If you’re a new or small business operating in Canada, chances are you don’t need to worry about what taxes to charge or collect, but you might be wondering what taxes you need to charge as a Canadian entrepreneur! Learn basic tax responsibilities of Canadian Sellers and familiarize yourself with registration requirements to avoid penalties down the road.
Goods and Services Tax (GST) / Harmonized Sales Tax (HST):
One of the primary tax obligations for Canadian sellers is the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST*). Businesses with annual revenues exceeding $30,000 are required to register for and collect GST/HST on taxable sales. It’s important to remember that the appropriate tax rate is determined based on the buyer’s location.
*HST replaces the GST in provinces that have combined their provincial tax rate with the GST (Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island)
Small Supplier Exception:
If your business earns less than $30,000 in annual revenue, you most likely qualify as a small supplier and are exempt from registering for and collecting GST/HST.
Provincial Sales Tax (PST):
In addition to the federal GST/HST, some provinces impose Provincial Sales Tax (PST) on certain goods and services. The rules and rates vary by province, so sellers need to be aware of the specific requirements in the regions where they operate.
PST Registration Requirements
Province | Registration Requirement |
|---|---|
BC | >$10,000 in a 12 month period |
Saskatchewan | >$30,000 in a 12 month period |
Manitoba | >$10,000 in a 12-month period |
Quebec | >$30,000 in a 12 month period |
Out-of-Province Sellers
Remote sellers, including those engaged in e-commerce, should assess whether their sales to residents of each province exceed the minimum revenue threshold to determine their provincial tax collection and registration requirements.
E-commerce and Digital Products:
For sellers engaged in e-commerce or selling digital products and services, it’s essential to understand the tax implications. Canada applies GST/HST to digital products and services, and foreign sellers may need to register for the GST/HST if their sales to Canadian customers exceed $30,000.
Reporting and Filing:
Registered businesses must file regular GST/HST returns with the Canada Revenue Agency (CRA). Filing deadlines and reporting periods depend on factors such as the type of business and the reporting method chosen. Staying organized and keeping accurate records is crucial to ensure a smooth filing process.
Navigating tax obligations is a fundamental aspect of running a successful business in Canada. Regularly staying informed about changes in tax regulations and seeking professional advice when needed will contribute to the long-term success of your business.
Struggling to Keep Track of Your Expenses?
Here at FitKittyTries, we use Quickbooks as our self serve accounting solution. Quickbooks offers an easy and affordable way to stay on top of your small business finances, whether you’re a self employed solopreneur or a small business, Quickbooks is packed with features that support your business as you grow.
Ready to hire your first employee? Quickbooks makes payroll a breeze. Need to track your mileage? The Quickbooks app works in the background to make sure you capture all your expenses. Drowning in receipts? Quickbook scans and stores them for you.
Trying to navigate your tax responsibilities as an online seller? Quickbooks seamlessly connects to Etsy, Square, Shopify, Paypal and more keeping track of your sales and inventory
