HST Rules for small and medium businesses in Canada

[@businessincanada-doitright1822]

HST Rules for small and medium businesses. Disclaimer: This overview is intended as a general summary of the basic HST rules for small and medium business owners. It should not be considered as a professional advise - consult your accountant or other specialist before you make any decisions based on this video!!! In Canada, the system is pretty complicated and combines GST (Goods and Services Tax), PST (Provincial Sales Tax) and HST (Harmonised Sales Tax). The rate of HST varies from one province to another and the rule of where the goods/services were supplied will determine the rate of HST that should be added. Once a business registered for HST, it must collect HST on all its supplies, and must calculate HST it paid on all it purchases. The balance of these two amounts is either paid to or collected from the CRA. Only registrants can claim back paid HST credit from the CRA. It is important to understand the difference between 0% rated and exempt businesses. While 0% rated are still considered as registrants (and can claim HST credit), exempt businesses do not participate in the HST system at all and hence are not entitled to claim refunds. Mandatory registration applies as soon as a business passes $30K in a 12 months period (or a quarter, whichever is earlier). From the CRA perspective a business is considered as “registered” 29 days thereafter. Failure to register does not absolve the business from HST obligations, you still will be assessed by the CRA and all your bills will be considered as inclusive of HST. You will lose 13% of your sales and will pay interest and penalties. There is also an option for a voluntary registration - this is the kind of registration I suggest everyone to investigate and consider - there are situations where a business might benefit from it. As soon as we register for HST, we become entitled to claim HST refunds. Many beginning businesses that work at loss during the initial months of operations, and spend significant financial resources to purchase equipment and inventory, sign lease, pay contractors and more - they will benefit from HST credit only if they’ve registered BEFORE those expenses were incurred. Please make sure you contact your accountant and discuss it with them before you make the final decision… Once registered, we must report HST annually, quarterly or monthly, depending on the volume of our sales. We do have an option to report more frequently than the mandatory frequency, but we cannot report less frequently. The rule of thumb should be - if you approach transaction which is outside the regular scope of your business operations - make sure you discuss the HST topic with your accountant or advisor. Related videos and links: “How to Open a Restaurant” www.youtube.com/watch?v=pjE36...​ “Business number in Canada” www.youtube.com/watch?v=oStD-...​ HST Registration Verification: www.canada.ca/en/revenue-agen...​ Our website - cbes.ca/​​ Facebook - facebook.com/CanadianBiz​​ LinkedIn - www.linkedin.com/company/cbes​​ All information provided in this video is for informational and reference purpose only. Nothing contained herein shall be considered as a legal advice or instructions to be acted upon. CBES - Canadian Business and Enterprise Services does not offer legal advice online or on its KZbin channel. Please consult a professional before you act in reliance on the information contained in our videos. #HSTCanada​ #GSTCanada​ #Canadataxes

[@dr.samirshaikh3363]

Thank you so much for another awesome video. Can you please make one in running gas station video. Thank you

[@businessincanada-doitright1822]

Dr. Samir. I will start preparing one. It might be a bit complicated just as the current one. There are multiple issues involved - licensing, environmental, and more.

[@bensonwu1238]

Recently I am learning about HST in accounting class. This is a good video.

[@TheMr3742]

Good looking host and great tips

[@HurtDealer]

Thanks for the informative video! Helped me better understand our HST system.

[@mancmehd]

Thank you so much for the information. To be honest before watching this video I knew nothing about hst, I used to file for my very small business and I used go just nil, in fact I had spend a lot for purchases and sales was just Zero, I try to do it myself because of my small transactions, but I think better to have an accountant. Is it possible to talk about filling hst for Realtors in Ontario, for online which has 101, 108 and other numbers to explain it please, also would you please explain how you can claim some of the past years of unclaimed or by mistake you paid more that means by mistake you put more numbers on line 101 for example by mistake you included your regular pension as sales and other revenue and then you couldn't fix. Thanks again for the video

[@yuzhakova]

Great info, thank you Eugene!

[@fairchildfox]

Do you still have to remit HST if you make less than $35000 in net profit?

[@LightWalk3r]

You are awesome dude. 👍👍👍

[@businessincanada-doitright1822]

Thanks. It's important to hear. 👍👍👍

[@NCAAhockeyplayer]

If i work part time as an employee.. and run a side business, do I add the total of both incomes to reach that 30 000 threshold or do I not have to collect hst yet because the biz only makes for example 10 000 and employee revenue is at 22000

[@businessincanada-doitright1822]

Jonathan, employment income is not included in the HST calculation, so you essentially completely disregard it. Only the business income generated by offering your services/products is relevant for HST and the threshold calculation.

[@NCAAhockeyplayer]

@@businessincanada-doitright1822 Thqnk you!!

[@projectlinkservices7849]

Witch of the provinces tax the least on a cooperations earnings ?

[@businessincanada-doitright1822]

You can see provincial taxes here: www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-tax-rates.html Look at the "lower" rate since this is what companies owned by Canadians pay. Keep in mind that this rate is being added to the federal rate of 9%. So as you can see the difference is not too significant...

[@mauriciakanafany6450]

Hi there. I just received a GST/HSTC notice from CRA. I need to pay something. BUT... I am not self-employed nor have a business (and I've never had one). I can't find any info on the CRA web about GST/HSTC for people like me (without a business). I am so confused. Any guidance on how to find info would be very appreciated (even search terms I can use online would be great). MANY THANKS.

[@leaf16nut]

I already have an HST number, I'm in the process of starting my business and am looking to buy a mini excavator (from a company with an HST number) so my question is; Do I still have to pay HST at time of purchase and am refunded later, or am I exempt from the start and just claim in on my HST at year end? Great video, helps a lot!

[@khungjuleekorea2008]

how can we change frequency of hst from yearly to quarterly please advice.

[@businessincanada-doitright1822]

You should discuss it with your accountant - they know how it works. Please keep in mind that once you change, it will be difficult to go back.

[@khungjuleekorea2008]

@@businessincanada-doitright1822 thank you. I found it already. Have a good day

[@cheeta662244]

If we are making less than 30K and aren’t registered for HST, do we collect the GST (5%) or not even that?

[@businessincanada-doitright1822]

Sherifu, no. If you are not registered for HST, you do not collect HST, GST, PST and any other similar sales taxed - they are all from the same group.

[@presentowner3198]

Mindbuildingsolutions approved! Excellent video and content.

[@AndreElfar]

I am a Virtual assistant with multiple clients around the world and one in Canada that currently passed 30k in income collectively. If I have only made about 12k with my Canadian client is that the only income I count toward the 30k mark or is it the total of all my client even though they would technically fall into the exempt/zero rated category. I just want to make sure I am doing the right thing here. I also still have not registered as a business with the CRA as my Canadian sourced income has remained well below 30k per year. I have been claiming all the income under my own name as a self employed individual on my personal taxes and paying income tax that way, is this the correct way to do this going forward? Please advise

[@krishchauhan235]

Do you think a tech business is better to start in USA or Canada?

[@businessincanada-doitright1822]

Krish, I do not have enough knowledge in the US business environment to express such opinion. What I can say is that Canada is very friendly to tech businesses and usually you would be able (as a canadian corp.) to apply for various benefits, subsidies, support and more from the local govt. I do not know how it works in the US. Additionally, there are also tax considerations in favour of each jurisdiction and of course the location of your main clientele.

[@SDabbour]

Hi , thank you for your vidoe , I have quistion if you don't mind. I am working with uber there is no gst for the service I do , but I pay for a lot of expensis like ; gas , car repairs, meals and other my quistion how can I claim my GST & PST thank you.

[@businessincanada-doitright1822]

Samir, the only way to claim HST is to be registered for HST yourself (or your corporation). In case your busienss is considered as HST exempt, you cannot register at all and hence cannot recoup the HST you pay. In case your business operations are 0% rated HST, then you can register and recoup the HST you pay.

[@nikhilv3931]

Thank you this was very informative. If I'm a sole proprietor based in canada offering Marketing Consulting services to clients in Europe only. Do I still have to register for HST or charge my clients HST? Even if my revenue goes over 30k CAD.

[@businessincanada-doitright1822]

Nikhil, To start with, you have to determine if the services you offer are covered by HST - taxable supplies (this should be determined by your accountant). If not - end of story. If yes - it doesn't matter where you supply the services for the purpose of registration, you must register upon achieving $30K of sales per year or quarter. In case all your services are offered overseas - the HST rate would be 0% though. And once - discuss it with your accountant before making the final decision.

[@skypilot003]

Thanks for the videos. I have a small farm business and am below the $30,000 threshold. Upon registering the business as a sole proprietorship I was advised I would not need to register for a HST number. I made lots of purchases for the business and have been told that I will not be refunded any HST because I did not register. Did the act of not registering for HST cause me to miss out on a refund?

[@ecolawnaeratorcompanycanada]

Hi there you can optionally register for an HST number if you want to and then you can get HST you paid back as ITC's!!

[@nexusfg]

Not understanding the $9,600 figure

[@businessincanada-doitright1822]

From the gross cash flow perspective, since exempt and 0% rates sales do not collect the HST, the gross cash flow will result in $9,600 (100K - 80K - 10,400). As an HST exempt business (second column) you recognize HST paid as your regular expense, therefore "losing" $10,400 from your cash flow...

[@sohaibalkushli]

Thanks

[@pardeepaccountingzone5223]

HELLO SIR MYSELF PARDEEP SHARMA I WANT TO LEARN ABOUT GST / HST

[@Torontogtacleaners]

So if my daughter is a baby sitter She don’t charge hst ? Or if I teach how to do dreadlocks would that go under educational?

[@businessincanada-doitright1822]

Most of business operations are subject to HST, except those exempt . Education is usually exempt from HST, but the simplest way would be just to call CRA and see how they treat dreadlocks teaching (1800-959-5525)...

[@Torontogtacleaners]

@@businessincanada-doitright1822 tyvm for ur informative reply

[@elfredawright]

Where are you located in Ontario?

[@businessincanada-doitright1822]

North York.

[@YOYK666]

Awesome...

[@raiglobal7194]

I WANT IMPORT GOODS IN CANADA WHAT TYPE OF BUSINESS NUMBER I NEDD

[@businessincanada-doitright1822]

Rai, once you start your business (SP or corporation), you are being issued a business number. IN order to import/export, you have to register it with the CRA as an import/export business number. Also, HST makes sense too. Their phone number is 18009595525