recommended that you voluntarily register for GST/HST even if your annual sales are less than $30,000. Why? ... HST GST registration enables you to recover your input tax credits (ITCs) on business purchases and GST/HST paid on startup costs.

If you decide to voluntarily register (i.e. your sales are under $30,000 per year), you WILL be required to charge and collect GST/HST on your products and services that are not zero rated or exempt. You will also BE ELIGIBLE to claim input tax credits (see the next section for what this is all about.)

Who is Authorized to Charge GST/HST?

Let me just point this out ... if you are NOT a GST/HST registrant, you are NOT authorized to charge and/or collect GST/HST.

So what do you do if you are charged GST/HST by a business that is NOT registered?

What do you do if you charged your customers GST/HST but are NOT registered to do so?

Follow the links to find out how do deal with either of these circumstances.

What are Input Tax Credits?

ITCs are credits you are allowed to claim to recover any of the HST GST you paid on your business purchases. This means GST/HST is paid only by the end consumer as your GST/HST ITCs neutralize the tax for your business.

You must be registered to claim them. You cannot recover ITCs incurred prior to HST GST registration. This is where good tax planning comes in.

By voluntarily registering your business while you are in the startup stage, you will be able to recover your startup costs. If you wait to register, you have lost out on recovering your ITCs related to your startup costs. CRA does not allow (in most cases - there are always exceptions as I said earlier) you to retroactively register.

Consider this - By not being an HST GST registrant, you do lower your prices to your customers (hey they gotta love that) by 5% (our current rate) but hold on ... you also increase your cost of doing business 5% by not being able to claim the ITC as a non-registrant ... hmmm ...

There is the disadvantage that once HST GST registration occurs, you will have to track the GST/HST collected and paid out. But I think this disadvantage is offset by the reduction in your total taxes paid.

An added benefit of HST GST registration - it makes your business look more credible and legitimate. Remember, GST/HST is tax neutral to registered businesses. The customers that will be most affected by your decision to charge HST GST are retail customers. If most of your competitors are charging HST GST, then these retail customers should be neutral to you being a HST GST registrant and charging HST GST.

Free GST Registration - Free HST Registration
Startup Costs and Your First Audit By CRA

Once you have completed your free HST GST registration (see below for more information), you will have to file your first return. Here is what you should know.

CRA may audit you the first time you file an GST/HST return with a refund balance. 

The CRA is interested in verifying the existence of your business and your startup costs. They also want to ensure you are aware of your rights and responsibilities and have adequate books and records.

If CRA finds your books and records are unsatisfactory, they will make recommendations and answer any questions you may have. So take the time to do a proper job of your bookkeeping.

How to Register for GST/HST (It's Free)

There is no fee to register for GST/HST. You have a few ways available to you for HST GST registration:

• by internet - Business Registration Online (BRO) allows you to register for your Business Identification Number, GST-HST, payrolldeductions, import-export accounts and if you are incorporated, corporate income tax. It is self serve. There are also some provincial accounts available. ... Once at the registration site, you will find a list of restrictions after you click on "Register Now" to help you determine if you can use this self serve method.


• by telephone -you can phone 1-800-959-5525. Look over Form RC1 Request for a Business Number (BN) as you will need all the information on that form available for the agent.


• by mail or fax - send a completed Form RC1 Request for a BusinessNumber (BN) to your tax service office.

Mandatory GST Registration & HST Registration
Meeting or Exceeding the $30,000 Threshold

When you meet or exceed the small supplier threshold of $30,000 in a quarter, you are considered registered and must begin collecting GST/HST on all sales after the threshold has been met. HST GST registration must officially be applied for within 29 days of collection beginning.

If you meet or exceed the small supplier threshold of $30,000 over four consecutive quarters, you must begin collecting GST/HST one month after the fourth quarter. You have 29 days from when you begin collecting to officially register.

If you do not officially register when you meet the threshold of $30,000, you will lose your ITCs ... ouch! Expensive!

The February 2014 Federal Budget announced that CRA will be allowed to automatically register businesses if they have been notified and failed to comply. The automatic registration will occur 60 days after official notification. This change takes place effective with the Royal Assent of the enacting legislation.

Canada Revenue Agency (CRA) Guides on GST/HST

If you require more information on HST GST Registration, the main CRA guide is Publication RC4022 General Information for GST/HST Registrants. However, there are a lot of pamphlets and booklets published by CRA. Some are specific to different industries like travel and convention, or construction. Here is an index to them all - GST/HST Publications and Forms.

In my opinion, the advantage of HST GST registration is it increases your cash flow and reduces your overall taxes ... which gives you the opportunity to grow your business.

This concludes Part One of my chat on HST GST registration.

Check Part Two of the Guide on stuff you need to know after you have completed your registration.

The Guide Index also has links to HST transitioning, HST bulletins, ITCs and your personal vehicle, GST/HST historical rates and compliance deadlines.

You'll find links to both of these pages below.

See you on the next page ...
Your tutor

Main Reference Source: CRA publications and articles on HST GST Registration

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