What is GST & HST? And How To Register It In Canada?

GST and HST are known as value-added sales tax levied at each stage of the business process from manufacturer to wholesaler, and retailer to the final consumer. Whereas PST is a consumption tax and it’s charged to the final consumer only. GST and HST In this blog, we are going to discuss about taxes seek the importance of HST/GST for businesses in Canada. We will cover the following topics in the following blog:
  • Understanding GST & PST
  • HST in Ontario
  • GST and HST Payment Dates
  • Requirements to register for GST and HST
Once your sale is ramped up you need to register, pay and collect the GST i.e., federal goods and services tax or in some provinces HST. So, let’s see the highlights of the recent tax types in Canada:

Understanding GST (Goods and Services Tax)

It is defined as a goods and services tax that is levied on the supplies of goods and services. The GST tax rate is 5% in Canada on the selling of goods and services, excluding zero-rated items such as groceries, medical supplies, education courses, financial services, and childcare services. Talk to one of our experts for crucial tax advice at BG Accounting & Business Solutions.

KEY TAKEAWAYS:

  • GST is the federal tax that most businesses, selling goods and services in Canada need to collect from customers.
  • The GST rate is 5% since January 2019 but some provinces in Canada charged HST combining GST+PST, as in Ontario.
  • You will be paying whether GST or HST depending on your location.

What is PST (Provincial Sales Tax)

It is a consumption tax and is charged only to the consumer/ buyer of the goods and services. The PST rate differs depending on which Province your products are sold in. In British, Columbia PST is 7% and in Saskatchewan, it is 6%. Whereas in Manitoba, the provincial tax is known as Retail Sales Tax (RST) and rated at 7% and Quebec charges Quebec Sales Tax (QST) at a rate of 9.97%. BG Accounting and Business Solutions make sure you choose the right sales tax for your business operations in Ontario. Give us a call right away.

KEY TAKEAWAYS:

  • PST is only for the local province in which you’re carrying out business activities
  • The tax rate varies in different provinces, generally, it is 7% in Canada.
  • Some provinces promote their tax such as Quebec it’s (QST) instead of PST.
gst hst table

What is HST (Harmonized Sales Tax)

Harmonized sales tax (HST) is a consumption tax paid by consumers and businesses in Canada. The tax outlines the combination of the federal goods and services tax (GST) and other provincial sales taxes. (PST).

KEY TAKEAWAYS:

  • HST is a formation of GST and PST taxes on goods and services in five Canadian provinces.
  • The average HST tax rate is 15% for provinces, except Ontario, which has 13% combining GST and PST.
  • You must register for HST if you made a profit over $30,000 annually.

Requirements to Register for GST/HST

It is hell easy to register yourself for GST or HST with BG Accounting and Business Solutions right here. Check out the link to get painless processing of your GST or HST account. Link= https://bgaccountinggroup.com/hashim-chaudhry/ You must fulfill the two main requirements to register for GST or HST:
  • If you’re selling taxable supplies in Canada
  • OR your business has generated over $30,000 in the last 12 months.
Keep in mind, most of the services in Canada are taxable supplies from car repairs, hotel accommodations, clothing and shoes and even consulting services. So, if you register then how would you know what taxes you need to collect? Well, it all depends on your location as in which province you’re currently living in Canada. You may need to charge GST and  HST or GST and PST. For say if you’re living in Ontario, Nova Scotia, New Brunswick, PEI, and Newfoundland, you need to collect HST as these provinces have combined GST and PST to create HST for the businesses. You need to charge both GST and PST in British Columbia, Saskatchewan, Quebec, and Manitoba. Only the GST applies in Alberta, Yukon, Nunavut, and North West territories. PRO TIP: Sometimes it is quite helpful to register for GST or HST account numbers earlier than the $30,000 limit. The reason is very simple to win back the tax credits for the business. After you register for GST or HST account, you not only start to charge your clients the taxable amount but any GST or HST you pay in terms of expenses can be used as a tax credit at the end of the year. In addition to the general rules outlined here, other details might be important in your case such as determining the types of goods or services you sell are taxable.

GST/HST Pay Dates for 2023

The Canada Revenue Agency (CRA) has released the GST And HST payment dates for 2023 below:
  • 5 January 2023
  • 5 April 2023
The next GST tax submission date will be from January 5, 2023, to every 5th of each month quarterly.

Considerations:

Well, if this all sounds complex to you then let us give you a refresher on this, consider the key takeaways:
  • You must register for GST or HST if you have generated over $30,000 during the last financial year.
  • You must start charging your clients the appropriate taxes as soon as you get the GST and HST numbers.
  • It is better to register early for GST and HST to get benefited from the tax credits.
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