GST/HST Taxation
WHAT IS THE GOODS AND SERVICES TAX GST/HST AND THE TAXATION RATE IN CANADA?
The Canadian businesses collect GST (goods and services tax) on taxable supplies in Canada and the HST called harmonized sales tax at source and pay to Canada Revenue Agency. The GST/HST rate varies across the provinces ranged from 5% to 15%, and per Vancouver, British Columbia it is 5% (federal GST/HST tax) plus the 7% PST (Provincial Sales Tax) during this period. The first nation population is exempt from these taxes.
These taxes GST/HST and the PST are added to your purchase receipts at store or service invoice of all the services made in Vancouver, BC. Taxes are applied to properties too (supplies to Land, building, and interests of such properties), including intangible properties – trademarks, patents, etc.
WHAT ARE GST/HST TAXABLE SUPPLIES AND SERVICES IN CANADA AND WHAT ARE THE EXEMPT (ZERO RATED GOODS)?
• Purchase of new house (Condo, townhouse, detached house, and commercial properties)
• Rent of commercial properties
• Purchase and rental of automobiles (motor vehicle)
• repair of motor vehicles
• Junk food (soft drinks, fries, candies)
• Shopping of shoes and clothing (new or used at charity stores)
• Marketing and advertisement (services to a non-resident is exempt)
• Hiring transportation (taxi or uber)
• Accounting services or lawyer fees
• Hotel room for staying in hotels or motel
• Hair cut services, polar or massage
• Restaurant dining and eating pizza
The government of Canada has provided a list of items that are exempt from GST/HST (zero-rated tax), these are most of the basic groceries food items, agriculture products, livestock (meat) and fish, prescribed drugs, etc.
WHAT IS THE PROCESS TO REGISTER BUSINESS FOR GST/HST? HOW TO COLLECT AND SETTLE GST/HST PAYMENTS?
If you have registered your business for GST/HST collection, you are allowed to charge and collect taxes on taxable supplies and file your GST/HST returns periodically.
You are allowed to claim ITCs on GST/HST return you file and recover your paid taxes on purchases or supplies. Here you need to make a payment if your total collection is more than your claimed GST/HST on your expenses.
You have to register your business for the GST/HST if you are in business to trade taxable goods or taxable professional services. Make sure you are not the small supplier (excused to collect taxes).
You are the small supplier if you are:
• A sole proprietor and your total business revenue is less than $30,000 in the calendar year.
• A partnership or a corporation and you make yearly revenue less than $30,000 from your worldwide taxable supplies or services.
• A public service entity and your total taxable services or goods revenue (inside and outside of Canada sales) is less than $50,000 per calendar year.
You must register your business within 29 days from the day your sales from the taxable goods or services meet the threshold limit amount.
Voluntary registration of your business for GST/HST
Even you are a small supplier and involved in commercial activities in Canada, you can opt to be a voluntary registrant and collect GST/HST on taxable goods and services you are providing. Also, claim paid taxes on services or goods consumed for your business.
How to register for GST/HST your business to collect taxes on taxable goods and services
You must need a business number before apply for GST/HST registration. To set up a business number and GST/HST account please contact CRA and file the form RC1, and request for a business number and the registration.
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022/general-information-gst-hst-registrants.html
