GST/HST for businesses
GST (Goods and Services Tax) and HST (Harmonized Sales Tax) are consumption taxes in Canada. The GST is a federal tax, while the HST is a combined federal and provincial tax in certain provinces.
For businesses operating in Canada, GST/HST is applicable to most goods and services provided. However, not all goods and services are subject to GST/HST. Some goods and services are exempt or zero-rated.
Here's a brief overview of how GST/HST works for businesses:
Registration: Generally, if your business's worldwide annual taxable sales (including zero-rated and GST-exempt sales) exceed $30,000, you are required to register for GST/HST. However, businesses can voluntarily register for GST/HST regardless of their sales volume to claim input tax credits (ITCs) on their business expenses.
Charging GST/HST: Once registered, businesses must charge GST/HST on taxable goods and services sold in Canada. The rate varies depending on the province where the goods or services are supplied. In provinces with HST, the rate is the HST rate, while in provinces without HST, it's the GST rate plus any applicable provincial sales tax (PST). The rates may change, so it's important to stay updated with current rates.
Input Tax Credits (ITCs): Registered businesses can claim input tax credits (ITCs) to recover the GST/HST paid on business purchases and expenses. This helps to reduce the amount of GST/HST owed to the government.
Filing GST/HST Returns: Businesses are required to file GST/HST returns periodically (usually monthly, quarterly, or annually, depending on their annual taxable sales and whether they are a regular filer or a small supplier). The return reports the GST/HST collected on sales and claims the ITCs on eligible expenses. The net amount owed to or refundable from the government is calculated based on these figures.
Compliance and Record-keeping: Businesses must maintain adequate records to support their GST/HST filings. This includes keeping invoices, receipts, and other documents related to sales and expenses.
Exceptions and Special Rules: There may be special rules or exceptions applicable to certain industries or types of transactions. It's important for businesses to understand these rules to ensure compliance.
Overall, understanding and managing GST/HST obligations is crucial for businesses operating in Canada to avoid penalties and ensure compliance with tax laws. Consulting with a tax professional or accountant can provide tailored advice based on the specific circumstances of a business.
Here is a link for more helpful information
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses.html
