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Canada Sales Tax Registration: Everything You Need to Know for GST, PST, and HST
Canada – Get Ready to Register for Sales Tax!
We’re excited to announce that we are expanding our services to include Sales Tax registration and filing in Canada! This guide provides a comprehensive introduction to Canada Sales Tax, the different types of taxes, and how to register for them.
What are the Different Types and Rates of Sales Tax in Canada?
Canada is a federal state comprised of ten provinces and three territories, each with its own taxation policies. Sales Tax in Canada is divided into two levels:
- Federal: Administered by the Canada Revenue Agency (CRA)
- Provincial/Local: Administered by provincial or territorial authorities
Much like the United States, local governments in Canada can set their own Sales Tax rates, independent of the federal government. The three main types of Sales Tax are:
Each province and territory in Canada has unique tax structures. For example, in provinces like Alberta, only the federal GST applies, while provinces like Quebec apply both GST and their local PST, also known as the QST.
Who Pays Canada Sales Tax?
Sales Tax in Canada is collected from customers purchasing taxable goods and services. The process is as follows:
- Purchase: The customer buys a product or service.
- Tax Collection: The seller collects the applicable Sales Tax at the point of sale.
- Filing: The seller files a tax return to the respective authority (federal or provincial).
- Remittance: The seller remits the collected Sales Tax to the appropriate tax authority.
Certain categories of goods and services are zero-rated, meaning that customers do not need to pay sales tax. Zero-rating may be applied at the federal (national) or provincial level.
Common examples of zero-rated goods at the federal level include basic groceries and prescription medication and drugs.
Do You Need to Register for Canada Sales Tax?
Generally, if you reach the relevant sales threshold in the province/territory, you will need to register for tax.
Separate registrations are required for:
- GST/HST – threshold of CAD$30,000 in four consecutive quarters
- PST – dependent on the relevant provincial or local authority – check with us for more details
Registration usually must be done within 30 days of reaching the threshold.
Unlike European VAT, you are not automatically required to register for tax if you store goods in Canada – you only need to register after reaching the threshold.
If you fail to register after reaching the threshold, you could be liable to pay additional penalties, interest, and backdated GST/HST based on the date that you were required to register.
Marketplace Facilitation Rules
Since the 1st July 2021, marketplace facilitation legislation means that online marketplaces such as Amazon are required to automatically calculate, collect and remit GST/HST (and PST where applicable) for non-resident sellers (i.e. businesses based outside of Canada).
Additionally, if you’re also selling on your own website, you will still need to register for GST/HST separately when you reach the threshold.
Why Register Now?
Expanding into the Canadian market presents a fantastic opportunity for your business. Ensure compliance with Sales Tax regulations to avoid penalties and streamline your operations. Register your interest for a free consultation by contacting us at info@tbaglobal.com.
Take your business to the next level by expanding into Canada today!
