What Is GST And HST? Tips To Register - BG Accounting and Business Solutions

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:

Table of Contents

Understanding GST & PST
HST in Ontario
GST and HST Payment Dates
Requirements to register for GST and HST

After increasing your sales, you need to register, pay, and collect the GST or HST in certain provinces. The GST stands for federal goods and services tax. So, let’s see the highlights of the recent tax types in Canada:

Understanding GST (Goods and Services Tax)

A goods and services tax levies on the supplies of goods and services. The GST tax rate in Canada is 5% on most goods and services.

However, there are some exceptions. Groceries, medical supplies, education courses, financial services, and childcare services are exempt from this tax. 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)

The consumer/buyer of the goods and services pays a consumption tax. The PST rate varies depending on the Province where you sell your products.

In British, Columbia PST is 7% and in Saskatchewan, it is 6%. Manitoba calls the tax Retail Sales Tax (RST) and sets it at 7%. Quebec calls the tax Quebec Sales Tax (QST) and sets it at 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.

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.

Remember, many services in Canada are subject to taxes, including car repairs, hotel stays, clothing, shoes, and 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. If you live in Ontario, Nova Scotia, New Brunswick, PEI, or Newfoundland, you must collect HST. This is because these provinces have combined GST and PST to form HST specifically for 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 main rules mentioned here, there may be other specific factors that are relevant to your situation. One such factor is determining whether the items you sell are subject to taxes.

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.
Registering early for GST and HST will allow you to benefit from the tax credits.