When Do You Need to Register for a GST/HST Number?

When Do You Need to Register for a GST/HST Number?

In Canada, you are generally required to register for a GST/HST number once your sell $30,000 or more over the last 12 months (four consecutive calendar quarters) or in any single quarter.

This revenue threshold applies to the total of your sales, before deducting any expenses. It includes everything you’ve earned from "taxable" sales, all of your products combined.

Do you need a GST/HST number if you make money on YouTube?

Yes, even if you make money on a social platform (like YouTube, Google Ads, Etsy, Snapchat) you still have to register for a GST/HST number once you make $30,000 CAD. Even if the sales are to a US company, like Google, they are still "taxable", and most often the tax rate is 0%, you still need to register with CRA.

Do you have to pay tax on your first $30,000 before you registered?

No, you don't owe the CRA back taxes on your first $30,000 unless you registered from day one. You only start collecting tax once you become a registrant. You might owe income tax on your profits, which is totally separate from your GST/HST.

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Here's the detailed breakdown:

1. Small Supplier Exception

If your business makes less than $30,000 in revenue over four consecutive quarters, you are considered a “small supplier” and are not required to register. But once you hit that $30,000 mark—even in one quarter—you’ll need to register and start charging GST/HST on your taxable supplies. Be sure to monitor your revenue closely so you can register promptly when you cross that threshold.

2. One-Time $30,000 Trigger

If your business makes over $30,000 in any single calendar quarter, you’re no longer considered a small supplier. At that point, you must register for a GST/HST number within 29 days of exceeding the $30,000 mark.

3. Voluntary Registration

Even if you haven’t yet crossed the $30,000 threshold, you can voluntarily register for a GST/HST number. This might be a smart choice, as it allows you to claim input tax credits (ITCs) for the GST/HST paid on your business expenses, which can reduce your tax bill. More on the benefits of voluntary registration below!

What Happens if You Don't Register for a GST/HST number?

Failing to register for a GST/HST number once you’re required to do so can lead to hefty penalties from the CRA. They may take a wild guess and assess taxes on your taxable sales as if you had charged GST/HST, even if you didn’t, and you could owe back taxes, interest, and penalties. It’s crucial to stay on top of your revenue and act quickly once you hit that $30,000 threshold.

Benefits of Registering for a GST/HST Number Early

While it may seem like extra work, there are several benefits to registering for a GST/HST number even before you’re legally required to:

1. Refunds - Input Tax Credits (ITCs)

Once registered, you can claim ITCs for the GST/HST you’ve paid on eligible business expenses. This means if you’ve invested in equipment, supplies, or services to run your business, you can get a refund by claiming these credits.

2. Enhanced Business Credibility

When clients and customers see that you’re collecting GST/HST, it gives your business a more established and legitimate appearance. Especially in competitive markets, registering early can boost trust in your brand.

3. Prepare for Growth

If you anticipate rapid business growth, it may be wise to register for a GST/HST number early on. This way, when you cross the revenue threshold, you’re already compliant and won’t have to scramble to catch up.

How to Register for a GST/HST Number

Registering for a GST/HST number is straightforward. You can do it online, by mail, or even by phone. Here’s a step-by-step guide to help you get it done quickly:

1. Online Registration (CRA My Business Account)
   • Visit the CRA website and log into or create your My Business Account. You can register for your GST/HST number directly through this portal.
2. By Phone
   • Call the CRA Business Enquiries line (1-800-959-5525), and they’ll walk you through the registration process.
3. By Mail or Fax
   • Fill out Form RC1, Request for a Business Number, and mail or fax it to the nearest CRA tax center.

Once registered, the CRA will assign you a GST/HST number, which will be used in all your tax filings and on your invoices.

Who Doesn't Need to Register for a GST/HST Number?

Not all businesses need to register, even if they cross the $30,000 threshold. Certain categories of goods and services are GST/HST exempt. If your business only deals in these exempt supplies, you may not need to register, even if you surpass $30,000 in revenue. Exempt supplies include things like:

• Most financial services
• Residential rents
• Health care services
• Educational services

It’s always a good idea to consult a tax professional to determine if your business qualifies for these exemptions.

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Do you need to collect GST/HST on rental income?

Generally speaking, no, for residential rental income, it is exempt from GST/HST. However, commercial rental income may be taxable in your province.

Registering Early Pays Off

Whether you’re just starting out or are close to crossing that $30,000 threshold, understanding when to register for a GST/HST number is critical. Not only does early registration help you avoid penalties, but it also provides financial benefits in the form of input tax credits and boosts your business’s credibility.

So, don’t wait until the last minute—get ahead of your taxes and set your business up for long-term success!

Questions I often get asked by clients:

1. Can I charge GST/HST without a GST/HST number?
   No, you can’t legally charge GST/HST without being registered for a GST/HST number. If you do charge GST/HST without a number, you have to call CRA and get a backdated registration from the day you first collected tax, or you could face penalties from the CRA.
2. What if I make over $30,000 in one quarter and don’t register?
   You must register within 29 days of exceeding the $30,000 threshold. If you fail to register, the CRA may assess penalties and back taxes.
3. Are all businesses required to register for a GST/HST number?
   Not all businesses are required—those dealing exclusively in exempt supplies may not need to register. However, if you’re making taxable sales and surpass the $30,000 revenue threshold, you must register.
4. What are input tax credits?
   Input tax credits (ITCs) allow you to get a refund of the GST/HST you paid on business expenses, lowering your overall tax bill.

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This is not legally binding tax advice. This is educational analysis. Say hello if you need help.

hello@taxesmadesimple.ca

WhatsApp - 613.600.4194

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