In Canada, HST can be a complicated topic. Each of these processes—applying for a HST number, charging the appropriate amount, subtracting HST, remitting HST—has its own set of rules that can vary from province to province.
You must become well-versed in the nuances of managing your HST number if you have recently launched a new company or are taking over the duties for charging and remitting HST.
To assist you in navigating the system, the experts at Numetrica CPA have compiled the most frequently asked "how to" questions on HST. Learn all there is to know about handling your HST duties in Canada.
How Does Canada's HST Work?
The federal goods and services tax (GST) and the provincial sales tax (PST) are combined into the Harmonized Sales Tax (HST). There are now five provinces that use the HST:
- Ontario
- Nova Scotia
- New Brunswick
- Newfoundland and Labrador
- Prince Edward Island
After briefly implementing HST in 2010, British Columbia went back to using the GST/PST system in 2013.
If a business operator in Canada makes more over $30,000 in total income annually, they must apply for a HST number. They must then charge HST on the goods and services they supply after applying for this number, unless they are exempt from paying taxes.
To disclose the HST they collected during that fiscal year, businesses must file a HST return with the Canada Revenue Agency (CRA) at the end of the fiscal year. They are in charge of returning that HST to the government through remittance. There are possible deductions in the form of additional tax credits and company expenditures.
Every year, a HST return needs to be submitted, and the required HST remittance needs to be paid by the deadlines.
How much is Canada's HST?
There are different amounts for the federal and provincial rates, so the total amount of HST varies from province to province. The following table shows the HST rates for Canada's five provinces that have implemented it.
|
Province |
HST Rate |
Provincial Rate |
Federal Rate |
|
New Brunswick |
15% |
10% |
5% |
|
Newfoundland and Labrador |
15% |
10% |
5% |
|
Nova Scotia |
15% |
10% |
5% |
|
Ontario |
13% |
8% |
5% |
|
Prince Edward Island |
15% |
10% |
5% |
How do I get a HST number?
The application procedure for obtaining a HST number in Canada is a straightforward one. You will need your total annual revenue, your chosen fiscal year for the purposes of the HST, the date of registration (which is the date on which you cease to be considered a designated small supplier and make more than $30,000 in revenue), and basic information about your company.
You are able to register for a HST number in a variety of different ways, including online, via mail, by fax, or over the phone. Visit the Business Registration Online portal provided by the CRA in order to complete the process online. After everything is finished, your HST number will be provided to you right away.
What Is The Price Of Obtaining An HST Number?
It costs nothing to obtain a HST number from the CRA. There can be a minor service charge if you decide to use a tax accounting business to file your taxes for you.
Where can I find my HST number?
Three components make up a HST number. Your Business Number (BN) is the same as the first nine digits. The program identifier, which indicates the type of account, is represented by the next two letters. Typically, HST numbers are "RT." The reference number, which is the third component, is used to distinguish between various accounts that have the same program ID and BN. It normally has four digits, 0001, 0002, etc.
A possible format for a HST number is 123456789RT0001.
Looking through your pertinent tax paperwork is the best way to determine your HST number. It will be mentioned on HST returns from prior years. If you are unable to locate any documentation, you can obtain your number or generate a new one by calling the CRA at 1-800-959-5525.
How Can I Find a Company's HST Number?
You can use the CRA to validate a HST number that was given to you by a different business (such as a supplier) if necessary. To verify the accuracy of the number you were given, use their GST/HST Registry Search.
You can get in touch with the CRA to find out if the company is registered if you need to verify a HST number that was not supplied.
How to Take HST Out of the Total?
On a receipt, you apply the following calculation to figure out how much HST to remove from the total price.
HST Amount = Price X HST Rate Divided by 100 Plus HST Rate
What is the HST on a gross bill of $1,130
HST = Gross / 1.13*.13 = 130
How Do I Pay and remit HST?
When you submit your HST return, you will be informed of the amount of HST that you are obligated to pay to the government. In most cases, you are required to make your HST payment at the same time as you submit your tax return. In certain circumstances, you could have to make payments on a monthly or quarterly basis. The date by which you are required to send in your HST payment is written at the very top of Form GST34-2.
Visit the Canada Revenue Agency if you want a comprehensive timetable of deadlines.
Your HST remittance can be paid in one of these three ways:
- remit electronically through CRA webite as you log in or Netfile if you have your 4 digit codes
- remit at your financial institution in Canada, once you set up CRA as a payee
- send your payment by mail, file out the form and attach a cheque - least favouarable way.
For payments of $50,000 or more, you must use electronic funds transfer or go to your bank
It is suggested that you send your payment electronically through the CRA's "My Payment" option online.
How do I close my HST account?
There are a few things you will need to close your HST account:
- Business number
- Legal name of the business
- Cancellation date
- Reason for closing
After obtaining this data, you have two options: call the CRA at 1-800-959-5525, or submit Form RC145, Request to Close Business Number Program Accounts, to the CRA.
Once your account has been effectively terminated, you need to find out how much HST was due at the time of closure. Please visit the Canada Revenue Agency for further details.
The professionals at Numetrica can assist you if you require any additional support with your company's HST number or remittance. To make sure you are remitting the right amount and meeting deadlines, we provide application support and filing services for GST and HST returns.