As a small business, you may wonder if you need to charge and collect our province’s Harmonized Sales Tax (HST) on the goods and services you provide. Here, we’ll outline the rules that determine whether or not you should be collecting HST and sending remittances to the government and what to do if you must!
When Do I Collect HST On The Goods And Services I Provide?
Whether or not you collect HST depends on the size of your business. If your business is a part-time gig, or you don’t earn more than $30,000 per year in revenue yet, you’d be considered a “small supplier.” Businesses classified as small suppliers do not have to collect HST.
Sometimes, small businesses take off. If you’re the owner of a business that finds itself making more than $30,000 in a specific three-month period (or quarter), you’ll have to collect HST on the goods and services you provide (should they fall under HST-related goods; more on that below).
In fact, the day the sale goes through that took you over the $30,000 threshold is the day you’re no longer considered a small supplier. Are you prepared?
Should I Register For An HST Number?
Once your small business takes off, the change can be immediate. You have to charge HST on the sale that puts you over the $30,000 limit – and, of course, on any sales after that – even if you haven’t registered with the government yet. Don’t worry – you’ll have 29 days to register for an HST number from the day of that sale.
You can register your business for an HST number online, by phone, or by mail. If you don’t already have a business number, you will have to register for one. To register online, see the Canada Revenue Agency Business Registration Online page.
Like all else in business, it can be very smart to think ahead. If you sense that you’ll exceed the $30,000 threshold soon after opening, you might decide to register for your HST number as soon as you start your business. You’ll want to receive any HST paid back from the government on your business expenses, especially start-up costs!
What Products Don’t Require HST (Or The Full HST)?
Organizations providing certain goods and services do not need to collect HST; this includes anything provided by non-profit organizations, governments, public service bodies like municipal transit, and standard residential services such as water distribution.
You are not required to collect the 8% provincial portion of the HST on many products: books, children’s clothing and footwear, car seats, car booster seats, diapers, qualifying food and beverages, and newspapers. The government offers a point of sale rebate for these items.
Bottom line: if your business revenues do not exceed the small supplier limit, you do not need to register for or collect HST. Remember to keep your receipts: if your business has to charge HST, you can claim it on your expenses!