Introduction
If you are a non-resident company expanding your operations to Canada, in most cases you will need to register for a goods and services tax (GST)/harmonized sales tax (HST) account. This applies to all business types including sole proprietors, partnerships, or corporations.
In Canada, GST/HST is a sales tax that must be paid on all sales of the majority of goods and services. There are some exceptions such as residential rentals and basic grocery items.
Depending on the nature of your business, you might also be required to register for provincial sales taxes in the following provinces:
- Quebec
- British Columbia
- Manitoba and
- Saskatchewan
Sales Tax can range from 5% up to 15% depending on provincial regulations and type of sales tax applied. (Show sales tax chart)
| Province | Type | GST | HST | PST | Total Tax Rate |
| Alberta | GST | 5% | 5% | ||
| British Columbia | GST + PST | 5% | 7% | 12% | |
| Manitoba | GST + PST | 5% | 7% | 12% | |
| New Brunswick | HST | 15% | 15% | ||
| Newfoundland and Labrador | HST | 15% | 15% | ||
| Northwest Territories | GST | 5% | 5% | ||
| Nova Scotia | HST | 15% | 15% | ||
| Nunavut | GST | 5% | 5% | ||
| Ontario | HST | 13% | 13% | ||
| Prince Edward Island | HST | 15% | 15% | ||
| Quebec | GST + *QST | 5% | 9.98% | 14.98% | |
| Saskatchewan | GST + PST | 5% | 6% | 11% |
Small suppliers may also consider voluntary registration despite not reaching the threshold to enable them to claim Input Tax Credits and recover GST/HST paid on commercial activities. Voluntary registration also requires your business to charge, collect, and remit the GST/HST on your taxable supplies of property and services.
The Application Process
Non-resident business can apply for a GST/HST account in combination with the application for a Canadian business number. The business number is a unique identifier for any business operating in Canada and is used in conjunction with what are known as program accounts by the CRA to distinguish businesses and the remittances they undertake.
Non Residents may be asked to lodge a security deposit of 50% of expected net taxes with a minimum deposit of $5000 up to a maximum of $1M CAD with CRA. There are certain waivers to this requirement. Contact us to find out more.
Knowing in Advance
It is important to be aware of the complete landscape insofar as GST/HST is concerned before beginning business transactions in Canada. Getting registered for GST/HST is not onerous nor is maintaining the compliance. Not being registered can add significant costs to all imports of product unnecessarily.
While in most case, GST/HST is applied to products and services, there are exemptions and zero-rated items.
Exempt supplies means that the GST/HST does not apply to them and in turn no tax credits can be claimed against the products and services.
Zero-rated supplies means that the GST/HST is applied at 0% and input tax credits can be claimed for purchases of all products and services.
Need Help
Contact us you have more questions or need more details on sales tax application within Canada contact us. Our team of experts will help you plan and complete your GST/HST registration as well as ensure that your business is applying sales tax optimally with respect to your Canadian operations.
