If you do business in Canada, you should be aware of the goods and services tax.Most of the goods and services that are paid for in Canada are subject to the Goods and Services Tax.The goods and services tax is the same as the property and service tax in participating provinces that have the harmonized sales tax.Ontario, Newfoundland and Labrador, and Prince Edward Island are among the provinces that have a tax on sales.Native tribes and some regional government entities are exempt from paying the goods and services tax in Canada.It is important to know the tax codes of the province in which you will be doing business.
Step 1: Understand your province's tax rates.
Each province has its own tax rate.Knowing which provincial tax applies to your goods will help determine your return.The tax rates apply to each of the following provinces.British Columbia has a tax rate.The tax rate is five percent.The tax rate is 13 percent.The tax rate in Newfoundland and Labrador is 13 percent.The tax rate in the Northwest Territories is five percent.Nova Scotia has a tax rate.The tax rate is five percent.The tax rate in Ontario is 13 percent.The tax rate in Quebec is five percent.Prince Edward Island has a tax rate.The tax rate is five percent.The tax rate is five percent.
Step 2: Determine if your goods or services are taxed.
Zero-rated supplies are goods that are taxed at zero percent in Canada.Other goods and properties are not subject to the tax.Knowing whether the goods and/or properties related to your business are taxed will help determine your tax return for the fiscal year.Zero-rated groceries include milk, bread, and vegetables.Grains and raw wool are zero-rated goods.Zero-rated goods are farm livestock and fishery products meant for human consumption.Zero-rated goods and services include prescription medications and drug-dispensing fees.Zero-rated goods include medical devices.Residential housing that has been previously-inhabited is exempt from the tax.Residential condo fees as well as residential accommodations are exempt from the tax.Most health-related medical or dental services are not subject to the tax.Children under the age of 14 are exempt from day-care services.Tolls for use of bridges, toll roads, and ferries are not charged.Ferry tolls that travel to or from a place outside of Canada are taxed at zero percent, making them zero-rated services.Legal aid is not required.Vocational or trade courses, music lessons, and tutoring services are exempt.Loan or mortgage arrangements are exempt from being rendered by a financial institution.exempt services include the arrangement and issuance of insurance policiesMunicipal transit services and residential water distribution are exempt.
Step 3: Determine the tax rate for your goods.
Depending on the province in which the business is being conducted, the following goods and services are taxed at a rate of 5%, 12%, 13%, 14%, or 15%.
Step 4: Determine if you have to register for the tax.
Anyone who provides taxable supplies in Canada must register for the goods and services tax.There are a few exceptions.Small suppliers don't have to register for the HST.Any sole proprietor or partnership making $30,000 or less on taxable supplies per calendar quarter over the last four consecutive calendar quarters is considered a small supplier.Suppliers who only sell real estate property are not required to register.Any applicable taxes on the sale of property may still be charged by these suppliers.Non-residents who do not conduct business in Canada are not required to register.Small suppliers and public service bodies must register for the HST in any quarter that they surpass the threshold amount of $30,000 or $50,000 and must collect taxes on supplies that exceed that amount.Supplies that exceed the threshold amount must be registered for the goods and services tax within 29 days.
Step 5: Get a business number.
Before a supplier can register for a account, they need to be assigned a Business Number.All future interactions with the Canada Revenue Agency will use that number.Suppliers and business owners can get a business number by completing the form on the website.Suppliers without internet access can complete the process by calling.Individual partners are not required to register for the HST in the case of partnerships.
Step 6: You need to register for a HST account.
You can register for the tax if you have a business number.This can be done online or by phone.
Step 7: An annual reporting period can be received.
The supplier will be assigned an annual reporting period by the CRA once they register for the goods and services tax.Suppliers can file returns more frequently than the assigned reporting period.Suppliers earning on annual taxable supplies of $1,500,000 or less have the option of reporting monthly or quarterly.Suppliers earning between $1,500,000 and $6,000,000 must report quarterly, but have the option of reporting monthly.Suppliers earning more than $6,000,000 must report monthly.There is no way to file more returns for suppliers.Suppliers can change their reporting period by logging into the CRA website at www.cra.gc.ca/mybusinessaccount or by contacting their representatives.A supplier can change his reporting period by completing and returning Form GST20.
Step 8: You can choose an accounting method.
The standard method is used to calculate the tax, as set out in the return form.The Quick Method is available to suppliers when worldwide taxable annual supplies (including zero-rated supplies and supplies of all associates) total $200,000 or less in any four consecutive fiscal quarters over the past five.Suppliers use this method to divide total supplies by the Quick Method rate that is assigned to those supplies.The simplified method can be used to claim an income tax credit.It is available to suppliers who have registered for the Goods and Services Tax, and whose annual worldwide taxable revenues from supplies of goods and services (for the supplier plus his or her associates) total $500,000 or less in the last fiscal year, as well as the previous fiscal quarters of the current fiscalSuppliers using the simplified method aren't required to show the HST separately from the total purchases, but they must still calculate the ITC on the purchases.
Step 9: Obtain the forms you need.
You will receive an electronic filing information sheet if you electronically filed your last tax return.You will receive a personalized four-page return if you didn't file electronically.A four-digit access code will be printed on the first page of the forms.You can request a new form by calling 1-800-959-5525 if you don't receive either form.
Step 10: You should consider filing electronically.
People can file online to save time.Certain types of builders, suppliers with more than 1.5 million in annual taxable supplies, and anyone who has to report recaptured input tax credits are all required to file electronically.There are four ways to electronically file a GST/HST return, with the exception of accounts administered by Revenu Quebec.The four-digit access code printed on the personalized return to file will be used by NETFILE users.It is possible to file your taxes on a touch-tone telephone.The toll-free number for TELEFILE is 1-800-959-2038, and you can use the touch-tone telephone to input the necessary information.Electronic data interchange is the filing of tax returns through a financial institution.They don't need an access code to file for returns.Interested people can find out more about the program through the website of the Canada Revenue Agency or by speaking with a representative at a participating financial institution.The internet file transfer allows eligible people to use third-party accounting software.There is more information on the internet file trans at www.cra.gc.ca.
Step 11: The first part of the return is a working copy.
It's important to have your BN available.You need to give your company name, the reporting period for the return, and the due date for your return.
Step 12: Line 101 allows you to enter your total sales and revenue.
Don't include provincial sales tax.If you are using the Quick Method of accounting, you should include the taxes.To determine the amount to include on Line 1, run a profit and loss report.The total income figure on the P&L report is your sales and other revenue.Line 101 will be moved to Part 2.
Step 13: The calculation of your net tax should begin.
The first part of the return deals with goods and services tax.You can enter the total of all the amounts you collected in the tax reporting period on Line 103.Line 104 contains the total amount of adjustments that need to be added to the net tax.If you couldn't collect the debt, you may not have paid the tax on the sales invoice.Now that you have collected the invoice, you owe the tax.Line 105 is where the figure will be transferred to Part 2.
Step 14: You can enter the taxes you paid on the expenses.
This relates to ITCs for which you are eligible.Any unclaimed ITCs from a previous period can be entered on Line 106.To determine the net tax for the reporting period, enter the total amount of adjustments that should be deducted.You paid taxes for a sale, but weren't able to collect money from it.You should get the tax amount you paid back.Line 106 and Line 107 should be added to the total.This will be moved to Part 2.
Step 15: Determine your tax.
Line 105 is subtracted from Line108 in order to reach this figure.Line109 should be used to enter the figure.You will transfer this amount to the second part of the return.
Step 16: There are other credits to be calculated.
You might be entitled to additional credits.This won't apply to everyone.For the particular reporting period, enter any annual filer payments you made.Line 110 has this figure on it.Part 2 will get this amount.You can enter the total amount on Line 112.Amounts paid in error, or certain exports by a non-resident, are some of the items that are related to rebates.If the amount is eligible, the form will indicate it.You have to attach the form to the return.Check here for information on possible rebate programs.Line 112 will be transferred to Part 2.Line 112 has the total on it.Put Line 112 on Line 113A.
Step 17: There are other debits to be calculated.
You may be liable for other amounts.This may not apply to everyone.The total amount of the tax due on the purchase of real property can be entered on Line 205.If you bought the property for use or supply in your commercial activities, you must complete this line.This amount will be transferred to Part 2.You can self-assess the total amount of other taxes by entering it on Line 405.All imported taxable supplies that weren't detected by Canada's Customs agency are required to self-assessment.Line 405 will be moved to Part 2.The total should be put on Line 113B.
Step 18: Do you owe money or a refund?
Adding lines 113A and 113B will result in a figure on Line 113C.You get a return if the number is negative.You owe money if it is positive.Put the figure on Line 114 if you are due a refund.This will be moved to Part 2.If you owe money, put the figure on Line 115.This amount will be transferred to Part 2.
Step 19: Transfer the figures from Part 1 to Part 2 of the return.
If you make a payment at your financial institution, the paper returns can be filed by mail.It is mandatory for many people to file electronically.The requirements for electronic filing can be found here.Even if it is not required, most GST/HST registrants are able to electronically file their returns.