# RC4022 General Information for GST/HST Registrants - Canada.ca > Reproduced from the Canada Revenue Agency. Authoritative copy: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022/general-information-gst-hst-registrants.html > Local copy taken 2026-09-05. Do not take a figure from this page — current rates are at https://rules.backofficestars.ca/rates/ ## Before citing - Provenance injected by scripts/inject_guide_provenance.py, not captured at conversion time. The URL was resolved against the live CRA site and verified 200; the body text was NOT re-fetched, so it is still the original conversion of unknown date. - Tier B: this guide is checked weekly on metadata only (page date and edition string), never by text diff. It is far too large for a diff to produce signal rather than noise. - CRA's page metadata carries dcterms.issued 2017-05-15, which contradicts the document's own masthead (Rev. 25). This is a known CRA metadata defect, already documented on several mirrors. Treat the masthead as the operative edition; cra_dcterms_issued is recorded only so a change in it can be spotted. # General Information for ## GST/HST Registrants RC4022(E) Rev. 25 ## Find out if this guide is for you If you own or operate a business in Canada, you need to know about the goods and services tax (GST) and the harmonized sales tax (HST). This guide provides general information such as how to collect, record, calculate, and remit the GST/HST. It also includes line-by-line instructions to help you fill out your GST/HST return. ### Selected listed financial institutions This guide does not include information on the special rules for an SLFI, see Guide RC4050, GST/HST Information for Selected Listed Financial Institutions ### Non-residents and specific business entities This guide does not provide detailed information for non-residents and certain businesses such as tour operators, builders, and land developers. ### Digital economy businesses This guide does not provide detailed information about the digital economy measures applicable to digital economy businesses including businesses that are registered or required to be registered under the simplified GST/HST registration regime of the digital economy provisions of Subdivision E of Division II of the operators and non-resident digital economy businesses that are registered or required to be registered under normal GST/HST registration regime. You can refer to “GST/HST for digital economy businesses: Overview” at at 1-833-585-1463 (from Canada and the U.S.) or 1-613-221-3154 information. ### GST/HST and Quebec In Quebec, Revenu Québec generally administers the GST/HST. If the physical location of your business is in Quebec, you have to file your returns with Revenu Québec using its forms, unless you are an SLFI for the GST/HST or Quebec Sales Tax (QST) purposes or both. For more information, see the Revenu Québec publication IN-203-V, Concerning the QST and the GST/HST, available at -institutions. ### First Nations taxes This guide does not include information on the First Nations goods and services tax (FNGST) or the First Nations tax (FNT). For more information regarding the FNGST or the FNT, go to our webpages “First Nations goods and services tax” and “First Nations tax.” The CRA’s publications and personalized correspondence are available in braille, large print, e-text, and MP3. For more information, go to call 1-800-959-5525. Unless otherwise stated, all legislative references are to the Excise Tax Act This guide uses plain language to explain the most common tax situations. It does The CRA uses the term Indian because it has legal meaning under the La version française de ce guide est intitulée Renseignements généraux sur la TPS/TVH pour les inscrits. selected listed financial institutions (SLFIs). If you are . Excise Tax Act (ETA) and to platform the , or contact the CRA (from elsewhere – collect calls are accepted) for more General Information . If you are an SLFI, go to or or, where appropriate, the GST/HST Regulations. not replace the law. Indian Act. ## What’s new The major changes are listed below. ### First-time Home Buyers’ GST/HST Rebate On June 5, 2025, proposed legislation was introduced in the House of Commons to amend the a new GST/HST rebate for first-time home buyers. Once Royal Assent is received, first-time home buyers may be eligible for a rebate of up to $50,000 of the GST (or federal part of the HST) paid on a new home. To qualify for the First-time Home Buyers’ GST/HST rebate (FTHB GST/HST rebate), you must meet certain criteria. The FTHB GST/HST rebate applies to houses purchased from a builder where the agreement was entered into on or after March 20, 2025, and before 2031, and construction is substantially completed before 2036. For owner-built houses, the FTHB GST/HST rebate applies to houses where construction or substantial renovation of the house begins on or after March 20, 2025, and before 2031, and the construction or substantial renovation is substantially completed before 2036. Together with the existing GST/HST New Housing Rebate (where that rebate is applicable), the FTHB GST/HST rebate would provide for a rebate of 100% of the GST or federal part of the HST on new homes valued up to $1 million. The FTHB GST/HST rebate would be reduced for new homes valued between $1 million and $1.5 million. For example, a home valued at $1.25 million would be eligible for a 50% FTHB GST/HST rebate (a rebate of up to $25,000). No FTHB GST/HST rebate would be available for new homes valued at or above $1.5 million. For more information on the conditions for the FTHB GST/HST rebate, see Guide RC4028, ### Purpose-built rental housing rebate (PBRH rebate) The GST/HST new residential rental property (NRRP) rebate has increased from the current maximum of 36% to 100% of the GST or federal part of the HST for new purpose-built rental housing rebate). This measure applies to residential units that qualify for the current additional conditions, where construction begins after September 13, 2023, but before 2031, and is substantially completed before 2036. Provincial PBRH rebate Generally, a provincial PBRH rebate is also available for some or all of the provincial part of the HST paid, or deemed paid, on the purchase or self-supply of purpose-built rental housing located in participating provinces, where conditions for the federal PBRH rebate are met. A provincial PBRH rebate of 100% is available for purpose-built rental housing in Ontario, Nova Scotia and Newfoundland and Labrador. For such housing situated in Prince Edward Island, a provincial rebate of 100% is generally available up to a maximum of $35,000 per unit where construction of a residential complex is substantially completed before 2029, with a reduction to the rebate completed after 2028. Further, for such housing situated in New Brunswick, a rebate of 100% is available where construction begins after November 14, 2024, but before 2028, and is substantially completed before 2030. For more information on the conditions for the PBRH rebate, see GST/HST memorandum 19-3-9, Housing Rebate, and Guide RC4231, GST/HST New Residential Rental Property Rebate ### Electronic filing for GST/HST registrants For GST/HST reporting periods that begin in 2024, all GST/HST registrants, except for selected listed financial institutions and most charities, are required to file returns electronically. The mandatory electronic filing threshold of $1,500,000 that was in place for GST/HST returns has been removed for reporting periods that begin on or after January 1, 2024, which means that electronic filing is now required for most businesses. page 35, and “Failure to file electronically” on page 39. ### Electronic remittances or payments of $10,000 or more As of January 1, 2024, remittances or payments to the Receiver General for Canada if the amount is $10,000 or more. The option to send payments by cheque will remain available to taxpayers for the foreseeable future. Before applying a penalty, the CRA will be educating taxpayers about the easy, secure, and convenient electronic payments options currently available to make payments to the CRA. Excise Tax Act to include GST/HST New Housing Rebate. , with no phase-out thresholds (federal PBRH GST/HST NRRP rebate, with specific each year for a residential complex that is substantially Purpose-built Rental . For more information, see “Mandatory electronic filing” on must be made as an electronic payment ### Passenger vehicle thresholds Under proposed changes, the ceiling for capital cost allowance (CCA) was increased to $38,000 from $37,000, before tax, in respect of new and used passenger vehicles purchased on or after January 1, 2025, and the limit on deductible leasing costs for such vehicles was increased to $1,100 from $1,050 per month, before tax, for new leases entered into on or after January 1, 2025. The ceiling for CCA for zero-emission passenger vehicles will remain $61,000, in respect of vehicles (new and used) purchased on or after January 1, 2025. For more information, see the “ITCs for purchase of capital personal property – Passenger vehicles and aircraft” chart on page 27 and the instructions for ### Nova Scotia HST The Government of Nova Scotia has decreased the provincial part of the harmonized sales tax (HST) by one percentage point from 10% to 9%, effective April 1, 2025. This results in a decrease in the total HST rate in Nova Scotia from 15% to 14%. ### Simplified access to your CRA account The CRA has simplified its sign-in process, making it easier to access My Account, My Business Account, and Represent a Client portals with a single sign in. To access My Account, My Business Account, and Represent a Client, go to and sign in to or register for a CRA account. line 104 at the end of this guide. ## Generated Markdown table of contents - [General Information for](#general-information-for) - PDF page 1 - [What’s new](#whats-new) - PDF page 3 - [Definitions](#definitions) - PDF page 8 - [What is the GST/HST](#what-is-the-gsthst) - PDF page 10 - [Who pays the GST/HST](#who-pays-the-gsthst) - PDF page 10 - [False GST/HST exemptions](#false-gsthst-exemptions) - PDF page 10 - [Who charges the GST/HST](#who-charges-the-gsthst) - PDF page 10 - [Taxable supplies](#taxable-supplies) - PDF page 10 - [Taxable supplies (other than zero-rated)](#taxable-supplies-other-than-zero-rated) - PDF page 10 - [Zero-rated supplies](#zero-rated-supplies) - PDF page 11 - [Exempt supplies](#exempt-supplies) - PDF page 11 - [How does the GST/HST work](#how-does-the-gsthst-work) - PDF page 11 - [Should you register?](#should-you-register) - PDF page 12 - [Small supplier](#small-supplier) - PDF page 12 - [How to register](#how-to-register) - PDF page 14 - [Fiscal year](#fiscal-year) - PDF page 15 - [Reporting periods](#reporting-periods) - PDF page 15 - [Accounting periods](#accounting-periods) - PDF page 16 - [Making changes to your GST/HST account](#making-changes-to-your-gsthst-account) - PDF page 17 - [Address changes](#address-changes) - PDF page 17 - [Telephone and fax number changes](#telephone-and-fax-number-changes) - PDF page 17 - [Authorized representative changes](#authorized-representative-changes) - PDF page 17 - [Direct deposit changes](#direct-deposit-changes) - PDF page 17 - [Expecting a large refund](#expecting-a-large-refund) - PDF page 17 - [Legal entity type changes](#legal-entity-type-changes) - PDF page 17 - [Legal name changes](#legal-name-changes) - PDF page 17 - [Collecting the GST/HST](#collecting-the-gsthst) - PDF page 17 - [Informing your customers](#informing-your-customers) - PDF page 18 - [Sales invoices for GST/HST registrants](#sales-invoices-for-gsthst-registrants) - PDF page 18 - [Provincial sales tax](#provincial-sales-tax) - PDF page 19 - [Rounding off fractional amounts](#rounding-off-fractional-amounts) - PDF page 19 - [Early-payment discounts and late-payment surcharges](#early-payment-discounts-and-late-payment-surcharges) - PDF page 19 - [Volume discounts](#volume-discounts) - PDF page 20 - [Input tax credits](#input-tax-credits) - PDF page 21 - [Operating expenses](#operating-expenses) - PDF page 21 - [Time limits for claiming ITCs](#time-limits-for-claiming-itcs) - PDF page 22 - [ITC restrictions](#itc-restrictions) - PDF page 22 - [Claiming ITCs for capital property](#claiming-itcs-for-capital-property) - PDF page 25 - [Claiming ITCs for capital real property](#claiming-itcs-for-capital-real-property) - PDF page 30 - [Simplified method for claiming ITCs](#simplified-method-for-claiming-itcs) - PDF page 30 - [Calculating your net tax](#calculating-your-net-tax) - PDF page 31 - [GST/HST charged and not collected](#gsthst-charged-and-not-collected) - PDF page 32 - [GST/HST not charged](#gsthst-not-charged) - PDF page 32 - [GST/HST payable and not paid](#gsthst-payable-and-not-paid) - PDF page 32 - [Bad debt adjustments](#bad-debt-adjustments) - PDF page 32 - [Quick method of accounting](#quick-method-of-accounting) - PDF page 33 - [Exceptions](#exceptions) - PDF page 33 - [How does the quick method work?](#how-does-the-quick-method-work) - PDF page 33 - [How do I start using the quick method?](#how-do-i-start-using-the-quick-method) - PDF page 34 - [GST/HST returns](#gsthst-returns) - PDF page 34 - [GST/HST returns filed by non-residents](#gsthst-returns-filed-by-non-residents) - PDF page 34 - [Filing and remitting due dates](#filing-and-remitting-due-dates) - PDF page 34 - [How to file your return](#how-to-file-your-return) - PDF page 35 - [How to remit an amount owing](#how-to-remit-an-amount-owing) - PDF page 36 - [Branches or divisions filing separate returns](#branches-or-divisions-filing-separate-returns) - PDF page 37 - [Using a rebate or refund to decrease an amount owing on your GST/HST return](#using-a-rebate-or-refund-to-decrease-an-amount-owing-on-your-gsthst-return) - PDF page 37 - [Filing nil returns](#filing-nil-returns) - PDF page 37 - [After you file](#after-you-file) - PDF page 38 - [Notices and statements](#notices-and-statements) - PDF page 38 - [When can you expect your refund?](#when-can-you-expect-your-refund) - PDF page 38 - [Interest on overpayments and refunds](#interest-on-overpayments-and-refunds) - PDF page 39 - [Penalties and interest](#penalties-and-interest) - PDF page 39 - [How do you change a return?](#how-do-you-change-a-return) - PDF page 39 - [Enquiries service](#enquiries-service) - PDF page 40 - [What is the Voluntary Disclosures Program?](#what-is-the-voluntary-disclosures-program) - PDF page 40 - [Director’s liability](#directors-liability) - PDF page 40 - [What records should you keep?](#what-records-should-you-keep) - PDF page 40 - [Storage service providers](#storage-service-providers) - PDF page 40 - [If you are audited](#if-you-are-audited) - PDF page 40 - [How to register a formal dispute](#how-to-register-a-formal-dispute) - PDF page 40 - [Instalment payments](#instalment-payments) - PDF page 41 - [Who has to make instalment payments?](#who-has-to-make-instalment-payments) - PDF page 41 - [New registrants and instalments](#new-registrants-and-instalments) - PDF page 41 - [Instalment due dates](#instalment-due-dates) - PDF page 41 - [How to make instalment payments](#how-to-make-instalment-payments) - PDF page 42 - [Instalment interest](#instalment-interest) - PDF page 42 - [Harmonized sales tax](#harmonized-sales-tax) - PDF page 42 - [HST registration](#hst-registration) - PDF page 43 - [Point-of-sale rebates](#point-of-sale-rebates) - PDF page 43 - [Ontario First Nations point-of-sale rebate](#ontario-first-nations-point-of-sale-rebate) - PDF page 43 - [Tax on supplies of property and services made in provinces – place-of-supply rules](#tax-on-supplies-of-property-and-services-made-in-provinces-place-of-supply-rules) - PDF page 44 - [Tax on property and services brought into a participating province](#tax-on-property-and-services-brought-into-a-participating-province) - PDF page 47 - [Rules for motor vehicles](#rules-for-motor-vehicles) - PDF page 49 - [Special cases](#special-cases) - PDF page 50 - [Coin-operated machines](#coin-operated-machines) - PDF page 50 - [Coupons, rebates, gifts, and promotional allowances](#coupons-rebates-gifts-and-promotional-allowances) - PDF page 50 - [Deposits and conditional sales](#deposits-and-conditional-sales) - PDF page 53 - [Emission allowances](#emission-allowances) - PDF page 53 - [Employees and partners](#employees-and-partners) - PDF page 54 - [Exports and imports](#exports-and-imports) - PDF page 54 - [Financial services](#financial-services) - PDF page 57 - [Insurance claims](#insurance-claims) - PDF page 58 - [Mining activities in respect of cryptoassets](#mining-activities-in-respect-of-cryptoassets) - PDF page 58 - [Real property](#real-property) - PDF page 59 - [Sales of new housing](#sales-of-new-housing) - PDF page 59 - [Returns and warranties](#returns-and-warranties) - PDF page 68 - [Selling goods, services, and rights for others](#selling-goods-services-and-rights-for-others) - PDF page 71 - [Supplies to diplomats, governments, and First Nations](#supplies-to-diplomats-governments-and-first-nations) - PDF page 74 - [Trade-ins](#trade-ins) - PDF page 75 - [Selling your business](#selling-your-business) - PDF page 77 - [Cancelling your registration](#cancelling-your-registration) - PDF page 77 - [Instructions for filling out your GST/HST return](#instructions-for-filling-out-your-gsthst-return) - PDF page 79 - [Quick method](#quick-method) - PDF page 79 - [Regular method](#regular-method) - PDF page 79 - [Schedule A, Builders – transitional information](#schedule-a-builders-transitional-information) - PDF page 84 - [Schedule B, Calculation of recaptured input tax credits](#schedule-b-calculation-of-recaptured-input-tax-credits) - PDF page 84 - [Schedule C, Reconciliation of recaptured input tax credits (RITCs)](#schedule-c-reconciliation-of-recaptured-input-tax-credits-ritcs) - PDF page 84 - [Publications and forms](#publications-and-forms) - PDF page 85 - [Forms](#forms) - PDF page 85 - [Digital services](#digital-services) - PDF page 86 - [GST/HST electronic filing and remitting](#gsthst-electronic-filing-and-remitting) - PDF page 86 - [Handling your business taxes online](#handling-your-business-taxes-online) - PDF page 86 - [Create a pre-authorized debit agreement for payments from your Canadian chequing account](#create-a-pre-authorized-debit-agreement-for-payments-from-your-canadian-chequing-account) - PDF page 86 - [Electronic payments](#electronic-payments) - PDF page 86 - [For more information](#for-more-information) - PDF page 88 - [If you need help](#if-you-need-help) - PDF page 88 - [Direct deposit](#direct-deposit) - PDF page 88 - [Forms and publications](#forms-and-publications) - PDF page 88 - [Ordering personalized remittance forms](#ordering-personalized-remittance-forms) - PDF page 88 - [Electronic mailing lists](#electronic-mailing-lists) - PDF page 88 - [Teletypewriter (TTY) and Video Relay Service (VRS) users](#teletypewriter-tty-and-video-relay-service-vrs-users) - PDF page 88 - [Excise and GST/HST News](#excise-and-gsthst-news) - PDF page 88 - [GST/HST rulings and interpretations](#gsthst-rulings-and-interpretations) - PDF page 88 - [Formal disputes (objections and appeals)](#formal-disputes-objections-and-appeals) - PDF page 88 - [CRA service feedback program](#cra-service-feedback-program) - PDF page 88 - [Reprisal complaints](#reprisal-complaints) - PDF page 89 - [Due dates](#due-dates) - PDF page 89 - [Cancel or waive penalties and interest](#cancel-or-waive-penalties-and-interest) - PDF page 89 ## Table of contents Page Definitions......................................................................... 8 What is the GST/HST........................................................ 10 Who pays the GST/HST..................................................... 10 False GST/HST exemptions............................................... 10 Who charges the GST/HST................................................ 10 Taxable supplies................................................................. 10 Taxable supplies (other than zero-rated).......................... 10 Zero-rated supplies............................................................. 11 Exempt supplies.................................................................. 11 How does the GST/HST work.......................................... 11 Should you register?.......................................................... 12 Small supplier...................................................................... 12 Determining the effective date of registration for small supplier............................................................... 13 How to register.................................................................... 14 Voluntary registration..................................................... 14 Fiscal year............................................................................. 15 Reporting periods................................................................ 15 When does your reporting period change?.................. 15 Accounting periods............................................................. 16 Making changes to your GST/HST account.................. 17 Address changes.................................................................. 17 Telephone and fax number changes................................. 17 Authorized representative changes.................................. 17 Direct deposit changes........................................................ 17 Expecting a large refund..................................................... 17 Legal entity type changes................................................... 17 Legal name changes............................................................ 17 Collecting the GST/HST................................................... 17 Informing your customers.................................................. 18 Sales invoices for GST/HST registrants........................... 18 Disclosing the HST on sales subject to the point-of-sale rebates, or the Ontario First Nations point-of-sale relief........................................................ 18 Input tax credit information requirements................... 19 Provincial sales tax.............................................................. 19 Rounding off fractional amounts...................................... 19 Early-payment discounts and late-payment surcharges......................................................................... 19 Early-payment discounts................................................ 19 Late-payment surcharges................................................ 20 Volume discounts................................................................ 20 At the time of sale............................................................ 20 After the sale..................................................................... 20 Input tax credits.................................................................. 21 Operating expenses............................................................. 21 Time limits for claiming ITCs............................................ 22 ITC restrictions..................................................................... 22 Procurement cards........................................................... 23 Meal and entertainment expenses................................. 23 Long-haul truck drivers.................................................. 23 Employee, partner, and volunteer expenses................ 23 Restriction – No ITCs on allowances and reimbursements paid for qualifying items subject to the point-of-sale rebates.......................................... 24 Home office expenses...................................................... 24 Page New registrants............................................................... 25 Claiming ITCs for capital property................................... 25 Capital personal property.............................................. 25 Change-in-use rules for capital personal property..... 26 Claiming ITCs for capital real property........................... 30 Simplified method for claiming ITCs............................... 30 How does the simplified method for claiming ITCs work?............................................................................. 30 Calculating your net tax.................................................... 31 GST/HST charged and not collected................................ 32 GST/HST not charged........................................................ 32 GST/HST payable and not paid....................................... 32 Bad debt adjustments......................................................... 32 Bad debt recovered.......................................................... 33 Quick method of accounting............................................ 33 Exceptions............................................................................ 33 How does the quick method work?.................................. 33 Input tax credits............................................................... 34 How do I start using the quick method?.......................... 34 GST/HST returns............................................................... 34 GST/HST returns filed by non-residents......................... 34 Filing and remitting due dates.......................................... 34 Monthly and quarterly filers.......................................... 34 Annual filers..................................................................... 34 Reporting obligations...................................................... 35 How to file your return...................................................... 35 Mandatory electronic filing............................................ 35 How to file rebate applications for electronic returns........................................................................... 35 How to remit an amount owing........................................ 36 Electronic payments and paying at a financial institution...................................................................... 36 Are you a sole proprietor with an annual reporting period?.......................................................................... 37 Branches or divisions filing separate returns.................. 37 Using a rebate or refund to decrease an amount owing on your GST/HST return................................... 37 Filing nil returns.................................................................. 37 How to temporarily stop filing GST/HST returns for specific reporting periods..................................... 37 After you file....................................................................... 38 Notices and statements....................................................... 38 Notice of (re)assessment................................................. 38 Statement of arrears........................................................ 38 When can you expect your refund?.................................. 38 Refund holds.................................................................... 38 Refund off-sets................................................................. 38 Interest on overpayments and refunds............................ 39 Penalties and interest.......................................................... 39 Penalties............................................................................ 39 Interest.............................................................................. 39 How do you change a return?........................................... 39 Enquiries service................................................................. 40 What is the Voluntary Disclosures Program?................. 40 Director’s liability................................................................ 40 What records should you keep?........................................ 40 Storage service providers................................................... 40 If you are audited................................................................ 40 5 How to register a formal dispute....................................... 40 Instalment payments.......................................................... 41 Who has to make instalment payments?.......................... 41 New registrants and instalments....................................... 41 Instalment due dates........................................................... 41 How to make instalment payments.................................. 42 Statement of interim payments...................................... 42 Instalment interest............................................................... 42 Harmonized sales tax......................................................... 42 HST registration................................................................... 43 Point-of-sale rebates............................................................ 43 How to account for point-of-sale rebates...................... 43 Ontario First Nations point-of-sale rebate........................ 43 How to account for the Ontario First Nations point-of-sale rebate...................................................... 43 Tax on supplies of property and services made in provinces – place-of-supply rules.................................. 44 Goods................................................................................. 44 Services – General rules.................................................. 45 Personal services.............................................................. 45 Services in relation to real property.............................. 45 Services in relation to tangible personal property that remains in the same province while the service is performed..................................................... 46 Intangible personal property – General rules.............. 46 Intangible personal property relating to real property or tangible personal property.................... 47 Tax on property and services brought into a participating province............................................................................. 47 Goods................................................................................. 48 Services.............................................................................. 48 Intangible personal property.......................................... 48 Self-assessing for services and intangible personal property......................................................................... 49 Rules for motor vehicles..................................................... 49 Sales................................................................................... 49 Rentals............................................................................... 50 Leases................................................................................ 50 Special cases........................................................................ 50 Coin-operated machines..................................................... 50 Coupons, rebates, gifts, and promotional allowances.... 50 Reimbursable coupons.................................................... 50 Non-reimbursable coupons............................................ 51 Other coupons.................................................................. 51 Manufacturers’ rebates.................................................... 51 Gift certificates.................................................................. 52 Promotional gifts and free samples............................... 52 Promotional allowances.................................................. 52 Deposits and conditional sales........................................... 53 Deposits............................................................................. 53 Conditional and instalment sales................................... 53 Emission allowances........................................................... 53 How to self-assess on the purchase of an emission allowance....................................................................... 54 Employees and partners..................................................... 54 Employee benefits............................................................ 54 Employee and partner GST/HST rebate...................... 54 Exports and imports............................................................ 54 Exported goods................................................................ 55 Exported services............................................................. 55 Exported intangible personal property......................... 56 Imported goods................................................................ 56 6 Imported services and intangible personal property. 57 Financial services................................................................ 57 Insurance claims.................................................................. 58 Life and health insurance claims................................... 58 Property and casualty insurance claims....................... 58 Mining activities in respect of cryptoassets..................... 58 Real property....................................................................... 59 Rebates for new housing................................................ 59 Who remits the tax for a taxable sale of real property – Vendor or purchaser?.............................. 59 Claiming ITCs for purchases of capital real property........................................................................ 60 Claiming ITCs for improvements to capital real property........................................................................ 61 Change-in-use rules for capital real property.............. 62 Claiming ITCs when you make a taxable sale of real property................................................................. 68 Returns and warranties...................................................... 68 Returnable beverage containers.................................... 68 Returnable containers..................................................... 69 Returned goods................................................................ 70 Warranty reimbursements............................................. 70 Selling goods, services, and rights for others.................. 71 Auctioneers...................................................................... 71 Agents............................................................................... 71 Consignment sales........................................................... 73 Direct selling industry.................................................... 73 Supplies to diplomats, governments, and First Nations.............................................................................. 74 Diplomats......................................................................... 74 Federal government........................................................ 74 Provincial and territorial governments........................ 74 Municipalities.................................................................. 74 First Nations..................................................................... 74 Trade-ins............................................................................... 75 When the customer has to charge tax........................... 76 When the customer does not have to charge tax......... 76 Sale-leaseback arrangements......................................... 76 Barter-exchange networks.............................................. 76 Selling your business.......................................................... 77 Will you have any more business activity?.................. 77 Cancelling your registration.............................................. 77 Non-capital property held at the time of deregistration........................................................... 77 Capital property held at the time of deregistration.... 77 ITCs for services, rent, royalties, and similar payments....................................................................... 78 Filing your final GST/HST return................................ 78 Sole proprietor of the business has passed away........ 78 How to cancel your registration.................................... 79 Instructions for filling out your GST/HST return....... 79 Quick method...................................................................... 79 Regular method................................................................... 79 Schedule A, Builders – transitional information............. 84 Schedule B, Calculation of recaptured input tax credits 84 Schedule C, Reconciliation of recaptured input tax credits (RITCs)................................................................. 84 Publications and forms..................................................... 85 Forms.................................................................................... 85 Elections............................................................................ 85 Applications..................................................................... 85 Digital services.................................................................... 86 GST/HST electronic filing and remitting......................... 86 Handling your business taxes online................................ 86 Receive your CRA mail online........................................... 86 Create a pre-authorized debit agreement for payments from your Canadian chequing account...... 86 Electronic payments............................................................ 86 For more information......................................................... 88 If you need help................................................................... 88 Direct deposit....................................................................... 88 Forms and publications...................................................... 88 Ordering personalized remittance forms......................... 88 Electronic mailing lists........................................................ 88 Teletypewriter (TTY) and Video Relay Service (VRS) users.................................................................................. 88 Excise and GST/HST News............................................... 88 GST/HST rulings and interpretations.............................. 88 Formal disputes (objections and appeals)........................ 88 CRA service feedback program......................................... 88 Service complaints........................................................... 88 Reprisal complaints............................................................ 89 Due dates.............................................................................. 89 Cancel or waive penalties and interest............................. 89 7 ## Definitions Arm’s length refers to a relationship or a transaction between unrelated persons who act in their own separate interests. An arm’s length transaction is generally a transaction that reflects ordinary commercial dealings between unrelated parties acting in their own separate interests. Related persons are not considered to deal with each other at arm’s length. Related persons include individuals connected by blood relationship, marriage, common-law partnership, or adoption (legal or in fact). A corporation and another person or two corporations may also be related persons. In addition, for GST/HST purposes, a member of a partnership is related to the partnership. Unrelated persons may not be dealing with each other at arm’s length at a particular time. Each case will depend upon its own facts. The following criteria will generally be used to determine if the parties are not dealing at arm’s length: - whether there is a common mind that directs the bargaining for the parties to a transaction - whether the parties to a transaction act in concert without separate interests (“acting in concert” means, for example, that parties act with considerable interdependence on a transaction of common interest) - whether there is “de facto control” of one party by the other because of, for example, advantage, authority, or influence For more information, see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm’s Length. Associated person, for GST/HST purposes, means a person that is generally associated with another person where one controls the other. Associated persons (referred to generally as “associates”) may include: - two or more corporations - an individual and a corporation - a person and a partnership or trust - two persons, if they are associated with the same third person Basic tax content of a property generally means the amount of the GST/HST that was payable for the last acquisition of the property, and for any improvements made to the property since that last acquisition, less any amounts that were, or would have been, able to be recovered (for example, by rebate or remission, but not by input tax credits (ITC)). The calculation for the basic tax content takes into account any depreciation in the value of the property since it was last acquired (for example, when it was purchased or when it was last deemed to have been purchased, whichever occurred more recently). Registrants may have to calculate the basic tax content of a property if they increase or decrease their use of the property in their commercial activities. Non-registrants may have to calculate the basic tax content of real property if they file a rebate under section 257 of the Excise Tax Act. 8 For more information on how to calculate basic tax content, see “Calculating the basic tax content” on page 26. Calendar quarter means a period of three months beginning on the first day of January, April, July or October in each calendar year. Calendar year means a year that begins on January 1 and ends on December 31. Charity means a registered charity or registered Canadian amateur athletic association for income tax purposes, but does not include a public institution. A charity can issue official donation receipts for income tax purposes. For the definition of charity for the purposes of the public service bodies’ rebate, see Guide RC4034, GST/HST Public Service Bodies’ Rebate. Commercial activity means any business or adventure or concern in the nature of trade carried on by a person, but does not include: - the making of exempt supplies - any business or adventure or concern in the nature of trade carried on without a reasonable expectation of profit by an individual, a personal trust, or a partnership where all of the members are individuals Commercial activity also includes a supply of real property, other than an exempt supply, made by any person, whether or not there is a reasonable expectation of profit, and anything done in the course of making the supply or in connection with the making of the supply. Emission allowance means an allowance, credit or similar instrument (other than a prescribed allowance, credit or instrument) that: - is issued or created by, or on behalf of any of the following: - a government, a government of a foreign country, a government of a political subdivision of a country, a supranational organization or an international organization (each of which is, in this definition, referred to as a “regulator”) a board, commission or other body established by - a regulator an agency of a regulator - - can be used to satisfy a requirement under either of the following: - a scheme or arrangement implemented by, or on behalf of, a regulator to regulate greenhouse gas emissions a prescribed scheme or arrangement - - represents a specific quantity of greenhouse gas emissions expressed as carbon dioxide equivalent Emission allowance also includes a prescribed property. Exempt supplies means supplies of property and services that are not subject to the GST/HST. GST/HST registrants generally cannot claim input tax credits to recover the GST/HST paid or payable on property and services acquired to make exempt supplies. Financial institution includes a person that is a listed financial institution as defined on this page, and a person (referred to as a de minimis financial institution) whose income from certain financial services exceeds specific thresholds. For more information, see GST/HST Memorandum 17-6, Definition of “Listed Financial Institution ” and GST/HST Memorandum 17-7, De Minimis Financial Institutions. Input tax credit (ITC) means a credit that GST/HST registrants can claim to recover the GST/HST paid or payable for property or services they acquired, imported into Canada, or brought into a participating province for use, consumption, or supply in the course of their commercial activities. Listed financial institution includes: - a bank - a corporation that is authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as a trustee - a person whose principal business is as a trader or dealer in, or as a broker or salesperson of, financial instruments or money - a credit union - an insurer - a segregated fund of an insurer - a person whose principal business is the lending of money or the purchasing of debt securities or a combination of these activities - an investment plan - a tax discounter - a corporation that is deemed to be a financial institution because it has elected to have certain taxable supplies deemed to be financial services For more information, see GST/HST Memorandum 17-6, Definition of “Listed Financial Institution.” Municipality means an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality, or other incorporated municipal body however designated, and such other local authority that the Minister of National Revenue may determine to be a municipality for GST/HST purposes. Note For the purposes of the public service bodies’ rebate, a municipality includes a person designated by the Minister of National Revenue to be a municipality, but only in respect of activities, specified in the designation, that involve the making of supplies (other than taxable supplies) by the person of municipal services. For more information, see Guide RC4049, GST/HST Information for Municipalities. Participating province means a province that has harmonized its provincial sales tax with the GST to implement the harmonized sales tax (HST). Participating provinces include New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, but do not include the Nova Scotia offshore area or the Newfoundland offshore area except to the extent that offshore activities, as defined in subsection 123(1) of the Excise Tax Act, are carried on in that area. Person means an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or a body that is a society, a union, a club, an association, a commission or other organization of any kind. Property means any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, but does not include money. Public institution means a registered charity for income tax purposes that is also a school authority, a public college, a university, a hospital authority, or a local authority determined by the Minister of National Revenue to be a municipality. Public service body means a charity, non-profit organization, municipality, university, public college, school authority, or hospital authority. Real property includes: - a mobile home or floating home and any leasehold or ownership interest in such property - in Quebec, immovable property and every lease of such property - in any other place in Canada, all land, buildings of a permanent nature, and any interest in real property Registrant means a person that is registered or required to be registered for the GST/HST, but generally excludes a person that is registered or required to be registered under special rules applicable to digital economy businesses unless that person registered under those special rules begins carrying on business in Canada, requiring them to register under the regular rules that apply to most persons. Small supplier means a person whose revenue (along with the revenue of all persons associated with that person) from worldwide taxable supplies was equal to or less than $30,000 ($50,000 for public service bodies) in a single calendar quarter and over the last four consecutive calendar quarters. The calculation excludes consideration attributable to the sale of goodwill of a business, supplies of financial services, and supplies by way of sale of capital property. Charities and public institutions are also considered small suppliers if they meet the gross revenue test of $250,000 or less. For more information, see GST/HST Memorandum 2-2, Small suppliers. Service means anything other than: - property - money - anything that is supplied to an employer by an employee in the course of employment 9 Supply means the provision of property or a service in any way, including sale, transfer, barter, exchange, licence, rental, lease, gift, or disposition. Taxable supply means a supply that is made in the course of a commercial activity and is generally subject to the GST/HST (including zero-rated supplies). Zero-rated supplies are supplies of property and services that are taxable at the rate of 0%. This means there is no GST/HST charged on these supplies, but GST/HST registrants may be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to provide these supplies. ## What is the GST/HST The goods and services tax (GST) is a tax that applies to most supplies of goods and services made in Canada. The GST also applies to many supplies of real property (for example, land, buildings, and interests in such property) and intangible personal property such as trademarks, rights to use a patent, and digitized products downloaded from the Internet and paid for individually. The participating provinces harmonized their provincial sales tax with the GST to implement the harmonized sales tax (HST) in those provinces. Generally, the HST applies to the same base of property (for example, goods) and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on certain qualifying items. For more information, see “Point-of-sale rebates” on page 43. GST/HST registrants who make taxable supplies (other than zero-rated supplies) in the participating provinces collect tax at the applicable HST rate. GST/HST registrants collect tax at the 5% GST rate on taxable supplies they make in the rest of Canada (other than zero-rated supplies). Special rules apply for determining the place of supply. For more information on the HST and the place-of-supply rules, see “Tax on supplies of property and services made in provinces – place-of-supply rules” on page 44. The HST rate can vary from one participating province to another. For the list of all applicable GST/HST rates, go to and select “GST/HST calculator (and rates)” under “Most requested.” ### Who pays the GST/HST Almost everyone has to pay the GST/HST on purchases of taxable supplies of property and services (other than zero-rated supplies). However, in some situations, individuals registered under the Indian Act, Indian bands and band-empowered entities are relieved of paying the GST/HST on taxable supplies. In addition, some entities, such as certain provincial and territorial governments, do not always pay the GST/HST on their purchases. For more information, see “Supplies to diplomats, governments, and First Nations” on page 74. 10 ### False GST/HST exemptions Some individuals, businesses, and organizations are falsely claiming to be exempt from paying the GST/HST. In some cases, they may even present a fake exemption card to avoid paying the tax on their purchases. If you do not collect the GST/HST from someone who falsely claims to be exempt from paying the GST/HST, you still have to account for the tax you should have collected. Some provinces exempt farmers, municipalities, and certain businesses from paying the provincial sales tax. However, these provincial exemptions do not apply to the GST/HST. ### Who charges the GST/HST Generally, GST/HST registrants have to charge and collect the GST/HST on all taxable (other than zero-rated) supplies of property and services they provide to their customers. However, there are some exceptions for taxable sales of real property. For more information, see “Real property” on page 59. Note A supplier (other than a prescribed supplier) that makes a taxable supply of an emission allowance does not have to collect the GST/HST payable by the recipient of the supply. For more information, see “Emission allowances” on page 53. ## Taxable supplies Most property and services supplied in or imported into Canada are subject to the GST/HST. ### Taxable supplies (other than zero-rated) The items below are examples of taxable supplies (other than zero-rated supplies): - sales of new housing - sales or rentals of commercial real property - sales and leases of automobiles - car repairs - soft drinks, candies, and potato chips - clothing and footwear - advertising - taxi or commercial ride-sharing services - legal and accounting services - franchises - hotel accommodation - barber and hairstylist services For the list of all applicable GST/HST rates, go to /gst-hst and select “GST/HST calculator (and rates)” under “Most requested.” ### Zero-rated supplies Some supplies are zero-rated under the GST/HST – that is, the GST/HST applies at a rate of 0%. This means that you do not charge the GST/HST on these supplies, but you may be eligible to claim ITCs for the GST/HST paid or payable on property and services purchased to provide these supplies. The following are examples of supplies taxable at 0% (zero-rated): - basic groceries such as milk, bread, and vegetables - agricultural products such as grain, raw wool, and dried tobacco leaves - most farm livestock - most fishery products such as fish for human consumption - prescription drugs and drug-dispensing services - certain medical devices such as hearing aids and artificial teeth - feminine hygiene products - exports (most goods and services for which you charge and collect the GST/HST in Canada, are zero-rated when exported) - many transportation services where the origin or destination is outside Canada For more information, see GST/HST Memoranda Series, Chapter 4, Zero-rated supplies. ## Exempt supplies Some supplies are exempt from the GST/HST – that is, no GST/HST applies to them. This means that you do not charge the GST/HST on these supplies of property and services, and you are generally not entitled to claim ITCs on property and services purchased to provide these supplies. Generally, you cannot register for the GST/HST if your business provides only exempt supplies; one exception is if you are a listed financial institution resident in Canada. The following are examples of exempt supplies: - a sale of housing that was last used by an individual as a place of residence - long-term rentals of residential accommodation (of one month or more) and residential condominium fees - most health, medical, and dental services performed by licensed physicians, dentists, nurses, and certain other healthcare practitioners, such as optometrists and midwives for medical reasons Note Psychotherapists and counselling therapists have been added to the list of practitioners whose health care services rendered to individuals are exempt from the GST/HST. - child care services, where the primary purpose is to provide care and supervision to children 14 years of age or under for periods of less than 24 hours per day - most domestic ferry services - legal aid services - many educational services such as: - a supply made by a vocational school of a service of instructing individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences, that attest to the competence of individuals to practise or perform a trade or vocation, except where the supplier has made an election using Form GST29, Educational Services – Election and Revocation of the Election to Make Certain Supplies Taxable. - a service of tutoring an individual in a course that is approved for credit by, or that follows a curriculum designated by a school authority - music lessons - most services provided by financial institutions such as lending money or operating deposit accounts - the issuance of insurance policies by an insurer and the arranging for the issuance of insurance policies by insurance agents - most property and services provided by charities and public institutions - certain property and services provided by governments, non-profit organizations, municipalities, and other public service bodies including municipal transit services and standard residential services such as water distribution Note Public service bodies that provide exempt supplies are generally eligible to claim a public service bodies’ rebate for the GST/HST paid or payable on expenses related to making exempt supplies whether or not they are registered for the GST/HST. For more information, see Guide RC4034, GST/HST Public Service Bodies’ Rebate. ## How does the GST/HST work If you are a GST/HST registrant, you generally have to charge and collect the GST/HST on taxable supplies (other than zero-rated supplies) you make in Canada and file regular GST/HST returns to report that tax. Exceptions In certain cases, you do not have to collect the GST/HST on a taxable sale of real property. Instead, the purchaser may have to pay the tax directly to the CRA. For more information, see “Real property” on page 59. You do not have to collect the GST/HST on a taxable supply of an emission allowance. Instead, the purchaser must pay the tax directly to the CRA. For more information, see “Emission allowances” on page 53. You do not have to charge or collect the GST/HST if you sell your business under certain conditions. For more information, see “Selling your business” on page 77. 11 Corporations resident in Canada or Canadian partnerships, which satisfy certain requirements, do not have to charge or collect the GST/HST on certain supplies if they make the election for nil consideration. For more information, see GST/HST Form RC4616, Election or Revocation of an Election for Closely Related Corporations and/or Canadian Partnerships to Treat Certain Taxable Supplies as Having Been Made for Nil Consideration for GST/HST Purposes. You can generally claim ITCs on your GST/HST return to recover the GST/HST paid or payable on purchases and expenses to the extent you use, consume, or supply them in your commercial activities (see definition of “ Commercial activity ” on page 8). For the consumer, there is no difference between zero-rated and exempt supplies of property and services because tax is not collected in either case. However, one of the differences for you, as the registrant, is that although you do not collect the GST/HST on zero-rated or exempt supplies of property and services, you can only claim ITCs for the GST/HST paid or payable on purchases purchased to make zero-rated supplies of property and services. Taxable and exempt supplies Taxable Exempt Other than zero- Zero-rated rated You do not (taxable at 0%) (taxable at 5%, charge 13%, 14%, or 15%) the GST/HST You do not Charge charge You cannot the GST/HST the GST/HST claim ITCs Claim your Claim your ITCs ITCs When you fill out your GST/HST return, deduct your ITCs from the GST/HST you charged. The result is your net tax. If the total amount of tax you charged is more than the amount of your ITCs, send the difference to the CRA. If the total amount of tax you charged is less than the amount of your ITCs, you can claim a refund. For more information on ITCs, see “Input tax credits” on page 21. Note Special rules apply to charities. For more information, see Guide RC4082, GST/HST Information for Charities. ## Should you register? You generally have to register for the GST/HST if you make taxable supplies in Canada in the course of a commercial activity. You do not have to register if: - you are a small supplier (that does not carry on a taxi business or provide commercial ride-sharing services) 12 - your only commercial activity is the sale of real property, other than in the course of a business. Although you do not have to register for the GST/HST in this case, your sale of real property may still be taxable and you may have to charge and collect the tax. For more information, see “Real property” on page 59 - you are a non-resident who does not carry on business in Canada. For more information, see Guide RC4027, Doing Business in Canada – GST/HST Information for Non-Residents If your business is registered for the GST, it is also registered for the HST. For more information, see “HST registration” on page 43. Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. Type of supplies that are affected by these measures: - Cross-border digital products and services - You may be required to register under the simplified GST/HST. - Platform-based short-term accommodation You may be required to register under - the simplified GST/HST. - Supply of qualifying goods - You may be required to register under the normal GST/HST. The simplified GST/HST is not applicable to you. Go to “Find out if you need to register for the GST/HST: GST/HST for digital economy businesses” at -businesses/digital-economy-gsthst/find-out-need-register. Note A business required to be registered under the simplified GST/HST may, if it meets certain conditions, voluntarily apply to register for normal GST/HST. You cannot be registered under both types at the same time. For more general information on these measures and the definitions for the digital economy, go to GST/HST for digital economy businesses at . ### Small supplier You are a small supplier and do not have to register if you meet one of the following conditions: - The total amount of all revenues (before expenses) from your worldwide taxable supplies from all your businesses and those of your associates (if they were associated at the beginning of the particular calendar quarter), is $30,000 or less in any single calendar quarter and in the last four consecutive calendar quarters. - You are a public service body and the total amount of all revenues (before expenses) from your worldwide taxable supplies from all of the organization’s activities and those of your associates (if they were associated at the beginning of the particular calendar quarter), is $50,000 or less in any single calendar quarter and in the last four consecutive calendar quarters. Charities and public institutions are also considered small suppliers during their first fiscal year or if they meet the gross revenue threshold of $250,000 or less. For more information, see Guide RC4082, GST/HST Information for Charities. In determining the total amount of revenues from taxable supplies (including zero-rated supplies) of property and services made inside and outside Canada by you and your associates, do not include revenues from supplies of financial services, sales of capital property, and goodwill from the sale of a business. You are considered to be associated with another person for GST/HST purposes if you meet any of the following conditions: - If you are a corporation, you and another corporation are associated if you are associated for income tax purposes. - If you are not a corporation, you and a corporation are associated if you control the corporation or you are a member of a group that controls the corporation and each member of that group is associated with each other member. - You are associated with a partnership if the total of your share of the partnership’s profits and the share of all the persons with whom you are associated is more than half of the total of the partnership’s profits or would be more than half if the partnership had profits. - You are associated with a trust if the total value of your interest in the trust and the interest in the trust of all the persons with whom you are associated, is more than half the total value of all interests in the trust. - You are associated with another person if you are each associated with the same third person. Note You are no longer a small supplier and you must register for the GST/HST if your total revenues from taxable supplies (and those of your associates) are over $30,000 ($50,000 for public service bodies) in a single calendar quarter or over the last four consecutive calendar quarters. Exception A person who carries on a taxi business or provides commercial ride-sharing services must register for the GST/HST even if the person is a small supplier. For more information, see GST/HST Info Sheet GI-196, GST/HST and Commercial Ride-sharing Services. In addition, non-residents whose only business in Canada is selling admissions to seminars, performances, and other events must register for the GST/HST, as they are not considered to be small suppliers. Determining the effective date of registration for small supplier The effective date of your GST/HST registration depends on when you go over the small supplier threshold amount of $30,000 ($50,000 if you are a public service body). If your revenues are over the threshold amount in one calendar quarter, you are considered a registrant and must collect the GST/HST on the supply that made you go over the threshold amount. Your effective date of registration is the day of the supply that made you go over the threshold amount. You must register within 29 days of that day. Example 1 The following example explains what happens if you exceed the $30,000 limit in one particular quarter: First quarter $ 2,000 (January 1, 2024 to March 31, 2024) Second quarter $10,000 (April 1, 2024 to June 30, 2024) Third quarter $38,000 (July 1, 2024 to September 30, 2024) In this case, a sale that exceeded the small supplier limit was made on September 23. Therefore, in the third quarter, you cease immediately to be a small supplier since you have exceeded the limit. You have to charge the GST/HST on the September 23 sale that made you exceed the $30,000 limit, even if you are not yet registered. You have to register for the GST/HST by October 22, that is, within 29 days after you cease to be a small supplier. If you are under the threshold amount in one calendar quarter, but you are over the threshold during four (or fewer) consecutive calendar quarters, you are considered to be a small supplier for those calendar quarters and for the month following those quarters. Your effective date of registration would be the day the first supply was made after you cease being a small supplier. You have 29 days from this day to register for the GST/HST. Example 2 The following example explains what happens when you exceed the $30,000 limit at the end of four consecutive quarters: First quarter $ 2,000 (April 1, 2024 to June 30, 2024) Second quarter $ 10,000 (July 1, 2024 to September 30, 2024) Third quarter $ 12,000 (October 1, 2024 to December 31, 2024) Fourth quarter $ 8,000 (January 1, 2025 to March 31, 2025) Total revenues for four consecutive $ 32,000 quarters 13 In this case, you cease to be a small supplier at the end of the month following the fourth quarter (end of April 2025), since you have exceeded the $30,000 limit in the last four consecutive calendar quarters. You have to start collecting the GST/HST in May 2025. You have to register within 29 days after you make a sale other than as a small supplier. Example 3 The following example explains what happens when a person starts a small business, and that new business exceeds the $30,000 limit in two consecutive calendar quarters: First quarter $25,000 (April 1, 2024 to June 30, 2024) Second quarter $25,000 (July 1, 2024 to September 30, 2024) Total revenues for two consecutive $50,000 quarters In this case, you exceeded the $30,000 limit by the end of the second quarter of business, but not in one calendar quarter. You will be a small supplier for the following month (October 2024) providing you do not go over $30,000 in that one month. You have to start collecting the GST/HST in November 2024. You have to register within 29 days after the first sale other than as a small supplier. ### How to register Before you register for a GST/HST account, you need a business number (BN). Your BN will be your business identification for all your dealings with the CRA. If you are incorporated, you may already have a BN and a corporate income tax account. To set up a BN, a GST/HST account, and any other account you may need (such as a payroll deduction account), use the “Business Registration Online” digital service at , or send Form RC1, Request for a Business Number and Certain Program Accounts. Note When you register, you will have a 15-digit registration number. The 9-digit BN identifies the business followed by 2 letters which identifies the program (RT is for the GST/HST program) and a 4 digit number which identifies the specific account, for example: 123456789 RT 0001. You must retain this new BN for your own records and future interactions with the CRA. Representatives can now access the “Business Registration Online (BRO)” service directly in “Represent a Client” at . For more information, go to . 14 Note It is the person or business entity that registers for the GST/HST. For example, it is the partnership that registers and not each partner. If the physical location of your business is in Quebec, contact Revenu Québec at 1-800-567-4692. Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. If you need to register for the GST/HST as a digital economy business, you need to register for either a simplified GST/HST account or a normal GST/HST account. The registration requirements are based on which digital economy measure applies to your business. Simplified GST/HST registration is applicable for: - Cross-border digital products and services - Platform-based short-term accommodation For non-resident digital economy businesses who are required to register for the simplified GST/HST, the only registration option is using the non-resident registration web form available at -economy-gsthst/terms-conditions. For more information on filling out the non-resident registration web form, go to /register. Normal GST/HST registration is applicable for: - Supply of qualifying goods For more information on how to register for the GST/HST, go to -gst-hst. For more information on GST/HST for digital economy businesses, go to . Voluntary registration If you are a small supplier and you are engaged in a commercial activity in Canada, you can choose to register voluntarily. If you register voluntarily, your effective date of registration is usually the date you applied to be registered. However, the CRA will accept an earlier effective date, provided that the date is within 30 days of the date the application for registration is received, regardless of the method of registration. Once you are registered, you have to charge and remit the GST/HST on your taxable supplies of property and services, and you may be eligible to claim ITCs for the GST/HST paid or payable on purchases related to these supplies. If you already charged the GST/HST on your sales for more than 30 days before setting up your GST/HST account, call 1-800-959-5525 for more information. Note A listed financial institution that is resident in Canada may register for the GST/HST even if it is not engaged in a commercial activity. You have to stay registered for at least one year before you can ask to cancel your registration. For more information, see “Cancelling your registration” on page 77. If you choose not to register, you do not charge the GST/HST (other than on certain taxable supplies of real property), and you cannot claim ITCs. ### Fiscal year Usually, your fiscal year for GST/HST purposes is the same as your tax year for income tax purposes. Generally, the tax year of the following persons is a calendar year: - individuals and certain trusts - professional corporations that are members of a partnership (such as a corporation that is the professional practice of an accountant, a lawyer, or a doctor) - partnerships, where at least one member of the partnership is an individual, a professional corporation or another affected partnership However, some persons use non-calendar tax years. If you are a person described above that uses a non-calendar tax year approved by the CRA, you may want to use that same year as your GST/HST fiscal year. A corporation generally uses the same fiscal year for both income tax purposes and GST/HST purposes. However, if a corporation has a non-calendar tax year for income tax purposes, it can elect to use a calendar year for its GST/HST fiscal year. If you are a corporation that uses a non-calendar year for both income tax purposes and GST/HST purposes, and you change to another non-calendar tax year for income tax purposes, inform the CRA of the change as soon as possible and the CRA will change your GST/HST fiscal year to match it. To change your fiscal year, use the “File an election” digital service in My Business Account or Represent a Client at , or fill out Form GST70, Election or Revocation of an Election to Change a GST/HST Fiscal Year and send it to the CRA. ### Reporting periods Reporting periods are the periods of time for which you file your GST/HST returns. Generally, your reporting period is determined based on the total revenue from your taxable supplies of property and services made in Canada in your immediately preceding fiscal year or in all preceding fiscal quarters ending in a fiscal year. This revenue includes zero-rated supplies of property and services made in Canada, and those of your associates. Do not include revenue from: - supplies made outside Canada - zero-rated exports of property and services - zero-rated supplies of financial services - exempt supplies - taxable sales of capital real property - goodwill When you register for the GST/HST, the CRA generally assigns an annual reporting period. However, you may choose a more frequent reporting period. The chart, “Assigned and optional reporting periods” that follows shows the threshold revenue amounts that determine the assigned reporting periods, and the optional reporting periods available if you want to file a return more frequently. To change your assigned reporting period, use the “File an election” digital service in My Business Account or Represent a Client at , or fill out Form GST20, Election for GST/HST Reporting Period and send it to the CRA. Assigned and optional reporting periods Annual taxable Assigned Optional supplies threshold reporting period reporting amounts periods Monthly, $1,500,000 or less Annual Quarterly More than $1,500,000 up to Quarterly Monthly $6,000,000 More than Monthly Nil $6,000,000 Notes Charities are assigned an annual reporting period, regardless of their revenues. They can choose to file monthly or quarterly returns by using Form GST20, Election for GST/HST Reporting Period. Listed financial institutions (other than corporations that are deemed to be a financial institution because they have elected to have certain taxable supplies deemed to be financial services) are assigned an annual reporting period, regardless of their revenues. They can choose to file monthly returns and, if their total revenue from taxable supplies are not more than $6,000,000, choose to file quarterly returns by using Form GST20, Election for GST/HST Reporting Period. For more information, see GST/HST Notice 265, GST/HST Registration for Listed Financial Institutions (Including Selected Listed Financial Institutions). When does your reporting period change? If your total revenue from taxable supplies in the previous fiscal year was $1,500,000 or less and you have not elected to report more frequently, you will have an annual reporting period during the current fiscal year if your revenue is not more than $1,500,000. 15 If your total revenue from taxable supplies is more than $1,500,000, but not more than $6,000,000, in the first quarter of a fiscal year, then you have to report quarterly beginning on the first day of your second fiscal quarter of that fiscal year. If you go over $1,500,000, but not over $6,000,000, in your first two fiscal quarters of a fiscal year, you have to report quarterly beginning on the first day of your third fiscal quarter of that year. If this happens, call 1-800-959-5525, to tell the CRA of the change in your reporting period. Note The reporting period is usually based on annual revenue from taxable supplies of property and services made in Canada during the preceding fiscal year. However, if you were not registered for that entire year, the revenues from taxable supplies ( not including those revenues outlined under the heading “Reporting periods”) must be calculated as if you had been registered for the entire year. For example, assume XYZ Corp registered for the GST/HST on November 1, 2024, and was assigned an annual reporting period. In its return for its first fiscal year ending December 31, 2024, it reported taxable sales of $300,000. Since XYZ Corp was only registered for 61 days in that first fiscal year, for purposes of determining its reporting periods for fiscal year 2025, it must calculate its revenue from taxable supplies it made in 2024 as follows: $300,000 x 365/61 = $1,795,081.97 Since this amount is more than $1,500,000, XYZ Corp will be required to file its returns on a quarterly basis in 2025. Example ABC Corp is a registrant with an annual reporting period and a fiscal year-end of December 31. In 2024, it had taxable sales of $1,000,000 in each of its four fiscal quarters. ABC Corp had a quarterly reporting period beginning July 1, 2024, as it went over the $1,500,000 threshold in its first two fiscal quarters of 2024. ABC Corp contacted the CRA to report the change in its reporting period. ABC Corp was sent a GST/HST return for its reporting period from January 1 to June 30, 2024, and then GST/HST returns for quarterly reporting periods starting July 1, 2024. If your total revenue from taxable supplies is more than $1,500,000, but not more than $6,000,000, in your first three fiscal quarters of a fiscal year, or in your last fiscal quarter of a fiscal year, you have to report quarterly beginning on the first day of your next fiscal year. Example XYZ Corp is a registrant with an annual reporting period and a fiscal year-end of December 31. In 2024, it had taxable sales of $500,000 in its first fiscal quarter, $750,000 in its second fiscal quarter, $1,000,000 in its third fiscal quarter, and $1,500,000 in its last fiscal quarter. XYZ Corp has a quarterly reporting period beginning January 1, 2025, as it went over $1,500,000 in its 2024 fiscal year but not in its first two fiscal quarters of 2024. 16 If your revenue from taxable supplies is more than $6,000,000 in a fiscal year, you have to report monthly beginning on the first day of the fiscal quarter that follows the fiscal quarters ending in that fiscal year during which you went over the $6,000,000 threshold. Examples ABC Corp is a registrant with a quarterly reporting period and a fiscal year-end of December 31. In 2024, it had taxable sales of $2,500,000 in each of its four fiscal quarters. ABC Corp has a monthly reporting period beginning October 1, 2024, which is the first day of its fourth fiscal quarter as it went over $6,000,000 in its previous three fiscal quarters ending in its 2024 fiscal year. XYZ Corp is a registrant with an annual reporting period and a fiscal year-end of December 31. In 2024, it had taxable sales of $2,000,000 in its first fiscal quarter. XYZ Corp has a quarterly reporting period beginning April 1, 2024, as it went over $1,500,000 in its first fiscal quarter. In its second fiscal quarter, it had taxable sales of $4,500,000. As XYZ Corp went over $6,000,000 in its first two fiscal quarters, it has a monthly reporting period beginning July 1, 2024, which is the first day of its third fiscal quarter in its 2024 fiscal year. Information for non-resident businesses that are part of the digital economy Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. For more information on reporting obligations under the simplified GST/HST, go to -economy-gsthst/file-return. ### Accounting periods Some businesses use accounting periods that are different from calendar months or quarters for tax reporting purposes. If your business wants to use accounting periods instead of calendar months or quarters to file GST/HST returns, you need to get approval from the CRA before the first day of each fiscal year to which the accounting periods relate. To do this, use the “File an election” digital service in My Business Account or Represent a Client at -sign-in-services, or fill out Form GST71, Notification of Accounting Periods for GST/HST, or send a written request before the beginning of each fiscal year. Usually, your accounting periods have to meet the following guidelines: - Each fiscal month has to be shorter than 36 days and, except for the first and the last month in a fiscal quarter, longer than 27 days. You can apply to have one fiscal month per quarter that is longer than 35 days. You can also apply to have fiscal months, other than the first or last month of the quarter, that are shorter than 28 days. - A fiscal quarter has to be shorter than 120 days and, except for the first and last fiscal quarters in the fiscal year, longer than 83 days. If you do not notify the CRA of your accounting periods, the CRA will assign calendar months and calendar quarters, and you will have to wait until your next fiscal year to have the option to choose your accounting periods. ## Making changes to your GST/HST account ### Address changes You can view the information the CRA has on file for the physical location of your business, your mailing address, and your books and records in My Business Account. Your business address is the actual physical location of your business. If a street address is not available, use the legal description of the location of the business (for example, Lot 1, Concession 2). Your mailing address can be different from your business address. For example, you may have a post office box or you might have your business mail delivered to your home or your accountant instead of your place of business. You can have a different mailing address for each of your registered business accounts. For example, the mailing addresses for your GST/HST account, corporate income tax account, and payroll account can all be different. To update a mailing, physical, or books and records address, use the “Manage addresses” digital service in My Business Account or Represent a Client at /cra-sign-in-services, or send a request by mail or fax to your tax centre. ### Telephone and fax number changes If the telephone or fax numbers change for any owners or authorized representatives of the business, send a letter to your tax centre. ### Authorized representative changes An authorized representative is a third party. Accountants, bookkeepers, lawyers, employees of a business, or family members who are not the owner of the business, but represent it are considered authorized representatives. To add, change, or cancel an authorized representative named on your GST/HST account, use the digital services in My Business Account or Represent a Client at /cra-sign-in-services, or fill out Form AUT-01, Authorize a Representative for Offline Access or Form AUT-01X, Cancel Authorization for a Representative, or send a letter that provides the same information to your tax centre. ### Direct deposit changes To update your banking information, use the “Manage direct deposit” digital service in My Business Account or Represent a Client at . The information you provide will stay in effect until you request a change. For more information, go to . ### Expecting a large refund The Canadian Payments Association requires the CRA to process all refunds in excess of $25 million through the Lynx system (formerly the Large Value Transfer System (LVTS)). If you are expecting a refund of more than $25 million, you must enrol for direct deposit (see “Direct deposit” on page 88) and then register for the Lynx system by contacting your tax centre to begin the registration process. If you are expecting large value refunds for more than one BN, these steps must be completed for each BN. ### Legal entity type changes If the legal status of your business ownership changes, you have to get a new BN with a new GST/HST account for the new legal entity (for example, when a business changes from a sole proprietorship to a partnership, or a partnership changes to a corporation). ### Legal name changes If you change the legal name of your business, notify the CRA and send the proper documents showing the name change. For example, the legal name of your business may change if you are: - a sole proprietor whose own personal legal name changes - a partnership that takes on a new partner or loses a partner - a corporation that changes its legal name and receives articles of amendment to show this change ## Collecting the GST/HST As a GST/HST registrant, you are responsible for collecting the GST/HST when you make taxable supplies (other than zero-rated supplies) of property and services in Canada. You hold this tax in trust until you send it to the CRA. Exception In certain cases, you do not have to collect the GST/HST on a taxable sale of real property. Instead, the purchaser may have to pay the tax directly to the CRA. For more information, see “Real property” on page 59. You do not have to collect the GST/HST on a taxable supply of an emission allowance. Instead, the purchaser must pay the tax directly to the CRA. For more information, see “Emission allowances” on page 53. Note Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. 17 For more information on how to charge and collect the tax for your digital economy business, go to -businesses/digital-economy-gsthst/charge-collect. ### Informing your customers You have to let your customers know if the GST/HST is being applied to their purchases. For taxable supplies (other than zero-rated supplies), you have to show one of the following: - that the total amount paid or payable for a supply includes the GST/HST - the amount paid or payable for the supply and show the amount of the GST/HST payable on the supply separately - the GST/HST rate that applies to the supply. If HST applies to the supply, show the total HST rate. Do not show the federal and provincial parts of the HST separately You can use cash register receipts, invoices, contracts, or post signs at your place of business to inform your customers whether the GST/HST is included in the price or added separately. ### Sales invoices for GST/HST registrants In addition to the general rules previously described, you have to give customers who are GST/HST registrants specific information on the invoices, receipts, contracts, or other business papers that you use when you supply taxable property and services. They need this information to support their claims for ITCs or rebates for the GST/HST you charged. 18 Similarly, when you make business purchases, the invoices from your suppliers will support your claims for ITCs. If your customers ask you for an invoice or receipt so they can claim ITCs, you have to give them specific information, depending on the amount of the sale. For details of the information required, see the chart, “Input tax credit information requirements” on the next page. Disclosing the HST on sales subject to the point-of-sale rebates, or the Ontario First Nations point-of-sale relief When disclosing the HST on an invoice or receipt issued for a sale of a qualifying item for which you have paid or credited a rebate amount for the provincial part of the HST at the point-of-sale, you may show: - the total amount of the HST payable (or the total HST rate) with the amount of the rebate shown separately - the total HST payable as an amount net of the rebate amount paid or credited - the total price of the qualifying item that includes HST at a net rate of 5% For more information, see “Point-of-sale rebates” on page 43 and ”Ontario First Nations point-of-sale rebate” on page 43. You may also use these options to disclose the HST on an invoice or receipt issued for a sale of qualifying property or service on which you have paid or credited an amount for the Ontario First Nations point-of-sale relief. Input tax credit information requirements Information required Supplier’s business or trading name, or your intermediary’s * name The invoice date or, if no invoice issued, the date on which the GST/HST is paid or payable The total amount paid or payable An indication of the total amount of the GST/HST charged or that the amount paid or payable for each taxable supply (other than zero-rated supplies) includes the GST/HST at the applicable rate An indication of the status of each supply where the invoice includes both taxable and exempt supplies The supplier or intermediary’s GST/HST registration number The buyer’s name or trading name or the name of the buyer’s authorized agent or representative A brief description of the property or services The terms of payment * An intermediary is a registrant that either: is acting as your agent or under an agreement with you, causes or facilitates the making of a supply by you - - is a billing agent that is deemed to have acted as your agent in making a supply ### Provincial sales tax When you have to charge the GST and the provincial sales tax (PST), calculate the GST on the price excluding the PST. For more information on how to calculate the PST, contact your provincial sales tax office. In the participating provinces, the HST includes both the federal and provincial parts. ### Rounding off fractional amounts Round off the GST/HST to the nearest cent as follows: - If the amount is less than half a cent, you may round down. - If the amount is equal to or more than half a cent, round up. If your customer is buying more than one item and tax applies at the same rate on all items, you can add up the prices of all taxable supplies of property and services, calculate the GST/HST payable, and then round off the amount. Total sale Total sale of Total sale of under $100 $100 to $499.99 $500 or more yes yes yes yes yes yes yes yes yes no yes yes no yes yes no yes yes no no yes no no yes no no yes ### Early-payment discounts and late-payment surcharges Early-payment discounts If you offer an early-payment discount on credit sales, charge the GST/HST on the full invoice amount even if your customer takes the discount. Example You operate a business in Manitoba. You issue an invoice that shows the price of goods as $100, plus GST. The credit terms of the invoice give the customer a 2% discount if the customer pays within 10 days. Your customer pays within 10 days. You calculate the amount owed as follows: Purchase price:......................................................... $100 Plus GST ($100 × 5%):.............................................. 5 Less the discount:..................................................... (2) Customer pays:........................................................ $103 19 When you invoice an amount that is already net of the early payment discount, charge the GST/HST on the invoiced amount. Late-payment surcharges Do not charge the GST/HST on late-payment surcharges. The GST/HST is payable only on the original invoiced amount. Example You operate a business in Manitoba. You issue an invoice that shows the price of goods as $100, plus the GST. Your customer pays after the due date. If you charge $5 for late payment of goods invoiced at $100, the GST does not apply to the late charge. You calculate the amount owed as follows: Purchase price:.......................................................... $100 Plus GST ($100 × 5%):.............................................. 5 Plus the surcharge:................................................... 5 Customer pays:......................................................... $110 ### Volume discounts When you offer volume discounts to reduce the sale price, you can reduce the GST/HST payable. If you reduce the price because your customer buys a certain quantity of goods, the amount of the GST/HST you charge depends on whether you offer the discount at the time you make the sale or after you make the sale. At the time of sale If you offer a discount at the time of sale, you collect the GST/HST on the net amount (the sale price less the discount). The following sample invoice shows how to treat a volume discount at the time of sale. Dodd Company 123 ABC Street Edmonton AB T0K 2B2 Sold To: Flint Company Date: January 25, 2025 Business number: 123456789 Description of Items Amount Net Purchased Amount 10 tables @ $150.00 each $1,500.00 Volume discount (10%) - $150.00 = $1,350.00 $1,350.00 40 chairs @ $50.00 each $2,000.00 Volume discount (10%) - $200.00 = $1,800.00 + $1,800.00 Lamp $75.00 + $75.00 Subtotal = $3,225.00 Plus GST ($3,225 × 5%) + $161.25 Total = $3,386.25 20 After the sale Some businesses give volume discounts after they make the sale. The customer usually earns this type of volume discount over a period of time (for example, over a period of one year and not on a sale-by-sale basis). In this case, you have to decide if you want to credit the GST/HST related to the amount of the discount. If you adjust, refund, or credit the GST/HST for the volume discount amount, issue a credit note to the customer to explain the adjustment, which is the discount and the related amount of the GST/HST. Alternatively, the customer can issue a debit note to you to indicate the adjustment. Treat credit or debit notes for this purpose the same way as you treat credit or debit notes for returned goods. For more information, see “Returned goods” on page 70. You can deduct the amount of the GST/HST you adjust, refund, or credit to the customer if you included this amount in your net tax calculation for the reporting period in which the credit or debit note was issued or a previous reporting period. Your customer will have to repay any rebate claimed or add the amount of the GST/HST adjustment to their net tax if an ITC or rebate was previously claimed for the amount. Example Alberta Clothiers offers a 4% discount at the end of the year for customers that buy more than $20,000 in goods. East End Fashions buys $36,500 in goods from Alberta Clothiers during 2024. In January 2025, Alberta Clothiers credits East End Fashions $1,533 ($1,460 plus $73 GST) and it issues a credit note. Alberta Clothiers already included the GST charged on its supplies to East End Fashions in its net tax calculation, so it can include the $73 as an adjustment to its net tax on line 107 if it is filing electronically using GST/HST NETFILE or if it is filing a paper return, or in its line 108 calculation if it is filing using GST/HST TELEFILE. Because East End Fashions already claimed ITCs for the amount, it has to include the $73 GST in its line 104 if it is filing electronically or if it is filing a paper return, or in its net tax calculation on line 105 if it is filing a using GST/HST TELEFILE. If you do not adjust, refund, or credit the amount of the GST/HST you charged or collected, you do not have to adjust your net tax calculation. This is sometimes done when the customer is a GST/HST registrant and has already claimed an ITC. Any price reduction you make does not include a refund, adjustment, or credit of the GST/HST, and neither you nor the customer has to issue a credit or debit note for GST/HST purposes or make any adjustment on your GST/HST return. Example Using the example on the previous page, East End Fashions, a GST/HST registrant, informs Alberta Clothiers that it already claimed ITCs for its 2024 purchases. Alberta Clothiers credits it $1,460, ignoring the GST. It does not have to issue a credit note and neither company will make an adjustment in its net tax calculation. ## Input tax credits As a registrant, you recover the GST/HST paid or payable on your purchases and expenses related to your commercial activities by claiming input tax credits (ITCs) in your line 106 if you are filing electronically using GST/HST NETFILE or if you are filing a paper return, or in your line 108 calculation if you are filing using GST/HST TELEFILE. You may be eligible to claim ITCs only to the extent that your purchases and expenses are for consumption, use, or supply in your commercial activities. There are purchases and expenses for which you cannot claim ITCs, such as: - certain capital property. For more information, see “Claiming ITCs for capital property” on page 25 and “Claiming ITCs for purchases of capital real property” on page 60 - taxable supplies of property and services bought or imported to make exempt supplies of property and services - membership fees or dues to any club whose main purpose is to provide recreation, dining, or sporting facilities (including fitness clubs, golf clubs, and hunting and fishing clubs), unless you purchase the memberships to resell in the course of your business - property or services you bought or imported for your personal consumption, use, or enjoyment If you are a new registrant, you may be able to claim ITCs for the GST/HST paid or payable on property such as capital property and inventory that you have on hand on the day you register. For more information, see “New registrants” on page 25. To claim an ITC, the expense or purchase must be reasonable in quality, nature, and cost in relation to the nature of your business. To claim an ITC for the HST you pay when you buy a property or service in a participating province to use in your commercial activities, your business does not need to be located in a participating province. Note Most charities are limited in the ITCs that they can claim because of the special calculation method called the “net tax calculation for charities” that they must use to fill out their GST/HST returns. For more information, see Guide RC4082, GST/HST Information for Charities. ### Operating expenses Examples of operating expenses for which you may be eligible to claim an ITC are: - commercial rents - equipment rentals - advertising - utilities - office supplies (such as postage, computer disks, paper, and pens) You can claim an ITC equal to 100% of the GST/HST paid or payable by you for a particular operating expense (property or service) if substantially all (90% or more) of your consumption or use of that property or service is (or is intended to be) in the course of your commercial activities and all the other ITC criteria are satisfied. You cannot generally claim an ITC for any of the GST/HST paid or payable by you for a particular operating expense (property or service) if substantially all of your consumption or use of that property or service is intended to be otherwise than in the course of your commercial activities (for example, consumed or used to make exempt supplies ). Exception Financial institutions must use 100% of an expense in commercial activities before they can claim a full ITC. However, they can claim a partial ITC even when they use less than 10% of an expense in commercial activities. The ITC rules that apply to financial institutions are explained in GST/HST Memorandum 17-11, Determining Whether a Financial Institution is a Qualifying Institution for Purposes of Section 141.02, GST/HST Memorandum 17-12, Input Tax Credit Allocation Methods for Financial Institutions for Purposes of Section 141.02, and GST/HST Memorandum 17-13, Application of Section 141.02 to Financial Institutions That Are Qualifying Institutions. If you have both commercial activities and non-commercial activities (such as exempt supplies), and at least 90% of an operating expense cannot reasonably be allocated to either your commercial or your non-commercial activities, you apportion the GST/HST paid or payable for the property or service between these two activities for ITC purposes. You can generally claim an ITC only for the part of the GST/HST paid or payable for the property or service that relates to the consumption or use in your commercial activities. Example You own a building in Nova Scotia where you operate your retail store (a commercial activity), and you rent an apartment on the upper floor to a residential tenant on a long-term basis (an exempt activity). The rent includes utilities. Your utility bill for the building that is used for both commercial and exempt activities includes $80 HST. If all other conditions for claiming an ITC are met and you use a fair and reasonable allocation method to determine that 70% of the utility bill relates to the store and 30% to 21 the apartment, you can claim an ITC for 70% of the HST you pay on your utility bill: $80 (HST) × 70% = $56 (ITC) The method you use to determine the percentage that an operating expense is used in your commercial activities has to be fair and reasonable, and used consistently throughout the year. ### Time limits for claiming ITCs In general, registrants claim their ITCs when they file their GST/HST return for the reporting period in which they made their purchases. However, they may have ITCs that they did not claim when they filed the return for the corresponding reporting period. If so, they can claim those previously unclaimed ITCs on a future GST/HST return. For most registrants, ITCs must be claimed by the due date of the return for the last reporting period that ends within four years after the end of the reporting period in which the ITCs could have first been claimed. Example 1 - Most businesses You are a quarterly filer and you buy office furniture in the reporting period October 1, 2024, to December 31, 2024, for which you can claim an ITC. The due date of the return for this reporting period is January 31, 2025. The last reporting period in which you can claim an ITC for the tax you were charged on the office furniture is the reporting period October 1, 2028 to December 31, 2028. The due date for this return is January 31, 2029. This means that you can claim the ITC in any return due and filed by January 31, 2029. Suppliers have to provide specific information on the invoices, receipts, contracts, or other business papers that they use when they supply taxable property and services to a GST/HST registrant purchaser. The purchaser needs this information to support their claims for ITCs or rebates for the GST/HST they were charged. In certain situations, the documentation requirements have been reduced. See the chart, “Input tax credit information requirements” on page 19 for details on what is required. The time limit for claiming ITCs is reduced to two years for: - listed financial institutions (other than corporations that are deemed to be a financial institution because they have elected to have certain taxable supplies deemed to be financial services) - persons whose threshold amounts exceed $6 million for both the person’s fiscal year that includes the reporting period and the person’s preceding fiscal year, except for: - charities - persons whose supplies of property and services (other than financial services) during either of the two preceding fiscal years are at least 90% taxable supplies 22 Note The threshold amount of a person for a fiscal year is calculated based on the total consideration for taxable supplies made in Canada by the person, including those of associates, in the immediately preceding fiscal year. Therefore, the determination of whether a person is a specified person in a given year is based on those annual taxable supplies made in the two immediately preceding fiscal years. When calculating this amount, a person does not include consideration attributable to supplies made outside Canada, zero-rated exports of property and services, zero-rated supplies of financial services, exempt supplies, taxable sales of capital real property, and goodwill. Under the two-year limit, you can claim your ITCs on any future return that is filed by the due date of the return for the last reporting period that ends within two years after the end of your fiscal year that includes the reporting period in which the ITC could have first been claimed. Example 2 - Certain businesses with threshold amounts of more than $6 million and most listed financial institutions You are a monthly filer with a fiscal year-end of December 31. You buy goods in the reporting period September 1 to 30, 2024, for which you can claim an ITC. The fiscal year that includes the September 2024 return ends on December 31, 2024. You can claim the ITC on any later return for a reporting period that ends by December 31, 2026 and is filed by January 31, 2027. ### ITC restrictions In certain situations there are restrictions on the amount that you can claim as an ITC. These restrictions depend on the type and nature of the expense. This section explains the restrictions on claiming ITCs for different types of expenses. Note Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. Any GST/HST paid by the registered customer to a person registered under the simplified GST/HST is generally not recoverable by claiming an input tax credit or by filing a rebate application for an amount paid as tax paid in error. For more information on determining the status of your customers, go to -gsthst/charge-collect/cross-border. Procurement cards Procurement cards or purchasing cards are charge cards with pre-set spending limits. These cards allow your employees to make business purchases more efficiently than through the normal purchase order or invoice cycle. The statements and reports provided by the procurement card issuers might not provide enough information about your purchases to support your claim for ITCs. Provided certain conditions are met, eligible registrants can apply to the CRA to use ratios to claim ITCs for individual purchases under $1,000 made using procurement cards. For more information, see GST/HST Notice 199, Procurement Cards – Documentary Requirements for Claiming Input Tax Credits. Meal and entertainment expenses You can claim ITCs for the GST/HST you pay on reasonable meal and entertainment expenses that relate to your commercial activities. When the deduction for income tax purposes is limited to 50% of the cost of meals and entertainment, you can claim 50% of the GST/HST you pay on those expenses as ITCs. Note The above rule does not apply to charities or public institutions. These persons may be able to claim 100% ITCs for the GST/HST they pay on eligible meal and entertainment expenses that relate to their commercial activities. For more information, see Guide RC4082, GST/HST Information for Charities. Choose one of the following two ways to calculate your ITCs for meal and entertainment expenses: - Claim 100% ITCs for these expenses throughout your fiscal year. If you file monthly or quarterly GST/HST returns, add the 50% adjustment for the excess ITCs you claimed during the year to your net tax calculation for the first reporting period of your next fiscal year. If you file annually, add the 50% adjustment to your net tax calculation for that fiscal year. Enter the adjustment on line 104 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or include the adjustment in your line 105 calculation if you are filing using GST/HST TELEFILE. - Claim 50% of the actual GST/HST you pay on these expenses during each reporting period. By choosing this method, you do not have to make any adjustments at the end of your fiscal year. You may be eligible to claim an ITC for the GST/HST you reimburse to your employees and partners for meal and entertainment expenses they incurred in Canada. However, these expenses are also subject to the 50% limit. Large businesses may be subject to RITCs on 50% of the provincial part of ITCs allowed for meals and entertainment expenses. Long-haul truck drivers Meal and beverage expenses of long-haul truck drivers are deductible at a higher rate than the 50% permitted for other employees. During eligible travel periods in 2025, meal and beverage expenses are deductible at 80%. If you are a quarterly or monthly filer and you decide to claim 100% ITCs for these expenses throughout the year, make an adjustment for the excess ITCs you claimed during the year in your first reporting period of your next fiscal year. Enter the adjustment on line 104 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or include the adjustment in your line 105 calculation if you are filing using GST/HST TELEFILE. Example You are a long-haul truck driver and you have a December 31 fiscal year-end. You have chosen a quarterly reporting period. You have also chosen to claim 100% of your ITCs for food and beverage expenses during the year. When you file your return for the first quarter of 2024, report the adjustment on your return for the excess ITCs you claimed during the 2023 fiscal year. You claimed ITCs totalling $100 for the GST/HST paid on food and beverage expenses during 2023. You calculate your adjustment as follows: Adjustment for expenses: $100 × 20% = $20 Enter the $20 adjustment on line 104 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or include it in your line 105 calculation if you are filing using GST/HST TELEFILE. Employee, partner, and volunteer expenses Reimbursements You can generally claim ITCs for the GST/HST included in reimbursements you pay to your employees or the partners in your partnership for expenses they incurred in Canada on your behalf for your commercial activities. If you are a charity or public institution, you may also be able to claim ITCs for the GST/HST included in reimbursements you pay to your volunteers for expenses incurred on your behalf that relate to your commercial activities. Choose one of the following methods to calculate your ITCs. Method 1 Calculate an ITC for a reimbursement you paid as follows: - if the GST was charged on 90% or more of the total amount you reimbursed for expenses, multiply by 4/104 - if the HST was charged on 90% or more of the total amount you reimbursed for expenses, multiply by: - 12/112 where 13% HST was charged, 13/113 where 14% HST was charged, or 14/114, where 15% HST was charged 23 Method 2 Determine the actual GST or HST you incurred on reimbursed expenses using the following formula: A × B where: A is the GST/HST paid by the employee, partner, or volunteer on the property or services B is the lesser of the following: - the percentage of the cost to the employee, partner, or volunteer that you reimburse (reimbursement divided by cost) - the extent to which the employee, partner, or volunteer purchased, imported, or brought into a participating province the property or services for consumption or use in relation to your commercial activities Example Your employee is billed for an expense of $560 ($500 plus $25 GST and $35 PST) for use 100% in your commercial activity. You reimburse your employee $345 for this expense. You can claim an ITC equal to the lesser of the following amounts: A × B = $25 × $345 = $15.40 $560 =$2.13 and A × B = $25 × 100% = $25 You can claim an ITC of $15.40 for the reimbursement. The method you choose to calculate your ITCs for reimbursements must be used consistently throughout your fiscal year. For example, if you use method 1 to calculate your ITCs for meal and entertainment expenses reimbursed to one employee, you have to use the same method to calculate your ITCs for the same types of reimbursements to all of your employees. For more information, see GST/HST Memorandum 9-4, Reimbursements. Allowances Generally, you are considered to have paid the GST/HST on a reasonable allowance you pay to your employees or partners (or volunteers if you are a charity or a public institution) if all of the following conditions are met: - The allowance is used to pay the GST/HST-taxable (other than zero-rated) expenses and at least 90% of the expenses are incurred in Canada, or the allowance is for the use of a motor vehicle in Canada. - The allowance is or would be deductible for income tax purposes. - The expenses incurred by your employees, partners, or volunteers would have been eligible for ITCs if you had incurred them. 24 To calculate the amount of the GST or the HST that you are considered to have paid on a reasonable allowance, multiply the allowance by: - 15/115, if 90% or more of the expenses were subject to the HST in New Brunswick, Nova Scotia (until March 31, 2025), Prince Edward Island or Newfoundland and Labrador or the allowance was for a motor vehicle used 90% or more in New Brunswick, Nova Scotia, Prince Edward Island or Newfoundland and Labrador - 14/114, if 90% or more of the expenses were subject to the HST in Nova Scotia on or after April 1, 2025 - 13/113, if 90% or more of the expenses were subject to the HST in Ontario, or the allowance was for a motor vehicle used 90% or more in Ontario - the lowest tax fraction among two or more participating provinces if 90% of the expenses were subject to the HST in those provinces, or the allowance was for a motor vehicle used 90% or more in those participating provinces - 5/105 in all other cases A motor-vehicle allowance that is reasonable for income tax purposes also qualifies as a reasonable allowance for GST/HST purposes. To claim your ITC, multiply the amount of the GST/HST that you are considered to have paid on the allowance by the percentage use of the property or services in your commercial activities. For more information, see GST/HST Memorandum 9-3, Allowances. Restriction – No ITCs on allowances and reimbursements paid for qualifying items subject to the point-of-sale rebates Where an allowance or a reimbursement is paid for a qualifying item that is subject to the point-of-sale rebate for the provincial part of the HST, no ITC may be claimed for the provincial part of the HST that has been rebated. For information on qualifying items, see “Point-of-sale rebates” on page 43. Home office expenses You may be eligible to claim ITCs for your home office expenses only if the workspace is one of the following: - your principal place of business - used 90% or more to earn income from your business and used on a regular and continuous basis for meeting your clients, customers, or patients This restriction for home office expenses is similar to that used for income tax purposes. For more information, see Income Tax Folio S4-F2-C2, Business Use of Home Expenses and GST/HST Memorandum 8-2, General Restrictions and Limitations. New registrants If you are a new registrant, and you have been a small supplier immediately before you became a registrant, you are considered to have received a supply by way of sale of property that was held immediately before you became a registrant for consumption, use, or supply in the course of commercial activities. The CRA considers that you bought the property at that time and paid the GST/HST equal to the basic tax content of the property. This may apply to capital property, real property, and inventory that you had on hand to use in your commercial activities at the time you became a registrant. You may be eligible to claim ITCs for the GST/HST paid or payable on these supplies. You can also claim an ITC for any GST/HST that was payable before you became a registrant in respect of services to be supplied to you after you became a registrant, or that you prepaid for rent, royalties, or similar payments for property that relate to the period after you became a registrant, to the extent that the service or property is for consumption, use or supply in the course of your commercial activities. You cannot claim an ITC for the GST/HST paid or payable on services supplied to you before you became a registrant, or on the value of any rent, royalty, or similar payment that relates to a period before you became a registrant, even if you paid that GST/HST after you became a registrant. Example You prepaid three months of rent for office space for use in your commercial activities for the period January 1, 2025, to March 31, 2025. If you became a registrant on March 1, 2025, you can claim an ITC for the GST/HST you paid on rent for the month of March. You cannot claim an ITC for the GST/HST you paid for rent from January 1 to February 28, 2025 because that amount relates to the period before you became a registrant. ### Claiming ITCs for capital property Capital property, for GST/HST purposes, is based on the meaning of the term for income tax purposes and includes: - depreciable property (property that is eligible for capital cost allowance for income tax purposes) - other property that would result in a capital gain or capital loss for income tax purposes if you disposed of it Generally, capital property is property you buy for investment purposes or to earn income. It may include: - real property, such as land or a building (for more information, see “Claiming ITCs for purchases of capital real property” on page 60) - personal property such as equipment or machinery that you use in your business - photocopiers, computers, and cash registers - furniture and appliances used to furnish places such as offices, lobbies, and hotel rooms - free-standing refrigerators, ovens, and other large appliances. Built-in appliances are fixtures that are usually considered to be part of real property Note Capital property for GST/HST purposes does not include property described for income tax purposes in: class 12 (such as chinaware, cutlery, and certain - tableware) class 14 (certain patents, franchises, concessions, or - licences for a limited period) class 14.1 (goodwill of a business) - - class 44 (a patent or a right to use patented information for a limited or unlimited period) To claim ITCs for these items based on the rules for operating expenses, see “Operating expenses” on page 21. Capital personal property Primary use rule The general rule, known as the primary use rule, for claiming ITCs for capital personal property such as computers, equipment, and office furniture is as follows: - If you use the capital personal property primarily ( more than 50%) in your commercial activities, you can claim a full ITC. - If you use the capital personal property 50% or less in your commercial activities, you cannot claim an ITC. Example You bought a computer for $2,000 plus the GST/HST. You will use the computer 60% in your commercial activities and 40% for personal use. Since you will use the computer more than 50% in your commercial activities, you can claim an ITC for the full amount of the GST/HST you paid for the computer. Note The primary use rule also applies to certain public service bodies claiming ITCs for capital real property. For more information, see “Claiming ITCs for purchases of capital real property” on page 60. Exception The primary use rule does not apply to capital personal property of a financial institution. Financial institutions treat capital personal property costing more than $50,000 as if it were capital real property. For information on capital real property for financial institutions, see “Financial institutions” on page 61. Passenger vehicles and aircraft Corporations follow the primary use rule mentioned on page 25 to determine their ITCs for passenger vehicles and aircraft. Individuals and partnerships usually claim ITCs for passenger vehicles and aircraft based on the capital cost allowance (CCA) claimed for income tax purposes. However, if the use in commercial activities is 10% or less, you cannot claim any ITC. If the use in commercial activities is 90% or more, you can claim a full ITC. 25 Note Under proposed changes, the ceiling for capital cost allowance for passenger vehicles will increase to $38,000 from $37,000, before tax, in respect of new and used vehicles purchased on or after January 1, 2025. The part of the cost of zero-emission passenger vehicles eligible for an ITC is limited to the capital cost limitation, which is $61,000 ( not including the GST/HST and PST) in respect of vehicles (new and used) purchased on or after January 1, 2025. There has been no proposed increase for 2025 above the $61,000 for zero-emission passenger vehicles. You usually calculate your CCA for income tax purposes at the end of your fiscal year. Once you have calculated your CCA, calculate your ITC by using one or more of the formulas shown in the chart “ITCs for purchase of capital personal property – Passenger vehicles and aircraft” on page 29. For more information, see GST/HST Memorandum 8-2, General Restrictions and Limitations. Improvement to capital personal property An improvement to capital personal property means any property or service supplied to, or goods imported by, a person to improve the capital personal property, to the extent that the price paid for those supplies is included in determining the adjusted cost base of the capital personal property for income tax purposes. If you are a GST/HST registrant, you may be able to claim an ITC for the GST/HST paid or payable for an improvement to such property, if you were using the capital personal property primarily (more than 50%) in your commercial activities immediately after you last purchased the capital property or a portion of it. Note The last purchase could be an actual purchase or a purchase you were deemed to have made for GST/HST purposes. If the improvement is to a passenger vehicle or aircraft, you can add the cost of the improvement to the adjusted cost base of the passenger vehicle or aircraft. However, you cannot include any amount for improvements to a passenger vehicle that will make the adjusted cost base exceed the capital cost limitation. Passenger vehicles have a capital cost limitation of $38,000, not including the GST/HST and the PST, in respect of new and used vehicles purchased on or after January 1, 2025. If the improvement is to a zero-emission passenger vehicle, you can add the cost of the improvement to the adjusted cost base of the zero-emission passenger vehicle. However, you cannot include any amount for improvements to a zero-emission passenger vehicle that will make the adjusted cost base exceed the capital cost limitation. Zero- emission passenger vehicles have a capital cost limitation of $61,000, not including the GST/HST and the PST. 26 Note There are proposed changes to the capital cost limitation. For more information, see the “ITCs for purchase of capital personal property – Passenger vehicles and aircraft” chart on page 29. Musical instruments If you are an individual who is a registrant and you use a musical instrument for employment purposes or in a business carried on by a partnership of which you are a member, the CRA considers you to be using that instrument in your commercial activities. You can follow the primary use rule for claiming ITCs for capital personal property. Change-in-use rules for capital personal property The use of capital personal property may change over time. You have to apply the change-in-use rules in the following situations: - Your capital property that was used more than 50% in your commercial activities is now used 50% or less in your commercial activities. - Your capital property that was used 50% or less in your commercial activities is now used more than 50% in your commercial activities. In each situation, you have to determine the basic tax content of the property when the change occurs. If you change the use from 50% or less in commercial activities to more than 50% in commercial activities, you may be eligible to claim an ITC equal to the basic tax content. Generally, this means you can recover all or part of the GST/HST you paid when you bought the property and when you made any later improvements to the property. If you change the use from more than 50% in commercial activities to 50% or less in commercial activities, remit an amount equal to the basic tax content. Generally, this means that you have to repay all or part of the GST/HST you claimed (or were entitled to claim) as an ITC when you bought the property and when you made any later improvements to the property. Exception There are specific change - in - use rules that apply to capital personal property of financial institutions. Calculating the basic tax content The following basic tax content formula in its simplified form can be used by most registrants. (A - B) × C where: A is the GST/HST payable for your last purchase of the property and for later improvements you made to the property B is any rebate or refund you were entitled to claim (or would have been entitled to claim if you had not been entitled to claim an ITC) for the GST/HST payable for your last purchase of the property and for later improvements you made to it, but not including ITCs you were entitled to claim C is the lesser of: - 1 - the fair market value of the property at the time of the change in use divided by the total cost ( not including the GST/HST) for your last purchase of the property and for later improvements you made to it Changing the use to more than 50% in commercial activities When you buy capital personal property for use 50% or less in your commercial activities you cannot claim ITCs to recover the GST/HST paid or payable. However, if you later change the use of the property to more than 50% in your commercial activities, the CRA considers you to have purchased the property at the time of the change in use, by including this amount on line 106 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or by including it in your line 108 calculation if you are filing using GST/HST TELEFILE. Note If you later change the use again and begin to use the property 50% or less in your commercial activities, you may have to pay all or part of the GST/HST that you claimed, or were entitled to claim, as an ITC. For more information, see “Changing the use to 50% or less in commercial activities” on page 27. Example You operate several commercial and residential rental buildings in Manitoba. You bought a tractor for use more than 50% in operating the residential rental buildings (an exempt activity) and paid the GST on your purchase. Since you were not using the tractor more than 50% in your commercial activities, you could not claim an ITC for the tax paid on this purchase and you were also not entitled to any refunds or rebates of that tax. Cost of tractor............................................................ $10,000 GST payable ($10,000 × 5%).................................... $500 Later, you change the use of the tractor and begin using it more than 50% for the commercial buildings (commercial activity). Since you are now using the tractor more than 50% in your commercial activities, you can claim an ITC equal to the basic tax content of the tractor at the time of the change in use. The fair market value of the tractor at the time of the change in use is $7,000. You did not make any improvements to the tractor since you bought it. You calculate the basic tax content of the tractor as follows: Basic tax content = (A - B) × C = ($500 - $0) × ($7,000/$10,000) = $350 You can claim an ITC of $350 on your GST/HST return. Changing the use to 50% or less in commercial activities When you buy capital personal property for use more than 50% in your commercial activities, you may be eligible to claim an ITC to recover the GST/HST you paid, or that was payable, on your purchase. However, if you change the use of the property from more than 50% in your commercial activities to 50% or less in your commercial activities, the CRA considers that you sold the property and collected the GST/HST on that sale. This generally means that you have to repay all or part of the GST/HST you claimed, or were entitled to claim, as an ITC when you bought the property and when you made any improvements to it. The tax you have to repay is equal to the basic tax content of the capital personal property at the time of the change in use. This amount has to be included on line 103 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or in your line 105 calculation if you are filing using GST/HST TELEFILE, for the reporting period in which the change in use occurred. Note If you later change the use again and begin to use the property more than 50% in your commercial activities, you may be entitled to claim an ITC. For more information, see “Changing the use to more than 50% in commercial activities” on this page. Example You are the operator described in the previous example. After changing the use of the tractor to more than 50% in your commercial activities, you now change the use back to 50% or less in your commercial activities. Since you are no longer using the tractor more than 50% in your commercial activities, you have to pay tax equal to the basic tax content of the tractor at the time of the change in use. The tractor’s fair market value is now $4,000. You have not made any improvements to the tractor. You calculate the basic tax content of the tractor as follows: Basic tax content = (A - B) × C = ($500 - $0) × ($4,000/$10,000) = $200 You include $200 on line 103 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or in your line 105 calculation if you are filing using GST/HST TELEFILE, for the reporting period in which the change in use occurred. 27 Sale of capital personal property If you sell capital personal property that was used more than 50% in your commercial activities, you have to charge the GST/HST on the sale. However, you do not charge the GST/HST on the sale if the property was used 50% or less in your commercial activities (see the chart “ITCs for purchase of capital personal property” on the next page). 28 Exception Financial institutions must charge the GST/HST on sales of taxable capital personal property unless the property is exclusively (100%) used otherwise than in commercial activity. Special rules apply to municipalities. For more information, see Guide RC4049, GST/HST Information for Municipalities. ITCs for purchase of capital personal property – Personal Property Percentage of use in Corporations and public commercial activities service bodies <50% None \>50% 100% ITCs for purchase of capital personal property – Passenger vehicles and aircraft Percentage of use in Corporations and public commercial activities service bodies <10% None \>10% and <50% None CCA** \>50% and <90% 100% \>90% 100% * The part of the cost of passenger vehicles eligible for an ITC is limited to the capital cost limitation. The capital cost limitation is: - $38,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in - $37,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in - $36,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in - $34,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in - $30,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in **The part of the cost of zero-emission passenger vehicles eligible for an ITC is limited to the capital cost limitation. The capital cost limitation is: - $61,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in - $59,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in - $55,000 (not including the GST/HST and PST) in respect of vehicles (new and used) purchased in If you use the vehicle or aircraft in both commercial and non-commercial activities, only the part of the CCA attributable to the commercial activities can be used to calculate your ITC. **CCA is the capital cost allowance for income tax purposes. You determine your ITC annually using the following calculations: For tax years starting on or after April 1, 2025: - CCA × 5/105, if you paid the GST - CCA × 13/113, if you paid 13% HST in Ontario - CCA × 14/114, if you paid 14% HST in Nova Scotia - CCA × 15/115, if you paid 15% HST in New Brunswick, Newfoundland and Labrador, or Prince Edward Island For tax years ending on March 31, 2025: - CCA × 5/105, if you paid the GST - CCA × 13/113, if you paid 13% HST in Ontario - CCA × 15/115, if you paid 15% HST in New Brunswick, Newfoundland and Labrador, Nova Scotia, or Prince Edward Island If you paid the provincial part of the HST for a vehicle or aircraft after you brought it participating province with a lower HST rate, you can claim an ITC based on the difference between the rates, using the following calculations: For tax years ending on or after October 1, 2016: - CCA × 2/102, for a vehicle or aircraft brought into New Brunswick, Newfoundland and Labrador, Nova Scotia, or Prince Edward Island from Ontario If you paid the provincial part of the HST for a vehicle or aircraft after you brought it non-participating province or imported it into Canada for business purposes calculations: For tax years ending on or after April 1, 2025: - CCA × 8/108, for a vehicle or aircraft brought into Ontario - CCA × 9/109, for a vehicle or aircraft brought into Nova Scotia - CCA × 10/110, for a vehicle or aircraft brought into New Brunswick, Newfoundland and Labrador, or Prince Edward Island For tax years ending on or after October 1, 2016: - CCA × 8/108, for a vehicle or aircraft brought into Ontario - CCA × 10/110, for a vehicle or aircraft brought into New Brunswick, Newfoundland and Labrador, Nova Scotia, or Prince Edward Island Partnerships and Financial institutions individuals None % of use 100% % of use * Partnerships and Financial institutions individuals None % of use % of use CCA** % of use 100% % of use 2025. 2024. 2023. 2022. 2021. 2023. 2022. 2021. into a participating province from another into a participating province from a , you can claim an ITC by using the following 29 ### Claiming ITCs for capital real property The rules for claiming ITCs for capital real property, such as a building, depend on whether you are: - a corporation - a partnership - an individual - a financial institution - a public service body For more information, see “Real property” on page 59. For further information about real property and input tax credits, see GST/HST Memorandum 19-1, Real Property and the GST/HST, and GST/HST Memorandum 19-2-3, Residential Real Property – Deemed Supplies. ### Simplified method for claiming ITCs The simplified method for claiming ITCs is another way for eligible registrants to calculate their ITCs when filling out their GST/HST return using the regular method of filing. When you use the simplified method for claiming ITCs, you do not have to show the GST/HST separately in your records. Instead, total the amount of your taxable purchases for which you can claim ITCs. You still have to keep the usual documents to support your ITC claims in case the CRA asks to see them. You are eligible to use the simplified method for claiming ITCs if you meet all of the following conditions: - Your annual worldwide revenues from taxable property and services (including those of your associates) are $1 million or less in your last fiscal year. - Your total taxable supplies (including those of your associates) for all preceding fiscal quarters of the current fiscal year must also be $1 million or less. These limits do not include goodwill, zero-rated financial services, or sales of capital real property. - You have $4 million or less in taxable purchases made in Canada in your last fiscal year. The $4 million purchase limit does not include zero-rated purchases, but it does include purchases imported into Canada, as well as the GST/HST paid or payable on those purchases and importations. In addition, if you are a public service body, you must be able to reasonably expect that your taxable purchases in the current fiscal year will not be more than $4 million. Exception Listed financial institutions cannot use the simplified method to calculate ITCs. If you qualify, you can start using the simplified method for claiming ITCs at the beginning of a reporting period. You do not have to file any forms to use it. Once you decide to use this method, you have to use it for at least one year if you continue to qualify. 30 Charities can use the simplified method for claiming ITCs once they have elected not to use the net calculation for charities. See “Can you choose not to use the net tax calculation method assigned to charities?” at -businesses/calculate-prepare-report/calculate-net-gst -hst. How does the simplified method for claiming ITCs work? If you make purchases in both participating and non-participating provinces, you have to separate your taxable purchases based on the rate of the GST/HST you paid. You can use this simplified method to calculate ITCs only for purchases you use to provide taxable property and services. If you use your purchases for personal use, or to provide both taxable and exempt property and services, only the part used for providing taxable property and services can be included in the ITC calculation. If you use a purchase at least 90% of the time to provide taxable property and services, include the total purchase price in your ITC calculation. To calculate ITCs using the simplified method, follow these steps. Step 1 Add up your ITC eligible business expenses. When you make purchases in both participating and non-participating provinces, you have to separately add up your purchases that are taxed at different GST/HST rates. For the list of all applicable GST/HST rates, go to and select “GST/HST calculator (and rates)” under “Most requested.” Include purchases of capital personal property and improvements to such property if you use the property more than 50% in your commercial activities. Your totals will include: - the GST or the HST - non-refundable PST (only for GST-taxable purchases) - taxes or duties on imported goods - reasonable tips - interest and penalty charges related to purchases taxable at the GST or the HST rate - reimbursements paid to employees, partners, and volunteers for taxable expenses Do not include: - expenses on which you have not paid the GST/HST such as employees’ salaries, insurance payments, interest, exempt or zero-rated purchases, and purchases from a non-registrant - purchases you made outside Canada that are not subject to the GST/HST - real property purchases or leases - refundable or rebatable PST - purchases for which you are not entitled to claim an ITC such as: - the part of any purchase that you use for personal use - the part of any purchase that you use to provide exempt goods and services - capital personal property that you do not use more than 50% in your commercial activities - the part of the cost of a passenger vehicle that is more than the capital cost limitation for income tax purposes (for more information, see the chart “ITCs for purchase of capital personal property – Passenger vehicles and aircraft” on page 26) - 50% of the meal and entertainment expenses (you can include 100% of the expenses and make the 50% adjustment at the end of your fiscal year). This does not apply to charities and public institutions (they can include 100% of the meal and entertainment expense with no adjustment) - if you are a long-haul truck driver, the applicable percentage of food and beverage expenses for which you cannot claim ITCs. For the appropriate percentages, see “Long-haul truck drivers” on page 23 (you can include 100% of the expenses and make the adjustment at the end of your fiscal year) - if you are an individual or a partnership, passenger vehicles or aircraft you bought or imported that you will not use 90% or more in commercial activities (for more information, see the chart “ITCs for purchase of capital personal property – Passenger vehicles and aircraft” on page 29) - amounts paid or payable in reporting periods before you started using the simplified method to calculate your ITCs Note If you also use the quick method of accounting, only include business purchases for which you are entitled to claim ITCs, such as purchases of capital equipment. Step 2 Multiply the amount(s) you calculated in Step 1 by: - 5/105 for purchases on which you paid 5% GST - 13/113 for purchases on which you paid 13% HST - 14/114 for purchases on which you paid 14% HST; and - 15/115 for purchases on which you paid 15% HST Step 3 Add the following adjustments, if they apply, to your ITC amount calculated in Step 2: - ITCs you did not claim before you started using the simplified method, as long as the time limit for claiming them has not expired - ITCs for the GST/HST paid or payable on real property purchases or leases (for more information, see “Claiming ITCs for purchases of capital real property” on page 60) - if you are an individual or a partnership, the ITC you can claim for a passenger vehicle or an aircraft used less than 90% in your commercial activities Enter this amount on line 106 if you are filing electronically using GST/HST NETFILE or on your paper GST/HST return or include this total in your line 108 calculation if you are filing using GST/HST TELEFILE. - Example (includes 5% GST and 7% PST) Woodworks Company 123 4 th Street Brandon MB R7B 1T7 Description Expenses Rent*........................................................................... $ 1,120 Employees’ salaries**................................................. 3,000 Insurance**.................................................................. 50 Capital property used more than 50% in commercial activities***........................................... 575 Advertising***.............................................................. 214 Office supplies***........................................................ 230 Inventory purchases***................................................ 1,150 Land****....................................................................... 21,400 Total purchases and expenses................................ $27,739 * Includes the PST and $50 GST. ** GST does not apply. *** Includes the GST and non-refundable PST. ****Includes $1,019.05 GST Step 1 Add all purchases and expenses including the GST and PST.................................... $27,739 Subtract rent, employees’ salaries, insurance and land ($1,120 + $3,000 + $50 + $21,400).......... (25,570) Taxable expenses..................................................... $2,169 Step 2 Multiply taxable expenses by 5/105 ($2,169 × 5/105)....................................................... $103.29 Step 3 ITCs on taxable expenses....................................... $103.29 Add ITCs on rent and land ($50 + $1,019.05)....... $1,069.05 ITCs.......................................................................... $1,172.34 ## Calculating your net tax You have to calculate your net tax for each GST/HST reporting period and report this on your GST/HST return. To do so, calculate: - the GST/HST collected or that became collectible by you on your taxable supplies made during the reporting period 31 - the GST/HST paid and payable on your business purchases and expenses for which you can claim ITCs The difference between these two amounts, including any adjustments, is called your net tax. It is either your GST/HST remittance or your GST/HST refund. If you charged or collected more GST/HST than the amount paid or payable on your purchases, send the difference to the CRA. If the GST/HST paid or payable is more than the GST/HST you charged or collected, you can claim a refund of the difference. For most businesses, this calculation is straightforward. However, to help reduce paperwork and bookkeeping costs, most small businesses can use the quick method of accounting to calculate their GST/HST remittance. For more information, see “Quick method of accounting” on page 33. Notes Most charities have to use a special net tax calculation method for reporting the GST/HST they charge and for claiming ITCs. For more information, see Guide RC4082, GST/HST Information for Charities. Different simplified accounting methods are available for charities, qualifying non-profit organizations, and other public service bodies. For more information, go to our webpage “Special quick method of accounting for public service bodies,” or see the following guides: - Guide RC4049, GST/HST Information for Municipalities - Guide RC4081, GST/HST Information for Non-Profit Organizations - Guide RC4082, GST/HST Information for Charities ### GST/HST charged and not collected You are liable for the GST/HST you charge on property or services on the earlier of: - the day you receive payment - the day the payment is due The CRA usually considers payment to be due on the date you issue an invoice or the date specified in an agreement, whichever comes first. If you issue an invoice before you receive the payment, include the GST/HST charged on this invoice in the reporting period that includes the date of the invoice, even if you have not yet collected the tax. Include the GST/HST you charged for both paid and unpaid invoices on line 103 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return or in your line 105 calculation if you are filing using GST/HST TELEFILE, for the reporting period in which you issued the invoices. ### GST/HST not charged If you are required to charge the GST/HST but did not charge it, you are still liable for the tax. You have to include the GST/HST that you failed to charge in your return for the reporting period during which you should have charged the tax. 32 ### GST/HST payable and not paid When you calculate your ITCs, you can include the GST/HST for purchases and expenses for which you have been invoiced but not yet paid. This means that you can get a credit for the GST/HST you owe to your suppliers before you pay the invoice. ### Bad debt adjustments If you already reported and remitted the GST/HST for a credit sale on your GST/HST return, and all or part of the amount owed to you became a bad debt, you can recover the GST/HST you overpaid as a tax adjustment on line 107 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or in your line 108 calculation if you are filing using GST/HST TELEFILE. To do this, you have to deal with the person at arm’s length. Then you can write off the amount owing as a bad debt in your records. Use the following formula to calculate the tax adjustment. This formula is based on the tax that was payable at the time of the sale. A × B C where: A is the GST/HST payable on the sale B is the total amount that remains unpaid for the sale that was written off as a bad debt, including the GST/HST and applicable PST C is the total amount of the sale, including the GST/HST and applicable PST Example You operate a business in Manitoba and you have a credit sale of $1,120 that includes $50 GST and $70 PST. You report and remit the $50 GST for this sale. You receive only a partial payment of $800 toward the credit sale of $1,120. The remaining unpaid balance of $320 later proves to be uncollectible and you write it off as a bad debt. Tax adjustment = $50 × $320 $1,120 = $14.29 You can recover the GST of $14.29 as a tax adjustment on line 107 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or in your line 108 calculation if you are filing using GST/HST TELEFILE. You have to make the tax adjustment on a return filed within four years of the due date of the return for the reporting period in which you wrote off the bad debt. Bad debt recovered If you claimed a bad debt adjustment and you later receive a payment towards that debt, you have to include the GST/HST part of that amount on line 104 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or as an adjustment in your line 105 calculation if you are filing using GST/HST TELEFILE, for the reporting period in which the amount is recovered. Use the following formula to calculate this tax adjustment: A × B C where: A is the amount of the bad debt you recovered B is the GST/HST payable for the supply to which the bad debt relates C is the total amount of the sale, including the GST/HST and applicable PST Example You operate a business in Manitoba and in September 2022, you made a credit sale of $1,120, including $50 GST and $70 PST. The amount later proved to be uncollectible and you wrote it off as a bad debt. In March 2024, you claimed $50 GST as a tax adjustment on line 107 of your GST/HST return. In June 2024, you receive a payment of $400 towards the debt. Tax adjustment = $400 × $50 $1,120 = $17.86 You have to include this GST adjustment of $17.86 on line 104 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or in your line 105 calculation if you are filing using GST/HST TELEFILE. ## Quick method of accounting You must have a permanent establishment in Canada to use the quick method. The quick method of accounting is another way to calculate the GST/HST you have to remit. You can begin using this method if the total revenue from your annual worldwide taxable supplies and those of your associates (including zero-rated supplies) is no more than $400,000 (including the GST/HST) in any four consecutive fiscal quarters over the last five fiscal quarters. The $400,000 limit does not include the following: - supplies of financial services - sales of real property - sales of capital assets - goodwill ### Exceptions The following persons cannot use the quick method: - persons that provide legal, accounting or actuarial services in the course of their professional practice - persons that provide book-keeping, financial consulting, tax consulting or tax return preparation services in the course of their commercial activities - listed financial institutions - public institutions - municipalities or local authorities designated as municipalities - public colleges, school authorities, or universities, that are established and operated other than for profit - hospital authorities, facility operators, or external suppliers - charities - non-profit organizations with at least 40% government funding in the year (qualifying non-profit organizations) Note A special quick method is available to certain qualifying non-profit organizations, selected public service bodies, specified facility operators and designated charities. For more information, go to our webpage “Special quick method of accounting for public service bodies.” ### How does the quick method work? With the quick method of accounting, you charge and collect the GST/HST on taxable property and services you supply to your customers in the usual way. However, to calculate the net GST/HST to remit, you multiply your taxable supplies including the GST and your taxable supplies including the HST made during the reporting period by the applicable quick method remittance rate(s). The remittance rates depend on the following factors: - whether you are in the service, retail, or manufacturing business - the province in which your permanent establishment is located - the province where your supplies are made or your services are provided The quick method remittance rates are less than the GST/HST rates of tax that you charge. This means that you remit only a part of the tax that you charge or collect. The part that is not remitted under this method is reported as income on your income tax return. If you use the quick method of accounting, you have to continue using it for at least a year. There are other rules as well. For more information, see Guide RC4058, Quick Method of Accounting for GST/HST. 33 Input tax credits You cannot claim input tax credits (ITCs) for your operating expenses if you use the quick method of accounting. The quick method remittance rates take into account the GST/HST you pay on these purchases and expenses. You do not have to keep track of the GST/HST paid or payable on your operating expenses (such as utilities, rent, and telephone expenses), meal and entertainment expenses, and inventory purchases. However, you still have to keep records of your purchases and expenses. You may be eligible to claim ITCs for certain purchases such as purchases of land and purchases for which you can claim a capital cost allowance for income tax purposes, such as computers, vehicles, and other large equipment and machinery. ### How do I start using the quick method? Before you start using the quick method of accounting, file a quick method election. To do this, use the “File an election” digital service in My Business Account or Represent a Client at , or complete and send Form GST74, Election and Revocation of an Election to Use the Quick Method of Accounting to your tax services office. For more information and line-by-line instructions on how to complete your GST/HST return using the quick method, see Guide RC4058, Quick Method of Accounting for GST/HST. ## GST/HST returns Each fiscal year, the CRA will mail you a personalized return package that includes the following documents to help you complete your GST/HST return: - an information sheet with your reporting periods and due dates - an access code for filing your returns electronically on GST/HST NETFILE or by phone using GST/HST TELEFILE - remittance vouchers to use if you make your payments at your financial institution You can also register for a CRA account and go to My Business Account to view the due dates for your returns, as well as make electronic payments or file your GST/HST returns without an access code. For more information, go to . If you make two consecutive electronic payments, the CRA will no longer send you an electronic filing package unless you request one. You still have to file your return by the due date even if you did not receive a personalized return. For more information, see “Instructions for filling out your GST/HST return” on page 83. If you need a new return package or access code, do one of the following: - Call the Business Enquiries phone line at 1-800-959-5525. 34 - Go to to get a new access code for GST/HST NETFILE or GST/HST TELEFILE. ### GST/HST returns filed by non-residents If you are a non-resident, fill out your GST/HST return in Canadian dollars, sign the return, and remit any amounts owing in Canadian dollars. If you choose to make your payment in foreign funds, the exchange rate you receive for converting the payment to Canadian dollars is determined by the financial institution processing your payment, and may be different from the exchange rate that the CRA uses. ### Filing and remitting due dates Monthly and quarterly filers If you have a monthly or quarterly reporting period, you have to file your GST/HST return and remit any amount owing no later than one month after the end of your reporting period. For more information, see “Reporting periods” on page 15. Annual filers If you have an annual reporting period, you usually have to file your return and remit any amount owing no later than three months after the end of your fiscal year. Exceptions Your GST/HST payment is due by April 30 if all of the following conditions are met: - You are an individual with business income for income tax purposes. - You file annual GST/HST returns. You have a December 31 fiscal year-end. - Although your payment is due April 30, you have until June 15 to file your GST/HST return. A registrant listed financial institution (other than a corporation that is deemed to be a listed financial institution because it has elected to have certain taxable supplies deemed to be financial services) that has an annual reporting period has six months after its fiscal year-end to file its return and remit any amount owing. As an annual filer, you may have to pay quarterly instalments. If so, they are due no later than one month after the last day of each fiscal quarter. For more information, see “Instalment payments” on page 41. Note A financial institution that is a registrant and has annual income of over $2 million will also generally be required to file Form GST111, Financial Institution GST/HST Annual Information Return, in addition to its regular GST/HST return. For more information, see Guide RC4419, Financial Institution GST/HST Annual Information Return. Reporting obligations Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. For more information on reporting obligations under the simplified GST/HST, go to -economy-gsthst/file-return. ### How to file your return The mandatory electronic filing threshold of $1,500,000 that was in place for GST/HST returns has been removed for reporting periods that begin on or after January 1, 2024, which means that electronic filing is now required for all GST/HST registrants, other than selected listed financial institutions and most charities. GST/HST returns in paper format can be filed by mail or, if you are making a payment, at your financial institution. If this change applies to you, there will be penalties for not filing electronically. For more information, see “Failure to file electronically” on page 39. There are five methods of electronically filing a GST/HST return. They are: - My Business Account is a service available to GST/HST registrants across Canada. Register for a CRA account at so that you, or your representative, can access My Business Account or Represent a Client and file your GST/HST return. You do not need an access code when filing your GST/HST return through My Business Account or Represent a Client. - GST/HST NETFILE is available to GST/HST registrants across Canada, excluding accounts administered by Revenu Québec. You can file GST/HST returns online using your four digit access code from your Filing Information Package by going directly to . - GST/HST TELEFILE allows eligible registrants to file their returns using their touch-tone telephone and a toll-free number. To file your return electronically using GST/HST TELEFILE, call 1-800-959-2038 from Canada and the continental United States using your touch-tone telephone. An automated telephone process will prompt you to give your GST/HST information, starting with your access code. For more information, go to . - Electronic data interchange allows returns and remittances to be filed electronically through a participating financial institution. You will not require an access code. For more information, go to or contact your financial institution. - GST/HST Internet file transfer is an option that allows eligible registrants to file their return electronically using third-party CRA certified accounting software. An access code is needed. For more information, go to . The CRA offers a printer-friendly version of a GST/HST return working copy. This working copy is provided to enable registrants who file electronically to keep a copy of their GST/HST return calculations for record purposes. Do not use the printer-friendly version to replace and file a lost pre-printed return or to make payments at your financial institution. To print a copy, go to . For payment options, see “How to remit an amount owing” on page 36. Note Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. For more information on how to complete and file a return for your digital economy business, go to -businesses/digital-economy-gsthst/file-return. Mandatory electronic filing There are many benefits to filing online Electronic filing has many benefits over paper processing. It saves businesses time and money because recipients can confirm their tax information earlier and receive refunds and credits much faster. It’s also safer and more reliable because data flows seamlessly over secure networks. Paper processing, on the other hand, is vulnerable to more errors and disruptions. For both business and individual accounts, electronic filing offers: - convenience and ease - faster processing times - quicker communication for errors and discrepancies - earlier confirmations for tax information - faster refunds and credits Note There will be penalties for not filing electronically. For more information, see “Failure to file electronically” on page 39. How to file rebate applications for electronic returns If you have rebate applications that cannot be filed electronically, but relate to the GST/HST return that you are filing electronically, send them by mail no later than the due date of your electronic return, to the applicable tax centre noted on the rebate form. 35 If you are a public service body non-registrant who is not required to file GST/HST returns, you can file your public service bodies’ rebate application using the “File a rebate” digital service in My Business Account or Represent a Client at . If you are a GST/HST registrant, you can file your public service bodies’ rebate applications electronically (Form GST66) with your GST/HST return using GST/HST NETFILE at or the “File a return” digital service in My Business Account or Represent a Client at . Form GST66 can also be filed electronically on its own using the “File a rebate” digital service in My Business Account or Represent a Client at . If you are a GST/HST registrant, you can file your GST/HST New Residential Rental Property Rebate Application (Form GST524) for TYPES 6, 7, 8, 9A, and 9B with your GST/HST return using the “File a return” digital service in My Business Account at -sign-in-services. Form GST524 can also be filed electronically on its own using the “File a rebate” digital service in My Business Account at . If you are a GST/HST registrant, you can file your General Application for GST/HST Rebates (Form GST189) for reason codes 1A, 1C, 5, 7, 8, 9, 12, 13, 16, 20, 23, 24 and 25 with your GST/HST return using the “File a return” digital service in My Business Account. For reason code 23 only, you can also file form GST189 with your GST/HST return using GST/HST NETFILE at . Form GST189 for reason codes 1A, 1C, 7, 9, 12, 13, 16, and 20 can also be filed electronically on its own using the “File a rebate” digital service in My Business Account or Represent a Client at . If you are a GST/HST registered builder filing a Type 1A or Type 1B new housing rebate, you can file Form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder, electronically along with your GST/HST return for the reporting period that you paid or credited the amount of the rebate to the buyer, by using GST/HST NETFILE at or by using the “File a return” digital service in My Business Account. Form GST190 can also be filed electronically on its own using the “File a rebate” digital service in My Business Account or Represent a Client at . Note If you file your rebate applications electronically, do not mail the rebate forms. If you provide the Ontario First Nations point-of-sale relief, include the amount credited on line 111 and file this rebate application (Form GST189, reason code 23) electronically using GST/HST NETFILE or by using the “File a rebate” digital service in My Business Account or Represent a Client at . ### How to remit an amount owing There are three ways to make a payment: - remit electronically 36 - remit at your financial institution in Canada - send your payment by mail As of January 1, 2024, GST/HST payments or remittances to the Receiver General for Canada must be made as an electronic payment if the amount is $10,000 or more (formerly $50,000). You may face a penalty, unless you cannot reasonably remit or pay the amount electronically. You have to make arrangements with your financial institution when you make a payment of more than $25 million. Note You can make your payments in foreign funds. In this case, the financial institution handling your transaction determines the exchange rate for converting the payment to Canadian dollars. Electronic payments and paying at a financial institution You can pay electronically using your financial institution’s online or telephone banking services. You do not need a remittance voucher to pay online. You can also pay electronically using the CRA’s My Payment option. My Payment allows individuals and businesses to make payments online from an account at a participating financial institution, using the CRA website. For more information, go to . Another online option is to authorize the CRA to withdraw a pre-determined payment from your bank account to pay tax on a specific date or dates. You can set up an agreement in My Business Account at . You can make a payment at your financial institution for an amount owing on a return that has already been electronically filed using GST/HST NETFILE or GST/HST TELEFILE. However, you must include Form RC158, Remittance Voucher – Payment on Filing, when making the payment. If you are not required to file electronically, you can file your return and make your payment at your participating financial institution in Canada. If you are paying at a financial institution and your return requires attached documentation, you will have to send these documents separately. You cannot file your return at a financial institution if you are: - required to file your GST/HST return electronically - claiming a refund - filing a nil return - offsetting an amount owing on the return by a rebate or refund In these cases, you have to use one of the other filing methods described in this section. Note Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. For more information on how to pay (remit) the tax you collected for your digital economy business, go to . Are you a sole proprietor with an annual reporting period? If you are a sole proprietor with an annual reporting period, you use a calendar year as your fiscal year, and for the purposes of the Income Tax Act, you carried on a business in the year, your return is generally due June 15 of the following year, but your payment is due no later than April 30. You can file your return together with your remittance by April 30, or remit the amount owing by April 30 and file the return separately by June 15. Use the applicable form to remit any amount owing as follows: - Unless you are required to file electronically, use Form GST34-2, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return for Registrants, if you remit the amount owing and file the return together by April 30. You can also use Form GST62, which is the non-personalized version of Form GST34-2. - Pay online (if you have access to online banking at a participating financial institution) through My Payment at or use Form RC177, Balance Due Remittance Voucher, to remit an amount owing by April 30 and file the return separately by June 15. Form RC177 is not available on our website. The CRA only provides it in a pre-printed format. For more information on how to order this form, see “Ordering personalized remittance forms” on page 88. ### Branches or divisions filing separate returns Although you have to register your business as a single entity, you can apply to have your branches or divisions file their own returns. To do this, use Form GST10, Application or Revocation of the Authorization to File Separate GST/HST Returns and Rebate Applications for Branches or Divisions. To qualify, your branches or divisions have to be separately identified either by their location or by the nature of their activities, and separate records must be kept. The branches and divisions have to keep the same reporting periods as the head office. Note If you make this application and you are required to file electronically or you are required to file using a specific method, all of the branches or divisions identified in the election also have to file electronically. ### Using a rebate or refund to decrease an amount owing on your GST/HST return You can offset the net tax you owe on your GST/HST return with certain GST/HST rebates to which you are entitled. For more information on the types of rebates that can be applied to an amount owing on your GST/HST return, go to . If you file your return and rebate application together, or if you file your return electronically, remit only the difference (if any) between the amount of the rebate and the GST/HST you owe on your return. If the rebate is more than the amount of the GST/HST you owe, the CRA will refund you the difference. Include the rebate amount on line 111 of your GST/HST return and submit the rebate application. Some rebates can be filed electronically with your return. See “How to file rebate applications for electronic returns” on page 35. If you are filing a paper return, include your rebate application with the return and send both to the address shown on your return. If you are offsetting a remittance by the amount of a refund or rebate, make sure the CRA receives your return, rebate application, and any remittance by the due date of the GST/HST return. If you wish to offset the tax you owe by filing a paper rebate application, you should file the rebate application no later than the day your electronic return is due. Although financial institutions will accept GST/HST remittances along with returns, you cannot offset amounts owing at your financial institution. ### Filing nil returns File a GST/HST return for every reporting period, even if you have no net tax to remit and are not expecting a refund. In other words, even if you have no business transactions in a reporting period, you still have to file a return. Otherwise, you may experience delays in getting refunds and you could receive a failure to file notice and may be liable for a failure-to-file penalty. How to temporarily stop filing GST/HST returns for specific reporting periods You may be eligible to stop filing returns for reporting periods during which you have little or no GST/HST to report (for example, if you operate a seasonal or part-time business, or if you are a non-resident who carries on business in Canada only for a short period of time each year). 37 These reporting periods are called designated reporting periods. To temporarily stop filing GST/HST returns, send a written request to your tax services office and indicate the reporting periods that are to be designated. Once your request is approved, you will not have to file GST/HST returns for all designated reporting periods within a fiscal year, as long as you continue to meet the following criteria: - You expect that the amount of the GST/HST you will charge and other amounts that you must add to your net tax in a reporting period will be $1,000 or less. - You have met all your obligations with the CRA (such as customs, income tax, and GST/HST). - You did not revoke a designation for reporting periods in the current fiscal year. Once approved, a designation for a reporting period may be revoked if you no longer meet the above criteria. If consecutive reporting periods are to be designated, the total of all the amounts to be added to your net tax for those reporting periods must be $1,000 or less. Any amount owing in a designated reporting period is carried forward to the next reporting period. You cannot temporarily stop filing GST/HST returns if you are an annual filer or a branch of a registrant, unless the registrant, as a whole, applies for designated reporting periods. ## After you file ### Notices and statements Notice of (re)assessment Once the CRA receives your GST/HST return, you will receive a notice of (re)assessment if either: - the CRA owes you a refund or rebate - your amount owing is more than the payment you made If you are registered for email notifications from the CRA, once your GST/HST return has been processed, you will receive an email notification letting you know you have CRA mail to view in My Business Account at /cra-sign-in-services to inform you that there is mail available for you to view. You can sign up for email notifications from the CRA by entering an email address in my Business Account or when filing a GST/HST NETFILE return. For more information, see “Electronic payments” on page 86. This notice explains the results of our assessment of your GST/HST return. It also explains any changes that the CRA made to your return. If there is an amount owing, you will receive Form RC159, Amount Owing Remittance Voucher, with your notice. Use this form to pay any outstanding amount. You can also pay the outstanding amount online. See “Electronic payments” on page 86. Note Form RC159 is not available on our website. The CRA only provides it in a pre-printed format. For information 38 on how to order this form, see “Ordering personalized remittance forms” on page 88. You will not receive a notice of assessment when: - A return is filed and no business activity has been reported (nil return). - A return is filed and the amount owing on the return equals the payment made on filing. Statement of arrears The statement of arrears for the GST/HST is no longer being issued. To check your up-to-date account balance and transactions, or to request your personalized remittance voucher, go to My Business Account or Represent a Client at . ### When can you expect your refund? As long as you have included all the necessary information and completed your return correctly, your refunds of net tax claimed on your GST/HST returns will be processed with the least possible delay. The CRA aims to achieve a 95% service standard to process paper returns in eight weeks and electronically filed returns (NETFILE, TELEFILE, EDI, and GIFT returns) in four weeks. Refund holds If you have to file any returns under the Excise Tax Act, the Income Tax Act, the Excise Act, 2001, the Underused Housing Tax Act and its regulations, the Select Luxury Items Tax Act. or the Air Travellers Security Charge Act, but have not done so, any GST/HST refund or rebate you are entitled to will be held until all required returns are filed. If you are a sole proprietor or partnership, your personal income tax refund will also be held. In addition, under proposed changes, all returns required under the Digital Services Tax Act will also need to be filed before any GST/HST refunds or rebates will be issued. Note The CRA will not withhold refunds or rebates because of outstanding T2 corporate income tax returns under the Income Tax Act for tax-exempt incorporated municipalities, universities, schools, hospitals, non-profit organizations, federal Crown corporations, Indian band councils, and municipal corporations and their subsidiaries. Refund off-sets If you have any outstanding amounts owing under the Excise Tax Act, the Income Tax Act, the Excise Act, 2001, the Underused Housing Tax Act and its regulations, the Select Luxury Items Tax Act, or the Air Travellers Security Charge Act, any GST/HST refund or rebate that you are entitled to may be used to pay that outstanding amount. Any difference will be refunded to you. In addition, under proposed changes, the GST/HST refunds or rebates may also be applied to offset amounts owing under the Digital Services Tax Act. ### Interest on overpayments and refunds The CRA will pay you interest, compounded daily, on an overpayment or refund of net tax claimed on a GST/HST return beginning from the later of the following options: - 30 days after the day you file the return in which you claim the refund - 30 days after the day following the last day of the reporting period that is covered by that return The calculation of interest the CRA pays ends on the day the refund is paid or applied. The interest rate for corporations is equal to the basic rate, which is based on the rate charged on 90-day Treasury bills, adjusted quarterly, and rounded up to the nearest whole percentage. The interest rate for persons other than corporations is equal to the basic rate plus 2%. ### Penalties and interest Penalties Failure to file A penalty will apply to any return you file late unless there is a $0 amount owing or the CRA owes you a refund on that return. The penalty will be calculated as follows: A + (B x C) A is 1% of the amount owing B is 25% of A C is the number of complete months the return is overdue, to a maximum of 12 months Demand to file If you receive a demand to file a return and do not do so, a penalty of $250 will be charged. You cannot claim an income tax deduction for any penalty paid or payable for failing to file a GST/HST return. Failure to file electronically For GST/HST reporting periods that begin on or after January 1, 2024, all GST/HST registrants, except for selected listed financial institutions and most charities, are required to file returns electronically. If you are required to file your GST/HST returns electronically (see “Mandatory electronic filing” on page 35) and don’t, you will be subject to the following penalty: - $100 for the first return that is not filed electronically - $250 for each subsequent return that is not filed electronically There are additional penalties, which can be significant, for failing to correctly report certain amounts and information on an electronically filed return, if they are not included, are under/over-reported, or are otherwise reported incorrectly. These amounts include: - recaptured input tax credits (RITCs) - resales of housing that are subject to the HST at 13% in Ontario, 14% in Nova Scotia on or after April 1, 2025, 15% in Nova Scotia (until March 31, 2025), New Brunswick, Newfoundland and Labrador, - or Prince Edward Island, where the housing was originally purchased on a grandparented basis - the transitional tax adjustment - provincial transitional new housing rebates For these specific amounts, the penalties will generally be 5% of the difference between what is reported and what should have been reported plus 1% per month until the amounts are corrected (to a maximum of 10%). Interest Interest equal to the basic rate plus 4% will be charged on an overdue amount. The basic rate is based on the rate charged on 90-day Treasury bills, adjusted quarterly, and rounded up to the nearest whole percentage. The CRA charges interest on: - any overdue balance owing on a GST/HST return - late or insufficient instalment payments - any other overdue GST/HST amount that you have to remit to the Receiver General for Canada You can request an interest review or a statement of interest online, by selecting “Enquiries service” in My Business Account or in Represent a Client at . Note You cannot claim an income tax deduction for interest paid or payable for outstanding GST/HST amounts. ### How do you change a return? If you need to change a return you have sent to the CRA, do not file another return. If you forgot to include an amount in your ITCs, include the omitted amount on your next return, on line 106 if you are filing electronically using GST/HST NETFILE or filing using a paper GST/HST return, or in your line 108 calculation if you are filing using GST/HST TELEFILE. In most cases, you have up to four years to claim your ITCs. For more information, see “Input tax credits” on page 21. If you need to increase the amount of the GST/HST charged or collected, or you have incorrectly reported recaptured ITCs, you can adjust your return in My Business Account or Represent a Client at . You can also send a letter to your tax centre indicating your GST/HST business number, the GST/HST reporting period to be amended and the corrected amounts per line number on your GST/HST return. Make sure the letter is signed by the owner, or an authorized representative for whom the CRA has the correct level of authorization and includes the name and telephone number of a person the CRA can contact if needed. 39 ### Enquiries service You can view answers to common enquiries online, or ask an account-related question online and the CRA will provide an answer online. Use the “Enquiries service” to make an online request (for example, to order remittance vouchers), or submit an enquiry about a GST/HST return or a GST/HST rebate. The CRA will try to respond within 30 business days, depending on the complexity of the question. To view the response, use either the “Mail” service or access the Message Centre. To access these services, go to My Business Account or Represent a Client at . ### What is the Voluntary Disclosures Program? The Voluntary Disclosures Program (VDP) allows you to come forward and correct inaccurate or incomplete information or to disclose information you had not previously reported to the CRA. You may avoid penalties and prosecution if you make a valid disclosure before you become aware of any compliance action being initiated against you by the CRA. You will only have to pay the taxes owing plus interest. A disclosure is valid if it: - is voluntary - contains complete information - involves the application or the potential application of a penalty - generally includes information that is more than one year overdue The VDP provides an avenue for you to correct past errors and omissions and become compliant with tax laws. For more information, go to -disclosures or see GST/HST Memorandum 16-5, Voluntary Disclosures Program or GST/HST Memorandum 16-3, Cancellation or Waiver of Penalties and Interest. ### Director’s liability When a corporation fails to remit net GST/HST owing, the directors may be liable to remit that amount. ### What records should you keep? Usually, you have to keep all sales and purchase invoices and other records related to your business operations and the GST/HST for six years from the end of the year to which they relate. However, the CRA may ask you to keep the invoices longer than six years. If you want to destroy your records earlier, you have to send a written request to the CRA and wait for a written approval to do so. For more information, see GST/HST Memorandum 15-1, General Requirements for Books and Records. 40 As a registrant, you also need the correct information on the invoices you receive from your suppliers to support your ITC claims. Registered businesses should give you invoices showing their GST/HST business number and other required information as described in the chart, “Input tax credit information requirements” on page 19. For capital property and improvements to such property, you should keep your invoices for a longer period to support any further ITC claims or tax owing in respect of future changes in use of the property. Note To verify if a supplier provided you with a valid GST/HST number, go to the GST/HST Registry at . The CRA administers an audit program. The auditors may ask to see your records. During an audit, the CRA will make sure that you have charged and reported the GST/HST when required, and that you are entitled to all the ITCs that you claimed on your return(s). ### Storage service providers Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. For more information on the notification and information reporting obligations under the measures, go to /notification-information-reporting. ### If you are audited If the CRA audits your records, you will receive a preliminary statement of audit adjustments. You have 30 days to analyze and discuss the adjustments with the auditor and make any representations. After that period, the CRA will issue a notice of (re)assessment. The notice of (re)assessment explains the results of any assessment or reassessment of your GST/HST return. It also explains any changes that the CRA made to your return. If there is an amount owing after the assessment or reassessment of your GST/HST return, the CRA will send Form RC159, Amount Owing Remittance Voucher, for you to use to make your remittance. To make your remittance online, go to . ### How to register a formal dispute If you think the CRA has misinterpreted the facts or applied the law incorrectly, you have the right to object to assessments and reassessments of the GST and HST. Filing an objection is the first step in the formal process of resolving a dispute. The time limit for filing an objection is 90 days from the date on the notice. To file an objection, fill out Form GST159, Notice of Objection (GST/HST). You or your authorized representative can also submit your objection and supporting documents online in your CRA account, by selecting the “File a formal dispute” digital service in My Business Account or Represent a Client at . You may also register for a CRA account if you do not already have one. To submit supporting documents online, select “Submit documents” in your CRA account. Your objection will be sent directly to the Appeals Division for validation and review. For more information about objections and appeals to your GST/HST assessment or reassessment, go to . ## Instalment payments ### Who has to make instalment payments? If you are an annual filer and your net tax for the previous fiscal year was $3,000 or more, and your net tax for the current fiscal year is $3,000 or more, you have to make quarterly instalment payments during the current fiscal year, even if you have a rebate that reduces your amount owing to less than $3,000. If you do not remit instalments, you may incur penalty and interest. To calculate your instalment payments and view the related due dates, go to My Business Account or Represent a Client at . These quarterly payments are due within one month after the end of each of your fiscal quarters and are usually equal to one quarter of your net tax from the previous year. You may also choose to base your quarterly instalment payments on an estimate of your net tax for the current year if you expect that your net tax for the current year will be less than it was for the previous year. Note If you estimate your instalments based on your current year and the instalment payments you make are less than the amount you should have paid, the CRA will charge instalment interest on the difference. Example You are a corporation with a December 31 fiscal year-end. Your net tax for the 2023 fiscal year was $4,000. You estimate that your net tax for 2024 will be $3,200. The CRA will calculate your quarterly instalments at $1,000 each ($4,000 ÷ 4). However, if you choose to base your instalments on your estimate for 2024, you can make quarterly payments of $800 ($3,200 ÷ 4). Your first instalment is due April 30, 2024. The balance of your net tax for 2023 was due one month earlier, on March 31, 2024. When you file your GST/HST return at the end of the fiscal year, deduct the instalment payments you made throughout the year from the net tax you owe on line 110 of your return. Generally, if the instalments you paid are less than your net tax, you have to remit the difference. If the instalments you paid are more than your net tax, you can claim the difference as a refund. ### New registrants and instalments If you are a new registrant and an annual filer, you may have to make instalment payments during your next fiscal year even if your net tax is less than $3,000. This could happen if your first year of filing for GST/HST is less than a full fiscal year. To determine if you need to do this, estimate what your net tax will be for your next fiscal year by prorating your net tax from your short fiscal year. To do so, divide the net tax for the first short fiscal year by the number of days that you were registered in that fiscal year. Then multiply this amount by 365. If the estimated amount is $3,000 or more, and your net tax for the next fiscal year will be $3,000 or more, you will need to make instalment payments in the next year. If your net tax for the current or previous year is less than $3,000, you do not need to make quarterly instalment payments in the current year. In this case, you need to file your GST/HST return and send any GST/HST owing once a year to the CRA. Example You are a sole proprietor. Your first year as an annual filer began on December 12, 2023, and ended on December 31, 2023. Your net tax for those 20 days was $200. To determine if you need to make instalment payments in 2024, prorate your net tax for 2023 as follows: $200 (net tax) ÷ 20 (days) × 365 = $3,650 Since your prorated 2023 net tax is greater than the $3,000 threshold, you will need to make equal quarterly instalment payments in 2024 if your 2024 net tax will also be $3,000 or more. To base your instalment payments on your prorated 2023 net tax, calculate the amount of each payment as follows: $3,650 ÷ 4 = $912.50 You have two payments due on April 30, 2024, both your net tax of $200 for 2023 and your first instalment for 2024 of $912.50. ### Instalment due dates Instalment payments are due within one month after the end of each of your fiscal quarters. Example You are an annual filer and you have a December 31 fiscal year-end. Your net tax on your 2023 GST/HST return was $3,500 and you expect it will be at least that much for 2024. 41 This means you have to make instalment payments throughout your 2024 fiscal year. Your instalment due dates are as follows: Fiscal Quarter Due Date January 1 – March 31 April 30 April 1 – June 30 July 31 July 1 – September 30 October 31 October 1 – December 31 January 31 To calculate your instalment payments and view the due dates online, go to My Business Account at . To view an interim balance of payments and credits received for a period end of a return not yet processed, go to My Business Account or Represent a Client at . ### How to make instalment payments To make your GST/HST instalment payments, use Form RC160, Remittance Voucher – Interim Payments. This form is only available in a personalized and printed format. You still have to make your payment by the due date even if you do not receive your remittance form on time. You can order Form RC160 online, by selecting the ”Enquiries service” in My Business Account or in Represent a Client at . You can also make instalment payments electronically using your financial institution’s online or telephone banking services. You do not need a remittance voucher to pay online. Another way to make instalment payments electronically is to use My Payment option at . This service allows you to make payments online from your account at a participating Canadian financial institution. You may authorize the CRA to withdraw a pre-determined payment from your bank account on specific dates. You can set up an agreement in My Business Account at . Statement of interim payments If you make instalment payments, the CRA will send you this statement once a year to: - confirm the reception of your payment - provide your instalment credit balances by period - show transfers in and out of your instalment account - show how we applied your instalment credits to assessments The CRA will also send four copies of Form RC160, Interim Payments Remittance Voucher, one copy for each of your next four instalment payments. To view the up-to-date account balance and transactions and to transfer payments, go to My Business Account or Represent a Client at . 42 ### Instalment interest If the instalment payments you make are equal to one quarter of your net tax from your last fiscal year and you make those payments in full and on time, the CRA will not charge instalment interest, even if your net tax for the year is more than the instalments you made. Interest on the part of any instalment payment that was not paid or that was paid late will be charged at the end of the fiscal year. Note If you realize at any time during the fiscal year that you paid less than your required instalment payment or that you did not pay an instalment on time, you can reduce or eliminate your instalment interest by overpaying your next instalment payment or by paying it early. Instalment interest is calculated beginning the day after the instalment payment was due and ending on the earlier of the following dates: - The day the overdue instalment amount and any accrued interest is paid. - The day your net tax owing for the year is due (although interest still applies if there is an overdue balance on your GST/HST return, see “Interest” on page 39). Instalment interest is equal to the basic rate plus 4%. The basic rate is based on the average rate of 90-day Treasury bills sold during the first month of the previous quarter, adjusted quarterly, and rounded up to the nearest whole percentage. Example Your net tax for the 2023 fiscal year was $4,000. You estimate that your net tax for 2024 would be $3,200. You chose to make quarterly instalments of $1,000 each based on your 2023 net tax and you paid each one by its due date. At the end of 2024 you calculated your net tax and it was actually $5,500. Since your 2024 instalment payments were equal to one quarter of your net tax for 2023 you will not be charged instalment interest. You have to pay the balance of $1,500 by the due date for your net tax for the fiscal year. ## Harmonized sales tax The participating provinces (defined on page 9) harmonized their provincial sales tax with the GST to implement the harmonized sales tax (HST) in those provinces. For a breakdown of the HST rates for the participating provinces, go to and select “GST/HST calculator (and rates)“ under “Most requested.” Generally, the HST has the same basic operating rules as the GST and is applied at a single rate on the same base of property and services that are taxable under the GST. This section covers specific issues related to the HST. ### HST registration If your business is registered for the GST, your business is also registered for the HST. As a GST/HST registrant, you have to collect and remit the HST on taxable (other than zero-rated) supplies you make in the participating provinces. You collect and remit the GST on supplies you make outside the participating provinces. You can claim ITCs for the HST you pay when you buy property and services in a participating province to consume, use, or supply in your commercial activities, even if your business is not located in a participating province. ### Point-of-sale rebates Vendors provide point-of-sale rebates for the provincial part of the HST on qualifying items, which are included in the following chart. On these items they only collect the 5% federal part of the HST payable. Qualifying items for the point-of-sale rebate New Brunswick Books* Newfoundland Books and Labrador Nova Scotia Books*, children’s clothing and footwear, and children’s diapers Ontario Books*, children’s clothing and footwear, children’s diapers, children’s car seats, qualifying newspapers, and qualifying food and beverages Prince Edward Books*, children’s clothing and footwear, Island and qualifying heating oil * Books, for the point-of-sale rebate, include audio books, printed scripture, and composite property, but not e-books, newspapers, magazines, catalogues, colouring books, agendas, etc. If the vendor does not credit the point-of-sale rebate, the purchaser would be able to apply for a rebate of the provincial part of the HST using Form GST189, General Application for GST/HST Rebates. For a detailed description of all the qualifying items and more information on the point-of-sale rebate, see the following publications: - GST/HST Info Sheet GI-060, Harmonized Sales Tax for Ontario – Point-of-Sale Rebate on Newspapers - GST/HST Info Sheet GI-063, Point-of-Sale Rebate on Children’s Goods - GST/HST Info Sheet GI-064, Harmonized Sales Tax for Ontario – Point-of-Sale Rebate on Prepared Food and Beverages - GST/HST Info Sheet GI-065, Point-of-Sale Rebate on Books - GST/HST Info Sheet GI-169, Point-of-Sale Rebate on Heating Oil - Guide RC4033, General Application for GST/HST Rebates (“Reason code 16”) How to account for point-of-sale rebates A registrant supplier that pays or credits the rebate amount at the point of sale can account for the rebate amount on its GST/HST return in one of two ways. It does so either by using the total HST or by using only the 5% federal part of the HST. Using the total HST To account for point-of-sale rebates using the total HST, if you are filing electronically using GST/HST NETFILE or filing a paper GST/HST return, show the total HST on line 103 and claim an adjustment for the rebate amount on line 107. If you are filing using GST/HST TELEFILE, include the total HST collected or collectible in your line 105 calculation and claim an adjustment for the rebate amount you paid or credited in your line 108 calculation. Using only the 5% federal part of the HST To account for point-of-sale rebates using only the federal part of the HST, if you are filing electronically using GST/HST NETFILE or filing a paper GST/HST return, show the net amount by including only the 5% federal part of the HST on line 103 and do not make an adjustment for the rebate amount on line 107. If you are filing using GST/HST TELEFILE, include only the 5% federal part of the HST collected or collectible in your line 105 calculation and do not claim an adjustment for the rebate amount paid or credited in your line 108 calculation. ### Ontario First Nations point-of-sale rebate The Government of Ontario made regulations under the Retail Sales Tax Act of Ontario, that allow for a point-of-sale rebate equal to the 8% provincial part of the HST to be provided to individuals registered under the Indian Act, Indian bands, and councils of an Indian band for purchases of qualifying property and services made off a reserve. This is referred to as the Ontario First Nations point-of-sale rebate. As a result, GST/HST registrant suppliers in Ontario may credit an amount equal to the 8% provincial part of the HST at the point-of-sale. For information on what property or services qualify, who is eligible, and the documents required to support the amounts credited, go to the Ontario Ministry of Finance website at -harmonized-sales-tax-hst-rebate. You can see these regulations at . How to account for the Ontario First Nations point-of-sale rebate A GST/HST registrant supplier that credits amounts for the Ontario First Nations point-of-sale rebate would: - include the amount of HST collected or collectible for these supplies at the full 13% rate on line 103 if filing electronically using GST/HST NETFILE or if filing a paper GST/HST return, or in the line 105 calculation if filing using GST/HST TELEFILE 43 - report the amounts credited at the point of sale on line 111, whether submitting the rebate Form GST189, General Application for GST/HST Rebates electronically with the GST/HST return or by mail - submit Form GST189, reason code 23. This can be submitted electronically with your GST/HST return either in GST/HST NETFILE at -netfile, or in My Business Account or Represent a Client at . On Form GST189, indicate in Section 2 of Part D the reporting period in which the amounts credited at the point of sale have been offset on line 111 Note If you file your GST/HST return electronically and send in a paper GST189 rebate claim for reason code 23, Form GST189 is due on or before the due date of the GST/HST return where you have reported the credit on line 111. For more information, see GST/HST Info Sheet GI-106, Ontario First Nations Point-of-Sale Relief – Reporting Requirements for GST/HST Registrant Suppliers. Note You have to file a separate Form GST189 for each reason code. ### Tax on supplies of property and services made in provinces – place-of-supply rules Specific rules apply to determine whether a supply that is made in Canada is made in or outside a participating province. The province of supply then determines whether suppliers must charge the HST, and if so, at which rate. Unless otherwise indicated, the supplies referred to throughout this section are taxable (other than zero-rated) supplies. The following sections explain the place-of-supply rules and tax on property and services brought into a participating province. For more information on the place-of-supply rules, see GST/HST Memorandum 3-3-2, Place of Supply in a Province – Overview, Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province, or go to . Note Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. For more information on how to charge and collect the tax and place-of-supply rules, go to -businesses/digital-economy-gsthst/charge-collect. 44 Goods Sales You collect the HST if you sell goods and deliver them or make them available to the customer in a participating province. Goods are also considered to be delivered in a particular province if you either: - ship the goods to a destination in the particular province that is specified in the contract for carriage of the goods - transfer possession of the goods to a common carrier or consignee that you retain on behalf of the customer to ship the goods to such a destination - send the goods by courier or mail to an address in the particular province Example You are a supplier of office furniture in Ontario. In August 2024, you sold a desk to a customer from Newfoundland and Labrador and you delivered it to the customer there. The HST rate of 15% applies to the furniture. Rentals and leases of goods – Three months or less You collect the HST if you rent or lease goods to a customer that has continuous possession or use of the goods for three months or less, and you deliver the goods or make them available to the customer in a participating province. Note For more information regarding the circumstances in which goods are considered to be delivered in a province, see “Sales” on this page. Example In July 2024, you rented a video camera that you picked up at the supplier’s premises in New Brunswick to use while travelling through several provinces. The rental agreement was for two weeks. Since New Brunswick is the place of supply, the HST rate of 15% applies on the rental. Rentals and leases of goods – More than three months When you rent or lease goods for a period of more than three months, the agreement is treated as a series of separate supplies for each lease interval to which a particular payment is attributable. Generally, the supply of goods (other than most motor vehicles) for each lease interval is considered to be made in the province where the goods are ordinarily located as indicated at the beginning of each lease interval. Example A national leasing company leases a photocopier for a four-year period to a consulting firm operating in Ontario. The consulting firm makes monthly lease payments (monthly lease intervals). The photocopier is usually stored and maintained at the firm’s office in Ontario. During the second year of the lease, the firm expands its operations to Alberta and relocates the photocopier to the firm’s new office in Alberta, with the agreement of the national leasing company. In this case, the monthly payments are subject to the HST at 13% (the HST rate in Ontario) where the photocopier is ordinarily located in Ontario at the beginning of the month. The monthly lease payments are subject to the GST at 5% where the photocopier is ordinarily located in Alberta at the beginning of the month. For information on sales, rentals, or leases of motor vehicles that have to be registered in a particular province, see “Rules for motor vehicles” on page 49. For more information on the place of supply rules for goods, see GST/HST Memorandum 3-3-3, Place of Supply in a Province – Tangible Personal Property. Services – General rules The general place-of-supply rules for services are subject to specific place-of-supply rules for certain services that are explained in the following sections. A supply of a service is generally made in a province where the supplier obtains a home or business address of the recipient in the ordinary course of its business and that address is situated in that province. Where the supplier does not obtain any home or business address of the recipient in the ordinary course of its business, but obtains another single address in Canada of the recipient, that address will be used in determining the place of supply. For more information on determining the place of supply of a service where multiple Canadian addresses of the recipient are obtained, or where a more specific place-of-supply rule applies, see Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province. Example An accounting firm in Calgary, Alberta is hired by a company located in London, Ontario. The accounting firm obtains only one address of the company, the business address in London, Ontario, as part of its ordinary information management practices. Because the only business address of the recipient that is obtained by the supplier in the ordinary course of its business is London, Ontario, the service will be subject to the HST at 13%. Where, in the ordinary course of its business, the supplier does not obtain a Canadian address of the recipient, the supply of services is made in a participating province if the services that are performed in Canada are performed primarily (more than 50%) in the participating provinces. The supply is made in the province in which the greatest proportion of the service is performed. Example A human resources consulting firm with offices in a number of provinces is hired to conduct an executive search in Ontario and Alberta for a Seattle-based company. The consulting firm does not obtain a Canadian address of the recipient of the supply. Seventy percent of the services performed in Canada are performed in Ontario and 30% in Alberta. If the service is not zero-rated, the entire service will be subject to the HST at 13%, the rate for Ontario, where the greatest proportion of the service is performed. In the case where the greatest proportions of the service are performed equally in two or more participating provinces and it therefore cannot be determined in which participating province the greatest proportion of the service is performed, the HST will apply at the rate that is highest among those participating provinces. If the services are performed primarily in the non-participating provinces or are performed equally in participating and non-participating provinces, the supply of services is made in a non-participating province and will be subject to the GST at 5%. Personal services A personal service, generally, is a service that is all or substantially all (90% or more) performed in the physical presence of the individual to whom the service is rendered. For example, a hair cutting service performed at a hair salon located in Sudbury, Ontario will be subject to the HST at 13%. A personal service does not include an advisory, consulting, or professional service. The following rules apply to personal services: - If the service is performed primarily (more than 50%) in the participating provinces, the supply will be subject to the HST. The supply is made in the participating province where the greatest proportion of the service is performed and the HST rate for that province will apply. - If the service is equally performed in two or more participating provinces, the HST will apply at the rate that is highest among those provinces. - If the service is performed primarily in the non-participating provinces or if it is performed equally in non-participating provinces and participating provinces, the supply is made in a non-participating province and will be subject to the GST at 5%. Example A service of providing an interpretative tour of the Canadian Shield is performed 50% in Ontario and 50% in Manitoba. Because the service is performed equally in a non-participating province (Manitoba) and a participating province (Ontario), the supply of the service is made in a non-participating province. The GST charged on the service is 5%. Services in relation to real property The following rules apply to services in relation to real property: - If the service relates to real property in Canada that is situated primarily (more than 50%) in the participating provinces, the service will be subject to the HST. The 45 supply of the service is made in the participating province where the greatest proportion of the property is situated, and the applicable HST rate for that province will apply. - If the greatest proportions of the real property are situated in two or more participating provinces and it therefore cannot be determined in which participating province the greatest proportion of the real property is situated, HST will apply at the rate that is highest among those participating provinces. - If the service relates to real property in Canada that is situated primarily in the non-participating provinces, or if it is situated equally in non-participating provinces and participating provinces, the supply of the service is made in a non-participating province and will be subject to the GST at 5%. Example A property management company is hired to provide property management services for real property situated in three provinces (40% in Ontario, 40% in New Brunswick, and 20% in Alberta). If a single supply is being made, the supplier will charge HST at the New Brunswick rate of 15% because the real property is situated primarily (more than 50%) in equal proportions in two participating provinces, and the highest rate for the two participating provinces is 15%. Services in relation to tangible personal property that remains in the same province while the service is performed Generally, a service in relation to tangible personal property (TPP) that remains in the same province while the Canadian element of the service is performed will be subject to the HST (at the applicable rate for that province) if the property is situated primarily (more than 50%) in a participating province. If the TPP is situated primarily in the participating provinces when the Canadian element of the service is performed, but not all of this property is situated in a single participating province, the supply of the service is made in the participating province where the greatest proportion of the property is situated. If the greatest proportions of the TPP are equally situated in two or more participating provinces, the HST will apply at the rate that is highest among those participating provinces. Example A national appliance repair company is hired to provide repair services in respect of TPP situated in three provinces (40% in New Brunswick, 40% in Saskatchewan, and 20% in Ontario). Saskatchewan has a GST rate of 5%, Ontario has an HST rate of 13%, and New Brunswick has an HST rate of 15%. Assuming a single supply is being made, the repair company will charge the HST at 15%. This rate applies because the TPP is situated primarily (in this case, a total of 60%) in the participating provinces of New Brunswick (40%) and Ontario (20%), and New Brunswick is 46 the participating province in which the greatest proportion of the TPP is situated. Generally, a service in relation to TPP will be subject to the GST if one of the following situations apply: - The Canadian element of the service is performed while the TPP is situated primarily in the non-participating provinces. - The Canadian element of the service is performed while the TPP is situated equally in non-participating provinces and participating provinces. E x ample A national appliance repair company is hired to provide repair services in respect of TPP situated in three provinces (40% in Saskatchewan, 40% in Ontario and 20% in Manitoba). Assuming a single supply is being made, the repair company will charge the GST at 5% since the TPP is situated primarily in the non-participating provinces of Saskatchewan and Manitoba. Note Other rules apply for situations not discussed in this section, such as services in relation to TPP where the property is moved to another province while the Canadian element of the service is performed. Additionally, there are separate rules for other types of services, such as telecommunications services, postal services and transportation services. For more information, see Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province. Intangible personal property – General rules The general place-of-supply rules for intangible personal property (IPP) are subject to specific place-of-supply rules for certain types of IPP that are explained in the following sections. Generally, a supply of IPP is made in a participating province where both of the following situations apply: - The Canadian rights (that part of the IPP that can be used in Canada) can only be used primarily (more than 50%) in the participating provinces. - The greatest proportion of those Canadian rights can only be used in that participating province. Example The sale of a franchise to operate a retail establishment and sell the franchisor’s product in Charlottetown, Prince Edward Island is subject to the 15% HST for Prince Edward Island. Where the Canadian rights can only be used primarily in the non-participating provinces, the supply is made in a non-participating province. Where the supply is not determined to be made in a province under the previous rules, the supply is generally made in the province where: - the IPP is purchased by the recipient or the recipient’s agent from a permanent establishment of the supplier or a vending machine in a particular province, if the IPP costs $300 or less and the rights can be used in that province - the supplier, in any other case, has obtained in the ordinary course of its business, a home or business address in Canada for the recipient that is located in that province and the Canadian rights in respect of the IPP can be used in that province Note Where such a home or business address of the recipient is not obtained, but the supplier obtains another single address of the recipient in a province in which the rights can be used, the supply is made in that province. If the supplier does not obtain such an address of the recipient, the HST will generally apply at the highest rate among the participating provinces where the rights can be used. For more information on the general rules for the place of supply for IPP, see GST/HST Memorandum 3-3-5, Place of Supply in a Province – General Rules for Intangible Personal Property. Example Alex purchases a digital music album from a Canadian (or “registered”) online vendor. There are no restrictions on where the music can be listened to in Canada. During the purchasing process, the supplier obtains Alex’s home address in Kingston, Ontario. The supply is made in Ontario and will be subject to the HST at the rate of 13%. Intangible personal property relating to real property or tangible personal property Different rules apply for IPP relating to real property and for IPP relating to tangible personal property. A supply of IPP that relates to real property is generally made in a participating province where: - the real property in Canada is situated primarily (more than 50%) in the participating provinces - among the participating provinces, the greatest proportion of the real property is situated in that participating province A supply of IPP that relates to TPP is generally made in a participating province where: - the TPP ordinarily located in Canada is ordinarily located primarily in the participating provinces - among the participating provinces, the greatest proportion of the TPP is ordinarily situated in that participating province Generally, where the IPP relates to real property situated, or TPP ordinarily located, equally in two or more participating provinces, HST will apply at the highest HST rate among those participating provinces. A supply of IPP is made in a non-participating province, if it relates to Canadian real property that is not situated primarily in the participating provinces, or to TPP ordinarily located in Canada that is not ordinarily located primarily in the participating provinces. For more information on the place of supply rules for IPP relating to real property or TPP, see GST/HST Memorandum 3-3-5-1, Place of Supply in a Province - Specific Rules for Intangible Personal Property. ### Tax on property and services brought into a participating province You may have to self-assess the provincial part of the HST if you bring goods into a participating province from a non–participating province, or purchase services or intangible personal property (IPP) in a non-participating province, for use, consumption, or supply within the participating provinces. The provincial part of the HST is 8% where the HST rate is 13%, 9% where the HST rate is 14%, and 10% where the HST rate is 15%. You may also have to self-assess if you bring goods into a participating province with a higher HST rate from a lower–rate participating province, or you purchase services or IPP in a participating province for use, consumption, or supply, in a participating province with a higher HST rate. A number of exceptions exist that may relieve you of the obligation to self-assess the provincial part of the HST in respect of goods, services or IPP brought into a participating province from a non-participating province, or from another participating province with a lower HST rate. For example, you may not be required to self-assess the provincial part of the HST if you are a registrant and the property or service is consumed, used, or supplied exclusively (at least 90% for registrants other than financial institutions, and 100% for financial institutions) in your commercial activities. Note This exception does not apply to specified motor vehicles that are brought into a participating province. For more information, see “Rules for motor vehicles” on page 49. This exception also does not apply to persons using simplified accounting (see “Simplified method for claiming ITCs” on page 30). In addition, you will not have to pay the provincial part of the HST if the total tax payable for all self-assessed amounts of the provincial part of the HST for property and services brought into participating provinces is $25 or less in the calendar month that includes: - in the case of a specified motor vehicle that is required to be registered by the person who brought it into a participating province, the day on which the vehicle is registered and the day the vehicle is required to be registered, whichever is earlier 47 - in any other case, the day on which property is brought into a participating province For more information regarding self-assessment requirements and exceptions, see GST/HST Notice 266, Draft GST/HST Technical Information Bulletin, Harmonized Sales Tax – Self-assessment of the provincial part of the HST in respect of property and services brought into a participating province. Goods You generally have to self-assess the provincial part of the HST when: - you purchase taxable (other than zero-rated) goods: - in a non-participating province and you later bring, or cause someone else to bring, the goods into a participating province - in a participating province and you later bring, or cause someone else to bring, the goods into another participating province for which the rate of HST is higher - you consume, use, or supply the goods less than 90% in your commercial activities Note Self-assessment of the provincial part of the HST may not be required in some cases if you are a registrant and the property is consumed, used, or supplied at least 90% in your commercial activities. If you purchased the goods (other than a motor vehicle) from someone with whom you are dealing at arm’s length, you have to remit the provincial part of the HST on the lesser of: - the amount paid or payable for the goods - the fair market value of the goods when they are brought into a participating province If you purchased goods (other than a motor vehicle) from someone with whom you are not dealing at arm’s length, you have to remit the provincial part of the HST on the fair market value of the goods when they are brought into a participating province. The tax is payable when the goods, other than in respect of most specified motor vehicles, are brought into a participating province. Enter this amount on line 405 of your GST/HST return. You may be entitled to claim ITCs for the tax you self-assess on the goods depending on the percentage of consumption, use, or supply in your commercial activities. For more information, see “Input tax credits” on page 21. 48 Example You are a registrant located in Ontario. You buy a $2,000 computer in Alberta, which you bring back to Ontario. At that moment, the fair market value of the computer is $2,000. You use the computer 40% in your business. You have to self-assess the 8% provincial part of the HST and remit $160 ($2,000 × 8%). You cannot claim an ITC for this tax since you are using the computer 50% or less in your commercial activities. For information on bringing a motor vehicle into a participating province, see “Rules for motor vehicles” on page 49. Services You generally pay the GST when you receive a supply of a service that is made in a non-participating province. If you are a resident of a participating province and you purchase a service in a non-participating province, you are generally required to self-assess the provincial part of the HST if the total consumption, use or supply of the service in the participating provinces is 10% or greater. The same rule applies for a supply of a service that is made in a participating province if the total consumption, use, or supply of the service in participating provinces with a higher rate of HST is at least 10%. Note You generally do not have to self-assess the provincial part of the HST in any of the following situations: - if you are a registrant and the service is consumed, used, or supplied at least 90% in your commercial activities - in respect of certain transportation and telecommunication services - in respect of certain legal services - where the service is for goods that are removed from the participating province as soon as the service has been performed Intangible personal property If you are a resident of a participating province and you receive a supply of intangible personal property (IPP) (such as franchise rights) that is made in a non-participating province where the total use, consumption, or supply of the IPP in the participating provinces is 10% or greater, you generally have to self-assess the provincial part of the HST. The same rule applies for a supply of IPP that is made in a participating province if the total use, consumption, or supply of the IPP in participating provinces with a higher rate of HST is at least 10%. Note You generally do not have to self-assess the provincial part of the HST if you are a registrant and the IPP is used, consumed or supplied 90% or more in your commercial activities. Self-assessing for services and intangible personal property The amount of tax to be self-assessed is determined by the formula: A × B × C where: A is one of the following: - the provincial part of the HST in the participating province where consumption, use or supply is to occur, where a supply of a service or IPP was originally made in a non-participating province - for a supply of a service or IPP that was made in a participating province that is for consumption, use, or supply in another participating province for which the rate of HST is higher, the difference between the rate of HST in the higher-rate participating province and the rate of the participating province where the supply occurred B is the consideration for the service or IPP that is paid or payable at that time C is the percentage that you consume, use, or supply the service or IPP in the participating province for which you are making the calculation The tax is payable when the payment for the service or IPP is paid or becomes due, whichever is earlier. Enter the amount on line 405 of your GST/HST return. You may be entitled to claim an ITC for the tax you self-assessed on the service or IPP to the extent that they are for consumption, use, or supply in your commercial activities. Example You are a registrant who lives in Prince Edward Island. You operate two retail stores, one in Ontario and one in Prince Edward Island. You make both taxable and exempt supplies from your stores. In April 2024, you purchased accounting services from Help Accounting Ltd., located in Alberta, and the accounting firm determined that the place of supply is Ontario. The yearly fee charged for the service is $5,000 + 13% HST (the HST rate for Ontario). 60 % of the service relates to your Prince Edward Island store and 40% relates to your store in Ontario. Using the formula for self-assessment, you would be required to self-assess $60. A × B × C where: A is 2% (% difference of the provincial part of HST between Prince Edward Island and Ontario) B is $5,000 C is 60% use in Prince Edward Island by the registrant 2% × $5,000 × 60% = $60 You generally can claim an ITC for the tax that you self-assessed to the extent that the services were consumed, used, or supplied in your commercial activities. ### Rules for motor vehicles Sales Sales by registrants Under the normal place-of-supply rules for sales of goods, the supply of a specified motor vehicle by way of sale is made in a province if the supplier delivers the vehicle or makes it available in the province to the recipient of the supply. The application of this place-of-supply rule is generally based on the province in which legal delivery of the vehicle to the recipient occurs. However, for purposes of this rule, a vehicle is also deemed to be delivered in a province if: - the supplier ships the vehicle to a destination in the province specified in the contract for carriage of the vehicle - the supplier transfers possession of the vehicle to a common carrier or consignee that the supplier has retained on behalf of the recipient to ship the vehicle to the province In addition, a special place-of-supply rule in respect of specified motor vehicles deems the sale of a motor vehicle to be made in a particular province in which the vehicle is registered, other than temporarily, if that registration occurs no more than seven days after the day the vehicle is delivered to the recipient in a participating province (other than the particular province) and the supplier maintains satisfactory evidence of that registration. You may have to pay the provincial part of the HST when you bring a vehicle into a participating province from another province or from outside Canada and you were not required to pay the provincial part of the HST at the rate for the participating province in respect of the supply or taxable importation of the vehicle. You generally have to pay the provincial part of the tax when you register your vehicle. Your provincial motor vehicle registration office will collect the provincial part of the HST for the CRA. If you are not required to register the vehicle, you may still have to pay the provincial part of the HST directly to the CRA by self-assessment on your GST/HST return. 49 You generally have to self-assess the provincial part of the HST for a motor vehicle, or an amount of the provincial part of the HST, that reflects the difference in the HST rates between the provinces, if: - you bring the vehicle from a province with a lower HST rate or a non-participating province - you import the vehicle into the participating province and the provincial laws relating to motor vehicle registration do not require you to register the motor vehicle in that province For more information, including examples of various situations, see GST/HST Info Sheet GI-119, Harmonized Sales Tax – Place of Supply of Specified Motor Vehicles Delivered and Registered in a Different Province. Sales by a non-registrant When you buy a motor vehicle from a non-registrant and the sale is not taxable, you generally have to pay a special provincial levy when you register the vehicle in the participating province. The province determines the rate of the levy. The provincial levy applies whether you bought the vehicle in a participating province or you bought it in a non-participating province and brought it into a participating province. For more information, go to -collect-specific-situations/motor-vehicles. Note You cannot recover the provincial levy as an ITC, even if the vehicle is used in your commercial activities. Rentals The general place-of-supply rules for a rental of goods for three months or less also apply to rentals of motor vehicles. For more information, see “Tax on supplies of property and services made in provinces – place-of-supply rules” on page 44. Leases A lease of a motor vehicle for more than three months is treated as a series of separate supplies for each lease interval for which a lease payment is required. A lease of a motor vehicle is made in a participating province if, at the beginning of the lease interval, the vehicle has to be registered in that province. Example A car-leasing company in Manitoba leases you a car for 24 months with monthly lease payments. You registered the vehicle in Ontario on August 1, 2024. Each of the lease payments is subject to the HST if the car stays registered in Ontario. If, in the middle of the eighteenth month, you move to Manitoba, the six remaining monthly lease payments are subject to the GST. 50 ## Special cases ### Coin-operated machines Generally, any goods, services, or a right to use a machine that you sell through vending machines or coin-operated machines is subject to the GST/HST. This includes products such as milk and fruits that are usually zero-rated. The price of these goods, services, or rights to use the machine includes the GST/HST. You are considered to have collected the GST/HST when you remove the money from the vending or coin-operated machine. Example You collect $100 from your coin-operated machine in Saskatchewan. Multiply that amount by 5/105 to determine the GST collected: $100 × 5/105 = $4.76 GST However, the GST/HST is equal to zero on a supply of goods, services, or a right to use a machine made through a coin-operated machine if it is designed to accept only a single coin of 25¢ or less as the total amount payable for the goods, services or right. For example, if you sell a lollipop in a vending machine for 25¢, and the vending machine only accepts one 25¢ coin, the GST/HST is equal to zero. The above rule does not apply to machines that accept coins of more than 25¢ (such as $1 or $2 coins) or machines that accept more than one coin as the amount payable for the good, service, or right. Note The right to use a coin-operated washing machine and clothes dryer located in a common area of a residential building is exempt from the GST/HST. ### Coupons, rebates, gifts, and promotional allowances Reimbursable coupons Reimbursable coupons are usually called manufacturers’ coupons. They entitle the customer to a reduction of a fixed dollar amount on the purchase price. Vendors can expect to be reimbursed an amount by the manufacturer or another third party for accepting these coupons from customers. The value of the coupons includes the GST/HST when used to purchase taxable supplies (other than zero-rated supplies). When you, as a vendor, accept a reimbursable coupon from a customer, you treat the coupon the same as cash. If the purchase is subject to tax, you charge the GST/HST on the full price of the item and then deduct the value of the coupon. The CRA considers you to have collected a portion of the GST/HST equal to the tax fraction of the value of the coupon. The tax fraction for the GST is 5/105, and the tax fraction for the HST is: - 13/113 where the rate of 13% applies - 14/114 where the rate of 14% applies; and - 15/115 where the rate of 15% applies For example, a coupon for $1 off the selling price includes: - 5¢ for the GST ($1 × 5/105) - 12¢ for the HST ($1 × 13/113) where the rate of 13% applies - 12¢ for the HST ($1 × 14/114) where the rate of 14% applies - 13¢ for the HST ($1 × 15/115) where the rate of 15% applies The manufacturer reimburses you for the coupon value of $1, which includes the GST/HST. Example You operate a pharmacy in Alberta. A customer buys shampoo for $10 and has a reimbursable coupon for $1. You charge and remit 50¢ GST and get $1 reimbursed by the manufacturer, which includes 5¢ GST. Your invoice would show: Price of the shampoo.............................................. $10.00 Plus GST ($10 × 5%)................................................50 Subtotal.................................................................... $10.50 Less coupon............................................................. (1.00) Customer pays........................................................ $9.50 If the customer is a GST/HST registrant and uses coupons to make purchases for their commercial activities, they can claim an ITC equal to the total GST/HST paid on the purchases less the tax fraction of the coupon value. They can claim an ITC of 45¢: 50¢ - ($1 × 5/105). The manufacturer who reimburses you can also claim an ITC (other than for zero-rated supplies) for the tax fraction of the coupon value. However, you, as the vendor who accepts the reimbursable coupons from the customer, cannot claim any ITCs for these coupons since you are reimbursed the tax by the manufacturer. Non-reimbursable coupons These are coupons that you, as the vendor, issue and accept, and for which no one reimburses you. They entitle the customer to a reduction in the price for a fixed dollar amount or a fixed percentage amount. As the issuer, you have the option to include the GST/HST in the value of the coupons, when the coupons are used to purchase taxable goods or services (other than zero-rated goods or services). If you choose to include the GST/HST in the value of the coupons, you treat them the same way as reimbursable coupons. This means that you charge and remit the GST/HST on the full price of the good or service and you can claim an ITC calculated on the tax fraction of the coupon value. Your coupon should state that the GST/HST is included in the value. If you choose not to include the GST/HST in the value of your coupons, deduct the coupon value from the selling price before calculating the GST/HST. Example A client buys an item in your store in Manitoba. He gives you a non-reimbursable coupon that does not include the GST. You calculate the tax as follows: Price of the item...................................................... $25 Less coupon value.................................................. (5) Subtotal.................................................................... $20 Plus GST ($20 × 5%)............................................... 1 Customer pays....................................................... $21 In this case, when you file your GST/HST return, report the GST/HST you charged on the net price, which is the price after you deducted the coupon value ($1 GST in the example). You cannot claim ITCs for coupons you issue that do not include the GST/HST. Other coupons Other coupons (whether reimbursable or not ) that are not for a fixed dollar amount may offer: - a different percentage off the price of an item (such as 10% off the purchase of five or less boxes and 20% off the purchase of six or more boxes) - an item for no charge if another item is purchased (such as two-for-one coupons) - more than one monetary discount such as 25¢ off a 750 ml soft drink or 50¢ off a 1.5 litre soft drink These coupons reduce the selling price of an item before the GST/HST is added. Therefore, deduct the value of the coupons from the selling price before calculating the GST/HST. Manufacturers’ rebates Some manufacturers include a rebate application with the goods or services they sell. After buying the item from the retailer, the customer fills out the application and mails it directly to the manufacturer. Since the payment of the rebate is a separate arrangement between the manufacturer and the customer, the retailer has to remit the GST/HST collected on the full selling price of the taxable goods or services without deducting the value of the manufacturer’s rebate. The GST/HST rules for manufacturers’ rebates apply when: - the supply of goods or services to the customer is made either directly by the manufacturer or by another person such as a retailer - the customer is made aware in writing that the rebate includes the GST/HST 51 Example A customer buys a package of batteries in your hardware store in Saskatchewan for $10 plus the GST. Inside the package is an application for a $2 rebate to fill out and mail to the manufacturer. You collect and remit tax on $10, the full price of the batteries. The customer fills out the rebate application and mails it to the manufacturer. Once the manufacturer receives the application it will send the customer a cheque for $2. Some manufacturers give rebates to their customers through the retailer when the customer buys the goods. Even if the retailer applies the rebate toward the retail price of the goods, the retailer collects the GST/HST on the full retail price before deducting the rebate amount. Example An automobile dealership in Alberta sells an automobile to a customer for $20,000 plus $1,000 GST. The dealer informs the customer that the manufacturer is providing a $1,050 tax included rebate. The customer uses the rebate to reduce the payment for the automobile. The dealer calculates the sale price as follows: Selling price............................................................. $20,000 Plus GST ($20,000 × 5%)........................................ 1,000 Subtotal.................................................................... $21,000 Less rebate............................................................... (1,050) Customer pays........................................................ $19,950 When the manufacturer pays a rebate, it has the option of providing, along with the rebate, written indication that the rebate includes the GST/HST. If the customer receiving the rebate is a registrant who is entitled to claim an ITC or a GST/HST rebate on the purchase, and the manufacturer provides written indication that the GST/HST is included in the rebate, the customer will have to remit an amount of GST/HST. This amount is generally calculated by multiplying the rebate amount by one of the following tax fractions, as applicable: - the GST is equal to 5/105 - the HST is equal to: - 13/113 where the rate of 13% applies - 14/114 where the rate of 14% applies; and - 15/115 where the rate of 15% applies If the manufacturer pays a rebate to a customer and provides written indication that the rebate includes the GST/HST, the manufacturer can claim an ITC in the reporting period in which it paid the rebate. The ITC is determined by multiplying the rebate amount by one of the above fractions, as applicable. If the manufacturer chooses not to provide written indication that the rebate includes the GST/HST, the manufacturer will not claim an ITC and the customer will not be required to remit any amounts of GST/HST. 52 Gift certificates A gift certificate (including gift cards and online gift certificates) is generally a voucher, receipt, or ticket that: - has a stated monetary value or is for a particular supply of property or a service - is issued or sold for consideration - is accepted as payment or partial payment of the consideration for a supply of property or service - has only to be presented as a means of payment without any other obligation imposed on the holder - has no intrinsic value Do not collect the GST/HST on the sale of a gift certificate. When a customer gives you a gift certificate towards a purchase, calculate the GST/HST on the price of the item and deduct the amount of the gift certificate as if it were cash. Example You sell a taxable item in Alberta for $100, and the purchaser gives you a $20 gift certificate toward the purchase. You calculate the sale price as follows: Price of item................................................................ $100 Plus GST ($100 × 5%)................................................. 5 Subtotal........................................................................ $105 Less gift certificate...................................................... (20) Customer pays........................................................... $ 85 For more information about gift certificates, see GST/HST Policy Statement P-202, Gift Certificates. Promotional gifts and free samples Do not charge the GST/HST on promotional gifts that you give your customers or that you distribute as a bonus with another item for no additional charge. You can claim ITCs for the GST/HST paid or payable on your purchases to supply these gifts as long as they relate to commercial activities. Where the purpose of the gift is to promote making an exempt supply, you will not be able to claim an ITC to recover the GST/HST paid or payable on any purchases related to that gift. Promotional allowances Promotional allowances are amounts given by a manufacturer to a retailer to promote goods purchased from the manufacturer, exclusively for resale by the retailer in its commercial activities. The promotional allowance is not considered to be payment for a supply made by the retailer to the manufacturer providing the allowance. In other words, the retailer is not considered to have provided a promotional service. However, there may be tax implications depending on how the allowance is paid, credited, or allowed as a discount. Example A manufacturer sells 12 cases of shampoo to a retailer in Manitoba, two of which are given free to promote the goods. The deduction appears on the face of the invoice, and the GST applies on the reduced price. You calculate the sale price as follows: 12 cases at $10 each..................................................... $120 Less 2 free cases.......................................................... (20) Subtotal before tax...................................................... $100 Plus GST ($100 × 5%)................................................. 5 Retailer pays............................................................... $105 If the allowance is given as a discount or credit against the price of a previous purchase for which tax has been charged or collected, the manufacturer has a choice of either: - giving the credit without adjusting the tax - adjusting the tax and issuing a credit or debit note For more information, see “Returned goods” on page 70. If the allowance is given as a discount against the goods at the time of purchase, the GST/HST applies on the reduced price. If the payment or credit is not a price reduction attributable to any invoice, it is considered to be a manufacturers’ rebate. For more information, see “Manufacturers’ rebates” on page 51. ### Deposits and conditional sales Deposits Do not collect the GST/HST when a customer gives you a deposit towards a taxable purchase. Collect the GST/HST on the deposit when you apply it to the purchase price. If the customer does not make the purchase and loses the deposit, the forfeited deposit is subject to the GST/HST. If the customer is a GST/HST registrant, the customer can claim an ITC for the GST/HST paid on the forfeited deposit. Calculate the GST/HST on the forfeited deposit as follows: - the GST is equal to the forfeited amount multiplied by 5/105 - the HST is equal to the forfeited amount multiplied by: - 13/113 where the rate of 13% applies - 14/114 where the rate of 14% applies - 15/115 where the rate of 15% applies Example A customer gives you a deposit of $50 towards the purchase of an item that is taxable at 5% GST, but does not pay the balance owing and forfeits the deposit. The CRA considers you to have collected the GST equal to 5/105 of the forfeited deposit. As a result, you have to include the GST of $2.38 ($50 × 5/105) in your net tax calculation. If the customer is a GST/HST registrant, that person may be entitled to claim an ITC for the GST you collected on the forfeited deposit. If you are in a participating province, the HST collected is equal to: - $5.75 ($50 × 13/113) where the HST rate of 13% applies - $6.14 ($50 × 14/114) where the HST rate of 14% applies; or - $6.52 ($50 × 15/115) where the HST rate of 15% applies Exception These rules do not apply to deposits for returnable containers. For more information, see “Returnable beverage containers” on page 68. Conditional and instalment sales A conditional sale takes place when you transfer possession of goods to a customer, but ownership passes only after the sale meets certain conditions, such as when the purchase price has been paid in full. In this type of sale, the customer agrees to make payments for the goods over a period of time. The customer takes possession of the goods, but you keep title or ownership of the goods until the customer has met the specified conditions. In an instalment sale, the ownership passes immediately but the customer pays the purchase price in instalments. You transfer title or ownership and possession of the goods at the time the agreement is entered into, and the customer agrees to make payments over a period of time. In both cases, you have to include the tax in your net tax calculation for the reporting period that includes the earlier of the following dates: - the date you issued the invoice - the date you received payment Any amount of tax that has not been paid or invoiced by the end of the month following the month in which you transferred possession or ownership of the goods (whichever is earlier) is considered due at that time and has to be included in your net tax calculation at that time. ### Emission allowances Generally, as of June 27, 2018, the purchaser of emission allowances would be responsible for self-assessing the tax in respect of the purchase of emission allowances. The GST/HST is to be paid and reported on taxable supplies of emission allowances made in Canada, such as those traded in cap-and-trade systems. The changes do not affect the fact that the GST/HST is payable on the allowances at the applicable rate of tax, and do not affect the requirement to self-assess the GST/HST on imported taxable supplies of emission allowances made outside Canada. As a transitional measure, tax that became payable before June 27, 2018, and was not collected before that day, is only required to be accounted for by the purchaser after that day. The timing of the required accounting of such tax is different than under the normal rules. In particular, the 53 tax is required to be accounted for in the recipient’s return for the reporting period that includes June 27, 2018, as opposed to the reporting period in which the tax became payable. GST/HST registrants that are entitled to an ITC in respect of the tax payable on the purchase of taxable emission allowances can continue to claim the ITC in their regular GST/HST return. A rebate of an amount paid on or after June 27, 2018, as GST/HST in error by a purchaser to a supplier in respect of a taxable supply of an emission allowance, would generally no longer be available to the purchaser. A supplier of an emission allowance who charges or collects an amount as GST/HST in error is able to adjust the amount charged, or to refund or credit the amount collected to the purchaser in accordance with existing rules. Where the GST/HST in respect of an emission allowance is paid directly to the CRA by a purchaser, the purchaser may request a rebate for taxes paid in error. For more information on procedures for rebates and refunds of amounts paid as tax in error, see GST/HST Memorandum 12-2 Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act and Guide RC4033, General Application for GST/HST Rebates. How to self-assess on the purchase of an emission allowance If you are a GST/HST registrant purchaser of taxable emission allowances and will use or supply the emission allowances primarily (that is, more than 50% ) in your commercial activities, you would generally be required to report the related tax payable on line 205 of your regular GST/HST return for the reporting period in which the tax became payable and remit any positive amount of tax owing to the CRA by the due date of that return. If you are a GST/HST registrant purchaser of taxable emission allowances and will use or supply the emission allowances less than primarily in your commercial activities or you are not a GST/HST registrant, you would be required to report the tax payable on Form GST60, GST/HST Return for Acquisition of Real Property or Emission Allowances. You would generally be required to file this return with the CRA by the end of the month following the calendar month in which the tax became payable and to pay the tax to the CRA by that date. ### Employees and partners Employee benefits You may be considered to have collected the GST/HST on supplies of non-cash taxable benefits you give your employees. However, you are not considered to have collected the GST/HST on salaries, wages, commissions, and other cash remuneration, including gratuities, you pay to employees. Employers who are GST/HST registrants may have to remit the GST/HST on certain benefits provided to employees such as: - the personal use of an employer’s automobile 54 - board and lodging - incentives - gifts worth more than $500 If you have to do this, calculate the GST/HST for the taxable employee benefits at the end of February following the year in which you gave the benefit. This matches the deadline for calculating employee benefits and issuing T4 slips for income tax purposes. You have to include the GST/HST on the benefits in the GST/HST return for the reporting period that includes the last day of February. For more information, see Guide T4130, Employers’ Guide – Taxable Benefits and Allowances, GST/HST Memorandum 9-1, Taxable Benefits (Other than Automobile Benefits), and GST/HST Memorandum 9-2, Automobile Benefits. Employee and partner GST/HST rebate The employee and partner GST/HST rebate allows employees to recover the GST/HST they paid on eligible employment expenses. The rebate is deducted from the tax payable on their income tax return. It also allows partners (who are individuals) to recover the GST/HST they paid on expenses they deducted from their share of the partnership income on their income tax return. Examples of eligible expenses include travel, meals, professional dues, and legal and accounting fees. Employees and partners who do not receive a reasonable allowance or reimbursement on eligible employment expenses or who have to include allowances in their income are also eligible for the employee and partner GST/HST rebate. Employees and partners can apply for the rebate by filling out Form GST370, Employee and Partner GST/HST Rebate Application, and filing it with their income tax return within four years after the end of the year or a date agreed to by the CRA. The amount you calculate as a rebate on Form GST370 is claimed on line 45700 of your income tax return. Rebate amounts that you receive must also be reported as income on your income tax return. For more information, see Guide T4044, Employment Expenses or go to . Exception Employees of a listed financial institution cannot claim the employee and partner GST/HST rebate. ### Exports and imports Measures for digital economy businesses are in effect as of July 1, 2021. Digital economy businesses, including platform operators, may have new potential GST/HST obligations under these measures. This means these businesses may have new obligations, including registering, charging, collecting and reporting the GST/HST. For more information on these measures and the definitions for the digital economy, go to . Exported goods Goods (other than a continuous transmission commodity that is being transported by means of a wire, pipeline, or other conduit) that are supplied in Canada are zero-rated (taxed at 0%) if the supplier: - ships the goods to a destination outside Canada that is specified in the contract for carriage of the goods - transfers possession of the goods to a common carrier or consignee that either the supplier or the purchaser’s employer retained for the purchaser to ship the goods to a destination outside Canada - sends the goods by mail or courier to an address outside Canada If the purchaser takes delivery of the goods (other than excisable goods such as beer, spirits, wine, and tobacco products) in Canada, your supply of the goods may still be zero-rated if all of the following conditions are met: - The purchaser is not a consumer (a consumer is usually an individual who is buying the goods for his or her personal use). - The purchaser exports the goods as soon after the property is delivered by the person to the purchaser as is reasonable having regard to the circumstances after you deliver them. - The purchaser does not buy the goods to consume, use, or supply in Canada before exporting them. - The goods are not further processed, transformed, or altered in Canada after the goods are purchased and before they are exported, except to the extent reasonably necessary or incidental to transport them. - You keep satisfactory evidence, for audit purposes, that the purchaser has exported the goods. - If the property being exported is electricity, crude oil, natural gas, or any good that can be transported by means of a wire, pipeline or other conduit, the purchaser is not registered for GST/HST purposes under the normal GST/HST regime. You generally have to charge (and the purchaser has to pay) the GST/HST on taxable supplies if the above conditions are not met. For more information on what qualifies as satisfactory evidence, see GST/HST Memorandum 4-5-2, Exports – Tangible Personal Property. Rebate for exported goods A non-resident purchaser may be able to apply for a rebate to recover the tax paid on goods purchased for commercial use primarily (more than 50%) outside Canada (other than gasoline and excisable goods, such as beer, wine, spirits, tobacco, and cannabis products). To qualify for the GST/HST rebate, the non-resident purchaser has to export the goods from Canada within 60 days of delivery, as well as meet other conditions. For more information, see Guide RC4033, General Application for GST/HST Rebates, which includes Form GST189, General Application for GST/HST Rebates. Export Trading House Program A purchaser (other than a consumer) who is registered for GST/HST purposes and is an authorized export trading house can issue an export certificate, which, when provided to the supplier, will cause the goods to be zero-rated. For more information on the Export Trading House Program and export certificates, see GST/HST Memorandum 4-5-2, Exports – Tangible Personal Property. Export Distribution Centre Program Under the Export Distribution Centre Program (EDCP), authorized export-oriented, non-manufacturing businesses can use a certificate to purchase or import most inventory and parts, or to import a customer’s goods for limited processing, without paying the GST/HST. Eligible registrants who want to use the EDCP certificate must apply to the CRA for authorization. Authorizations will remain in effect for three years, unless revoked earlier, and can be renewed. For authorization to use an EDCP certificate, send a completed Form GST528, Authorization to Use an Export Distribution Centre Certificate to the CRA. For more information on the EDCP, see GST/HST Technical Information Bulletin B-088, Export Distribution Centre Program. Exported services Generally, subject to the digital economy rules, you do not charge the GST/HST on services you perform wholly outside Canada, or on services that relate to real property situated outside Canada. Certain services provided to a non-resident person that are performed wholly or partly in Canada may be zero-rated, such as: - certain advisory, professional, or consulting services - advertising services to a non-resident person that is not registered under the normal GST/HST registration regime - advisory, consulting, or research services to help a non-resident person establish a residence or business in Canada - services and parts for goods or real property under warranty for a non-resident person that is not registered under the normal GST/HST registration regime - custodial or nominee services for the non-resident person’s securities or precious metals - services you perform on temporarily imported goods (except transportation services) may be zero-rated. The goods must be brought into Canada for the sole purpose of having the service performed on them and must be exported as soon as possible. Any parts supplied along with these services may also be zero-rated - training services supplied to a non-resident person that is not registered under the normal GST/HST registration regime (but not to individuals) to instruct non-resident individuals in or to give examinations for courses leading to certificates, diplomas, licences, or similar documents, or classes or licence ratings that attest to the individual’s competence to practise or perform a trade or vocation 55 - services to a non-resident person that is not registered under the normal GST/HST registration regime of destroying or discarding goods, or the services of dismantling goods for the purpose of exporting them - services to a non-resident person that is not registered under the normal GST/HST registration regime of testing or inspecting goods purchased or brought into Canada for this service and the goods are to be destroyed or discarded in the course of providing the service or upon its completion - services of an agent acting for a non-resident person where the services relate to a zero-rated supply made to the non-resident person or to a supply made outside Canada by or to the non-resident person - services of arranging for, procuring or soliciting orders for supplies by or to the person where the services relate to a zero-rated supply made to the non-resident person, or to a supply made outside Canada by or to the non-resident person Certain exported supplies of call centre services may be zero-rated. Specifically, the supply of a service of rendering technical or customer support to individuals by means of telecommunications (for example, by telephone, email, or web chat) will generally be zero-rated if: - the service is supplied to a non-resident person that is not registered for GST/HST purposes under the normal GST/HST regime - the non-resident person is not a consumer of the service The above list is not exhaustive. For more information, see GST/HST Memorandum 4-5-3, Exports – Services and Intellectual Property. Exported intangible personal property Supplies of intangible personal property (IPP) made in Canada to non-residents who are not registered for GST/HST purposes under the normal registration regime are generally zero-rated. The exceptions are: - a supply made to an individual who is in Canada when the supply is made - a supply of IPP that relates to real property in Canada or to tangible personal property that is ordinarily situated in Canada - a supply of IPP that relates to a supply of a service that is made in Canada. However, if that service is zero-rated as an export, a transportation service, or a financial service, the supply of IPP related to that service may also be zero-rated - a supply of IPP that can only be used in Canada - a supply of making a telecommunications facility that is IPP available for use in providing a telecommunication service A supply in Canada of an invention, patent, trade secret, trademark, trade name, copyright, industrial design, or other intellectual property, or any right to use such property that is made to a non-resident who is not 56 registered under the normal GST/HST registration regime, may also be zero-rated. You can generally claim ITCs to recover the GST/HST paid or payable on purchases and expenses related to your zero-rated supplies of property and services. For more information, see “Input tax credits” on page 21. For more information, see GST/HST Info Sheet GI-034, Exports of Intangible Personal Property. Imported goods Commercial goods, which are goods that are imported for sale or for any commercial, industrial, occupational, institutional or other like use that you import into Canada are subject to the GST or the federal part of the HST, except for items specified as non-taxable importations. Examples of non-taxable importations include: - certain zero-rated goods (goods that are specifically zero-rated when supplied in Canada, such as prescription drugs, certain medical devices, and basic groceries) - medals, trophies, and other prizes won outside Canada in competition (but not saleable goods such as an automobile) - tourist literature imported by governments or specified organizations for public distribution free of charge - goods imported by a charity or public institution that have been donated to the charity or institution - goods imported for the sole purpose of maintenance, overhaul, or repairs, if neither title nor use of the goods passes, or is intended to pass, while they are in Canada, and the goods are exported within a reasonable amount of time after the services are completed - goods imported by authorized manufacturing service companies where the goods are processed for non-residents, are later exported without being used in Canada, and where certain other conditions are met. Any parts to be used in or attached to, and materials directly consumed or expended in, processing those goods are also non-taxable. The manufacturing service companies must apply in writing for an import certificate to be able to import those goods on a non-taxable basis. For additional information, review the “Exporters of Processing Services Program” at -businesses/charge-collect-imports-exports - warranty replacement property and replacement parts supplied by a non-resident at no charge except for shipping and handling - goods valued at $20 or less sent to a person by mail or courier at an address in Canada, except for the following prescribed goods: - excisable goods (such as beer, spirits, wine, and tobacco products) - books, newspapers, magazines, periodicals, or other similar publications, where the vendor was required to register for the GST/HST, but did not do so The GST/HST is calculated on the value for duty of the goods, including duties and excise tax, as determined under the Customs Act, and the amount payable is in Canadian dollars. Generally, the GST/HST is collected at the border at the same time as these duties and taxes. The owner or importer of record is responsible for paying the GST/HST on imported goods. Generally, if you are the importer (the person who caused the goods to be imported into Canada), you can claim an ITC for the tax you paid on the imported goods, as long as you meet the requirements for claiming ITCs. Taxable non-commercial goods imported by a resident of a participating province are generally subject to the HST on importation, except for motor vehicles required to be registered in a participating province, or a mobile home or floating home that has been used or occupied in Canada by an individual. The provincial part of the HST on imported motor vehicles is generally paid at the time the vehicle is registered in a participating province. Although the provincial part of the HST is not payable when you import commercial goods that are destined for the participating provinces, you may have to self-assess the provincial part. Imported services and intangible personal property If you purchase services (such as architectural services for a building in Canada) or IPP (such as the right to use a patent in Canada) from an unregistered non-resident person outside Canada, you do not pay the GST/HST if you purchase them to consume, use, or supply 90% or more in your commercial activities (100% in the case of financial institutions). You also do not have to self-assess the provincial part of the HST if the imported services or IPP are for consumption, use, or supply 90% or more in the non-participating provinces. If you consume, use, or supply the imported services or IPP less than 90% in your commercial activities, you generally have to report the GST or the 5% federal part of the HST on line 405 of your GST/HST return and remit the tax directly to the CRA. The tax is calculated on the amount you were charged for the service or IPP and is payable in the reporting period in which the amount for the service or IPP was paid or became payable. If you are a resident of a participating province and the imported services or IPP are for consumption, use, or supply less than 90% in your commercial activities and the services or IPP are for consumption, use, or supply 10% or more in the participating provinces, you may also have to self-assess the provincial part of the HST on the services or IPP to the extent that the services or IPP are for consumption, use or supply in those particular provinces. For more information, see “Services” on page 48 or “Intangible personal property” on page 48. If you are a financial institution and you are a qualifying taxpayer, you may also have to self-assess the GST/HST using the special rules for financial institutions. For more information on imported services and the special rules for financial institutions, see GST/HST Technical Information Bulletin B-095, The Self-Assessment Provisions of Section 218.01 and Subsection 218.1(1.2) for Financial Institutions (Import Rules). If you are not a GST/HST registrant If you are not a GST/HST registrant, you may still have to self-assess tax on imported services or IPP. Use Form GST59, GST/HST Return for Imported Taxable Supplies, Qualifying Consideration, and Internal and External Charges, to remit the tax. The tax is due by the end of the month following the calendar month in which the amount of consideration for the services or IPP became payable or was paid without becoming payable. ### Financial services Financial services, as defined for GST/HST purposes, are generally exempt from the GST/HST and you cannot claim ITCs for the GST/HST paid on purchases used in providing these services. Examples of exempt financial services include: - the exchange, payment, issue, receipt, or transfer of money - the operation or maintenance of a savings, chequing, deposit, loan, charge, or other account - the issue, transfer of ownership, or repayment of a financial instrument, such as: - the right to be paid money - the deposit of money - a share of the capital stock of a corporation or any interest in or right to such a share - an insurance policy - an interest or a right in respect of an interest in a partnership, a trust, or the estate of a deceased individual - a precious metal - an option for the future supply of a commodity where the option is traded on a recognized commodity exchange - virtual payment instrument - the lending or borrowing of a financial instrument - the payment or receipt of money as dividends (other than patronage dividends), interest, principal, or certain benefits - the making of any advance, the granting of any credit or the lending of money - the payment or receipt of an amount in full or partial satisfaction of a claim arising under an insurance policy Note that services in the nature of management, administration, marketing, or promotional activities are not themselves financial services. Where a number of services or properties and services are provided under an agreement and you determine that a single supply is being provided, the predominant element of that supply must be established to determine the nature of the supply. If the predominant element of the single supply is a financial 57 service, then the supply as a whole will be considered a financial service. The supply of certain financial services is zero-rated. Examples of zero-rated financial services include the lending of money by a bank to a non-resident to purchase the housing in the United States, and a supply of a financial service that relates to a life insurance policy provided by the insurer that issued the insurance policy to the extent that the policy is issued in respect of a non-resident individual. For more information on financial services, see the following publications: - GST/HST Memorandum 17-1, Definition of “Financial Instrument” - GST/HST Memorandum 17-2, Products and Services of a Deposit-Taking Financial Institution - GST/HST Memorandum 17-8, Credit Unions - GST/HST Memorandum 17-10, Tax Discounters - GST/HST Memorandum 17-14, Election for Exempt Supplies - GST/HST Technical Information Bulletin B-105, Changes to the Definition of Financial Service - GST/HST Policy Statement P-077R2, Single and Multiple Supplies ### Insurance claims Generally, when an insurance company pays out benefits to compensate a claimant under the terms of an insurance policy, it is providing an exempt financial service. There are two types of insurance claims: - life and health insurance claims - property and casualty insurance claims Life and health insurance claims Under life and health insurance contracts, the settlement of a claim is usually limited to the payment of financial benefits. These payments are financial services and are generally GST/HST exempt. Property and casualty insurance claims Under property and casualty insurance contracts, the insurer may agree to settle a claim for loss or damage to property in one of the three following ways: - The insurer makes a cash settlement with the insured. A cash settlement is a financial service that is generally GST/HST exempt. - The insurer purchases repair services or pays for replacement property directly. The insurer would pay any GST/HST applicable to the purchase and would not be entitled to claim an input tax credit (ITC) because the insurer would not be acquiring the property or service for consumption, use, or supply in the course of a commercial activity. - The insurer compensates the insured for the cost of repairing or replacing the damaged property. 58 The insured would pay any GST/HST applicable to the purchase. If the insured is entitled to claim an ITC for some or all of the applicable GST/HST, the insurer can use the net-of-GST/HST method for settling a property and casualty insurance claim. The net-of-GST/HST method results in an insurer making a payment for an insurance claim only in the amount of financial loss actually suffered by the insured in accordance with the terms of the insurance policy. The amount paid by the insurer will not include the amount that the insured is eligible to claim as an ITC or rebate related to the tax portion of the repair or replacement expense. For more information, see GST/HST Memorandum 17-16, GST/HST Treatment of Insurance Claims. Example You are a GST/HST registrant in Manitoba who owns a car used exclusively in the course of your commercial activities. You are involved in an accident with that car. You arrange to have the repairs done at the dealership for $5,000 plus $250 GST. Under the car insurance policy, there is a $500 deductible. You make a cheque payable to the dealership and claim $250 in tax payable as an ITC. You forward a copy of the invoice to your insurer and ask for compensation less the tax portion. The insurer pays you the following: Total of invoice....................................................... $5,250 Less the GST ($5,000 × 5%)................................... (250) Less deductible....................................................... (500) Total compensation from insurer....................... $4,500 ### Mining activities in respect of cryptoassets Subject to certain exclusions, where a person receives a mining payment in respect of a mining activity, the provision of the mining activity is deemed not to be a supply and the provision of the mining payment is deemed not to be a supply. Accordingly, there is no liability for tax in these circumstances. Subject to certain exclusions, to the extent that a person purchases, imports or brings into a participating province property or a service for consumption, use or supply in the course of, or in connection with, mining activities, the person is deemed to have purchased, imported or brought into the participating province, as the case may be, the property or service for consumption, use or supply otherwise than in the course of commercial activities of the person. This means that no ITCs are claimable in respect of the applicable GST/HST in these circumstances. Furthermore, if a person consumes, uses or supplies property or a service in the course of, or in connection with, mining activities, that consumption, use or supply is deemed to be otherwise than in the course of commercial activities of the person. Where a person receives a mining payment in respect of a mining activity, and the provision of the mining activity and the provision of the mining payment are deemed not to be a supply, for the purposes of determining ITCs for the person that provided the mining payment, no amount is to be included in respect of tax that becomes payable, or is paid without having become payable, by that person in respect of any property or service purchased, imported or brought into a participating province for consumption, use or supply in the course of, or in connection with, the provision of the mining payment by that person. For more information, see GST/HST Notice 324, Mining Activities in Respect of Cryptoassets. ### Real property Supplies of real property are generally taxable. This includes supplies by way of sale and by way of lease, licence or similar arrangement. However, there are some specific supplies of real property that are exempt from the GST/HST. Some examples include: - the sale of the housing, that was last used by an individual as a place of residence, where the vendor is not a builder of the housing for GST/HST purposes and has not claimed any ITCs for the purchase or improvements to the housing Note There are special rules that apply to builders. Generally, the CRA uses the term “builder” to refer to a person that supplies new or substantially renovated housing. A person does not have to physically carry out the construction or substantial renovation to be a builder for GST/HST purposes. For more information, see Guide RC4052, GST/HST Information for the Home Construction Industry. - the lease of housing for the purpose of its occupancy as a place of residence or lodging by an individual for a continuous period of at least one month - the lease of a residential unit for the purpose of its occupancy by an individual who occupies it as a place of residence or lodging for $20 or less a day - the sale of farmland by an individual to a related individual where the farmland was only used in a farming business and the related individual is purchasing the farmland for their personal use and enjoyment For more information, see GST/HST Memoranda Series Chapter 19, Real property. ### Sales of new housing New housing in Nova Scotia The HST at 14% applies to a taxable sale by a builder of newly constructed or substantially renovated housing in Nova Scotia where both ownership and possession of the housing were transferred to the purchaser on or after April 1, 2025. However, the HST at 15% applies to a taxable sale by a builder of newly constructed or substantially renovated housing in Nova Scotia where either ownership or possession of the housing are transferred to the purchaser before April 1, 2025. Rebates for new housing The following rebates may be available for new housing: - GST/HST new housing rebate for houses purchased from a builder - GST/HST new housing rebate for owner-built houses - First-time home buyers’ GST/HST rebate - Ontario new housing rebate - GST/HST new residential rental property rebate - Newfoundland and Labrador new residential rental property rebate - Ontario new residential rental property rebate - GST/HST purpose-built rental housing rebate - New Brunswick purpose-built rental housing rebate - Newfoundland and Labrador purpose-built rental housing rebate - Nova Scotia purpose-built rental housing rebate - Ontario purpose-built rental housing rebate - Prince Edward Island purpose-built rental housing rebate For more information, see: - Guide RC4028, GST/HST New Housing Rebate - Guide RC4231, GST/HST New Residential Rental Property Rebate Who remits the tax for a taxable sale of real property – Vendor or purchaser? If you make a taxable sale of real property, you generally have to charge and collect the tax on the sale, even if you are not registered for the GST/HST. However, in some cases it is the purchaser who has to remit the tax directly to the CRA instead of paying it to you. Generally, if you are a vendor, you do not collect the tax from the purchaser when you make a taxable sale of real property if: - the purchaser is registered for the GST/HST. This rule does not apply if you make a taxable sale to an individual of housing or a cemetery plot or place of burial, entombment, or deposit of human remains or ashes - you are a non-resident of Canada. This rule still applies if you are considered a resident for only certain activities you carry on through a permanent establishment in Canada - you and the purchaser have made a type 2 election on Form GST22, Real Property – Election to Make Certain Sales Taxable. For more information, see the election form Note These rules only apply to taxable sales of real property. They do not apply, for example, if you lease real property or supply it in any other way. 59 If you do not have to collect the tax on your taxable sale of real property because one of these conditions applies, the purchaser has to pay any tax due on the purchase directly to the CRA. If the vendor has to collect and remit the tax If you are a vendor who has to collect the tax due on your taxable sale of real property, including housing, account for the tax as follows: - If you are registered for the GST/HST, include the GST/HST collectible on your regular GST/HST return for the reporting period during which the GST/HST became collectible (on line 103 if you are filing electronically using GST/HST NETFILE or if filing a paper GST/HST return, or in your line 105 calculation if you are filing your return using GST/HST TELEFILE) - If you are not registered for the GST/HST, report the tax collectible on line 103 of Form GST62, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return (Non-personalized). File this return by the end of the month following the month in which the tax became collectible and remit the net tax due with that return. The GST/HST payments that are $10,000 or more must be paid electronically or at your financial institution. Notes For the GST/HST reporting periods that begin in 2024, all GST/HST registrants, except for selected listed financial institutions and most charities, are required to file electronically. The mandatory electronic filing threshold that was in place for the GST/HST returns has been removed for reporting periods that begin on or after January 1, 2024, which means that electronic filing is now required for most businesses. As of January 1, 2024, the GST/HST payments or remittances to the Receiver General for Canada should be made as an electronic payment if the amount is more than $10,000. You may face a penalty, unless you cannot reasonably remit or pay the amount electronically. Form GST62 can only be used in preprinted format to file your return or make a payment at your financial institution. If you are not registered for the GST/HST and are a supplier of taxable real property, you must fill out Form GST62 and mail it to your tax centre, along with a letter explaining the real property transaction and a copy of the statement of adjustments if available. To order a pre-printed Form GST62, go to . If the purchaser has to pay the tax directly to the CRA If you are a purchaser who has to pay the tax on the purchase of real property directly to the CRA, you must account for the tax as follows: - If you are a GST/HST registrant and will use or supply the real property: - more than 50% in your commercial activities, report the tax due on line 205 (GST/HST due on the purchase of real property or purchases of emission allowances) of your GST/HST return for the reporting 60 period in which the tax became payable and pay any positive amount of tax due with that return - 50% or less in your commercial activities, report the tax due on Form GST60, GST/HST Return for Purchase of Real Property or Carbon Emission Allowances. File this return by the end of the month following the month in which the tax became payable and pay any positive amount of tax due with that return - If you are not a GST/HST registrant and you have to pay the tax on your purchase of real property directly to the CRA (for example, because the vendor is a non-resident), report the tax due on Form GST60, GST/HST Return for Purchase of Real Property or Carbon Emission Allowances. You have to file this return by the end of the month following the month in which the tax became payable and pay any positive amount of tax due with that return. Notes The GST/HST payments that are $10,000 or more must be paid electronically or at your financial institution. Form GST60 is available on our website at -hst-pub. You cannot file Form GST60 electronically. Claiming ITCs for purchases of capital real property The following rules are for GST/HST registrants. You may be able to claim an ITC equal to a percentage or the entire amount of the GST/HST paid or payable on purchases of real property (including improvements to real property) that you intend to use in your commercial activities. Note The purchase could be an actual purchase or a purchase you were deemed to have made for GST/HST purposes. There are different rules for claiming ITCs for real property, depending on whether you are: - a corporation or a partnership - an individual - a public service body - a financial institution Note See the chart “ITCs for capital real property” on the next page. The chart summarizes the ITC rules for purchases of real property that are explained in the following sections. Corporations and partnerships The rules for claiming ITCs on the purchase of real property are as follows: - If the intended use of the real property in commercial activities is 10% or less, you cannot claim an ITC. - If the intended use of the real property in commercial activities is more than 10% and less than 90%, you can claim an ITC based on the percentage of use in commercial activities. - If the intended use of the real property in commercial activities is 90% or more, you can claim a full ITC. Note These rules do not apply to a corporation or a partnership that is a financial institution. Example A corporation buys a building in Manitoba and intends to use it 60% in its commercial activities. The corporation can claim an ITC for 60% of the GST it paid. You calculate the ITC as follows: Cost of building...................................................... $500,000 GST payable ($500,000 × 5%)................................ $25,000 ITC = $25,000 × 60%............................................... $15,000 Individuals Individuals have to follow the same rules for claiming ITCs on the purchase of real property as those mentioned for corporations and partnerships with the exception that an individual cannot claim any ITC for the purchase of capital real property if the property is intended to be primarily (more than 50%) for their or a related individual’s personal use and enjoyment. Public service bodies The general rule that applies to public service bodies (PSBs) for purchases of capital real property is the same as the rule for calculating ITCs on purchases of capital personal property (that is, the primary use rule applies). ITCs for capital real property Percentage of use in commercial Corporations and activities Partnerships ≤ 10% None \>10% and ≤ 50% % of use \>50% and <90% % of use ≥ 90% 100% * Individuals cannot claim an ITC if the property is used more ** Where a PSB is determining ITCs for real property for which it see the column for Partnerships and corporations. *** Also applies where a PSB is determining ITCs for real property for which it see Form GST26, Election or Revocation of an Election by a Public Service Body to Have an Exempt Supply of Real Property Treated as a Taxable Supply). Claiming ITCs for improvements to capital real property An i mprovement to capital real property means any property or service supplied to, or goods imported by, a person to improve the capital real property, to the extent that the price paid for those supplies is included in determining the adjusted cost base of the capital real property for income tax purposes. If you are a GST/HST registrant, you may be able to claim an ITC for the GST/HST paid or payable for an improvement to capital real property. The ITC you can claim is based on the extent you were using the real property in your commercial activities at the time you last However, if a PSB has filed an election to treat certain exempt supplies of a particular real property as taxable, the rules for determining ITCs that apply to corporations and partnerships apply for determining ITCs for the purchase of that particular property. Real property for which an election was not filed remains subject to the primary use rule (see the “ITCs for capital real property” chart on the next page). For more information on the ITC rules that apply to PSBs when they purchase real property, see the following publications: - Guide RC4049, GST/HST Information for Municipalities - Guide RC4081, GST/HST Information for Non-Profit Organizations - Guide RC4082, GST/HST Information for Charities - Form GST26, Election or Revocation of an Election by a Public Service Body to Have an Exempt Supply of Real Property Treated as a Taxable Supply Financial institutions Financial institutions have to claim their ITCs for capital real property and capital personal property based on the percentage of use in commercial activities, regardless of whether the property is used 10% or less (or 90% or more) in commercial activities. Public service Financial Individuals* *** bodies ** institutions None None % of use % of use* None % of use % of use 100%** % of use 100% 100% % of use than 50% for their personal use or that of a related individual. has not made an election. If the PSB has made the election, has made an election (for information on the election, purchased the real property. This means the ITC is based on the use of the real property in your commercial activities, not on the extent to which you use the improvement itself in your commercial activities. Note Your last purchase of the real property could be an actual purchase, or a purchase you were deemed to have made for GST/HST purposes. The ITC rules in the preceding chart apply to improvements to real property. For example, if you are a GST/HST registrant who is an individual, you cannot claim an ITC for an improvement to capital real property if 61 you last purchased the real property primarily for your personal use and enjoyment or that of a related individual. Change-in-use rules for capital real property Corporations and partnerships The following rules apply to corporations and partnerships that are GST/HST registrants. They also apply to certain capital real property of a public service body (PSB) that has made an election (using Form GST26) to treat certain otherwise exempt supplies of property as taxable. If you are a corporation, a partnership, or a PSB that has made an election as previously discussed and you begin to use, or you increase your use of, capital real property in your commercial activities, you may be able to claim an ITC. If you stop using or decrease your use of capital real property in your commercial activities, you generally have to repay all or part of the ITC you previously claimed or were entitled to claim. If you change your use of capital real property, any ITC you may be entitled to claim, or any amount you have to repay, is calculated based on the basic tax content of the property at the time of the change in use. The basic tax content formula in its simplified form is as follows: (A - B) × C where: A is the GST/HST payable for your last purchase of the property and for later improvements you made to the property B is any rebate or refund you were entitled to claim (or would have been entitled to claim if you had not been entitled to claim an ITC) for the GST/HST payable for your last purchase of the property and for later improvements you made to it, but not including ITCs you were entitled to claim C is the lesser of: - 1 - the fair market value of the property at the time of the change in use divided by the total cost ( not including the GST/HST) for your last purchase of the property and for later improvements you made to it Beginning use in commercial activities – Corporations and partnerships If you own capital real property that you do not use in your commercial activities, you would not have been entitled to claim any ITCs when you last purchased the property. However, if you begin to use that property more than 10% in your commercial activities, you are considered to have purchased the real property at that time and, unless the purchase is exempt, to have paid the GST/HST on the purchase equal to the basic tax content of the property at the time you begin using it in commercial activities. If you are considered to have paid the GST/HST, you can claim an ITC equal to the basic tax content of the property multiplied by the percentage of use of the property in your commercial activities. 62 Note If you become a registrant on the same day that you begin to use the property in your commercial activities, see “New registrants” on page 25 for the rules that apply on becoming a registrant. Example 1 – Beginning use – Corporations/Partnerships A corporation that is a registrant buys an office building and the related land, located in Manitoba, to use only in exempt activities (other than residential rentals). Therefore, it cannot claim an ITC for any of the tax it paid to purchase the property. Cost of property..................................................... $500,000 GST ($500,000 × 5%)............................................... $25,000 The corporation has not made any improvements to the property. The corporation later begins to use the property 60% in commercial activities. As a result, the corporation is considered to have made a taxable purchase of the property and to have paid an amount of the GST/HST equal to the basic tax content of the property at that time. The fair market value of the property at the time the corporation begins using it in commercial activities is $550,000. The corporation can claim an ITC, based on the basic tax content of the property, calculated as follows: Basic tax content = (A - B) × C = ($25,000 - $0) × $550,000/$500,000 = $25,000 × 1 (maximum)* = $25,000 ITC allowable = $25,000 × 60% = $15,000 *The CRA uses 1 as the value for C in the above calculation because C is equal to the lesser of 1 and the fair market value at the time of the change in use divided by the cost of the property and improvements made since it was last purchased. Increasing use in commercial activities – Corporations and partnerships When you increase the percentage of use of capital real property in your commercial activities by 10% or more, you are considered to have purchased the real property to the extent you increased the use in such activities and, unless the purchase is exempt, to have paid an amount of GST/HST calculated by the formula: A × B where: A is the basic tax content of the property at the time of the change in use B is the percentage by which you increased the use of the property in your commercial activities You can claim an ITC equal to the GST/HST you are considered to have paid. Note If you increase the use in your commercial activities to 90% or more, you are considered to be using the property 100% in your commercial activities. Example 2 – Increasing use – Corporations/Partnerships Continuing with example 1, the corporation later increases the use of the real property in its commercial activities from 60% to 80% (an increase of 20% of the original purchase). As a result, the corporation is considered to have purchased an additional 20% of the property. In this case, the purchase of that part of the property is taxable. The fair market value of the property at the time of this change in use is $600,000. Since the corporation increased the commercial use of the property by 10% or more, they can claim an additional ITC calculated as follows: Basic tax content = (A - B) × C = ($25,000 - $0) × $600,000/$500,000 = $25,000 × 1 (maximum)* = $25,000 To calculate the ITC allowable for the increase in commercial activities, multiply the basic tax content by the percentage of increase in commercial use: A × B Additional ITC = $25,000 × 20% = $5,000 *The CRA uses 1 as the value for C in the above calculation because C is equal to the lesser of 1 and the fair market value at the time of the change in use divided by the cost of the property and improvements made since it was last purchased. Decreasing use in commercial activities – Corporations and partnerships When you decrease the use of capital real property in your commercial activities by 10% or more (without stopping its use in those activities), for purposes of determining the amount of tax you owe, you are considered to have sold the property to the extent by which you have decreased the use, and, unless the sale is exempt, to have collected the GST/HST on the part of the property that you are no longer using in your commercial activities. To calculate the amount of the GST/HST you are considered to have collected, multiply the basic tax content of the property at the time you change the use by the percentage of the decrease in use in your commercial activities. GST collected = A × B where: A is the basic tax content of the property at the time of the change in use B is the percentage by which you decreased the use of the property in your commercial activities Example 3 – Decreasing use – Corporations/Partnerships Continuing with example 2, the corporation later decreases the use of the property in its commercial activities from 80% to 30% (a decrease of 50% of the original purchase). As a result, the corporation is considered to have sold 50% of the property. In this case, the sale of that part of the property is taxable. The fair market value of the property at the time of this change in use is $550,000. The corporation has to account for the GST it is considered to have collected, calculated as follows: Basic tax content = (A - B) × C = ($25,000 - $0) × $550,000/$500,000 = $25,000 × 1 (maximum)* = $25,000 GST collected = $25,000 × 50% = $12,500 The corporation has to account for the tax it is considered to have collected, by including $12,500 GST on line 103 if it is filing electronically using GST/HST NETFILE or if filing a paper GST/HST return or in its line 105 calculation if it is filing using GST/HST TELEFILE, when it calculates its net tax for the reporting period during which the change in use occurs. *The CRA uses 1 as the value for C in the above calculation because C is equal to the lesser of 1 and the fair market value at the time of the change in use divided by the cost of the property and improvements made since it was last purchased. Stopping use in commercial activities – Corporations and partnerships When you stop using capital real property for commercial activities (that is, when you reduce the use in commercial activities to 10% or less ) and you begin to use the property 90% or more for non-commercial activities, the CRA considers you to have sold the property and, unless the sale is exempt, to have collected the GST/HST on this sale. You are also considered to have repurchased the property and to have paid the same amount of tax. The GST/HST that you are considered to have collected is equal to the basic tax content of the property. As a result, you have to include the amount of the basic tax content in your net tax calculation on your GST/HST return for the reporting period in which the change in use occurs. Example 4 – Stopping use – Corporations/partnerships Continuing with example 3, in which the property was being used 30% in commercial activities, it is now no longer being used in commercial activities and is used exclusively in exempt activities. As a result, the corporation is considered to have sold the property and, because the sale in this case would be a taxable sale, to have collected the GST/HST equal to the basic tax content of the property at that time. The corporation is also considered to have repurchased the property and to have paid the same amount of tax. 63 The fair market value of the property at the time of this change in use is $650,000. The GST the corporation is considered to have collected is calculated as follows: Basic tax content = (A - B) × C = ($25,000 - $0) × $650,000/$500,000 = $25,000 × 1 (maximum)* GST collected = $25,000 The corporation has to account for the tax it is considered to have collected by including $25,000 GST on line 103 if it is filing electronically using GST/HST NETFILE or if it is filing a paper GST/HST return, or in its line 105 calculation if it is filing using GST/HST TELEFILE, for the reporting period during which it stopped using the building in its commercial activities and began using it exclusively in exempt activities. The corporation may be eligible to claim an ITC to recover the tax it previously paid on the property but was not entitled to recover. See “Claiming ITCs when you make a taxable sale of real property” on page 68. *The CRA uses 1 as the value for C in the above calculation because C is equal to the lesser of 1 and the fair market value at the time of the change in use divided by the cost of the property and improvements made since it was last purchased. For more information on the change in use rules, see GST/HST Memorandum 19-4-2, Commercial Real Property – Deemed Supplies, or call 1-800-959-8287. Individuals The following rules apply to individuals who are GST/HST registrants. If you are an individual and you begin to use, or you increase your use of, capital real property in your commercial activities, you may be considered to have purchased the property at that time and to have paid the GST/HST. Therefore, you may be entitled to claim an ITC based on the basic tax content of the property at the time of your change in use. If you decrease your use of or stop using capital real property in your commercial activities, or if you begin to use it primarily for your or a related individual’s personal use and enjoyment, you generally have to repay all or part of any ITC previously claimed. The amount you have to repay is based on the fair market value or the basic tax content of the property at the time of the change in use, depending on whether there is an increase in personal use or in the use in exempt activities. Calculating the basic tax content The basic tax content formula in its simplified form is as follows: (A - B) × C 64 where: A is the GST/HST payable for your last purchase of the property and for later improvements you made to the property B is any rebate or refund you were entitled to claim (or would have been entitled to claim if you had not been entitled to claim an ITC) for the GST/HST payable for your last purchase of the property and for later improvements you made to it, but not including ITCs you were entitled to claim C is the lesser of: - 1 - the fair market value of the property at the time of the change in use divided by the total cost ( not including the GST/HST) for your last purchase of the property and for later improvements you made to it Beginning use in commercial activities – Individuals If you are an individual and you own capital real property that you use primarily ( more than 50%) for your or a related individual’s personal use and enjoyment, or if you do not use the property in commercial activities (10% or less ), you would not have been entitled to claim an ITC when you last purchased the property. However, if you begin to use that property more than 10% in your commercial activities and you do not use the property primarily for such personal use, you are considered to have purchased the property at that time and, unless the purchase is exempt, to have paid the GST/HST on the purchase equal to the basic tax content of the property at the time you begin using it in commercial activities. If you are considered to have paid the GST/HST, you can claim an ITC equal to the basic tax content of the property multiplied by the percentage of use of the property in your commercial activities. Note If you become a registrant on the same day that you begin to use the property in your commercial activities, see “New registrants” on page 25 for the rules that apply on becoming a registrant. Example 1 – Beginning use – Individuals You are an individual who is registered for the GST/HST. You paid a total of $300,000 plus $15,000 GST to purchase land, construction materials, and services to construct a building in Alberta. The property is capital property used exclusively to provide exempt music lessons. You were not entitled to claim any rebates or ITCs for the tax paid on the land or on any of your construction costs. You later begin to use the property 60% in your book-keeping business (commercial activity). As a result of the change in use, you are considered to have purchased the property at that time and, because the purchase is taxable in this case, you are considered to have paid an amount of GST equal to the basic tax content of the property. The fair market value of the property at the time you begin using it in your commercial activities is $400,000. You are entitled to claim an ITC, calculated as follows: Basic tax content = (A - B) × C = ($15,000 - $0) × $400,000/$300,000 = $15,000 × 1 (maximum)* = $15,000 ITC allowable = $15,000 × 60% = $9,000 *The CRA uses 1 as the value for C in the above calculation because C is equal to the lesser of 1 and the fair market value at the time of the change in use divided by the cost of the property and improvements made since it was last purchased. Increasing use in commercial activities – Individuals When you increase the percentage of use of capital real property in your commercial activities by 10% or more, and you are not using the property primarily for your or a related individual’s personal use and enjoyment, you are considered to have purchased the property to that extent and, unless the purchase is exempt, to have paid an amount of the GST/HST calculated by the formula: A × B where: A is the basic tax content of the property at the time of the change in use B is the percentage by which you increased the use of the property in your commercial activities You can claim an ITC equal to the GST/HST you are considered to have paid. Example 2 – Increasing use – Individuals You are an individual who is a registrant and you purchase a building in Saskatchewan. You use 40% of the property in your daycare business to provide exempt daycare services and 60% of the property is for use in your taxable construction activities. The building is capital real property used primarily in your commercial activity. You claimed an ITC for a portion of the tax you paid at the time you purchased the property. Cost of property...................................................... $500,000 GST ($500,000 × 5%)............................................... $25,000 ITC claimed ($25,000 × 60%)................................. $15,000 You later increase the use of the property in your commercial activities from 60% to 80%. As a result, you are considered to have purchased an additional 20% of the property, and, as the purchase of that part of the property is taxable in this case, you are considered to have paid the GST equal to the basic tax content multiplied by 20% of the property and to have paid an amount of the GST on the purchase, as calculated. The fair market value of the property at the time of this change in use is $600,000. You can claim an additional ITC, calculated as follows: Basic tax content = (A - B) × C = ($25,000 - $0) × $600,000/$500,000 = $25,000 × 1 (maximum)* = $25,000 To calculate the additional ITC you can claim, multiply the basic tax content by the % of increase in commercial use. Additional ITC = $25,000 × 20% = $5,000 *The CRA uses 1 as the value for C in the above calculation because C is equal to the lesser of 1 and the fair market value at the time of the change in use divided by the cost of the property and improvements made since it was last purchased. Note If you increase the use in your commercial activities to 90% or more, you are considered to be using the property 100% in your commercial activities. Decreasing use in commercial activities – Individuals When you decrease the use of capital real property in your commercial activities by 10% or more (without stopping its use in those activities) and you do not begin to use it primarily ( more than 50%) for your or a related individual’s personal use and enjoyment, you are considered to have sold the property to the extent that you reduced the use in commercial activities. Unless the sale is exempt, you are considered to have collected the GST/HST on the part of the property that you are no longer using in your commercial activities. Note If you decrease the use of the property in your commercial activities to 10% or less, you are considered to have stopped using the property in your commercial activities. For more information, see “Stopping use in commercial activities without changing the use to primarily personal use – Individuals”, or “Changing the use of the property to primarily personal use – Individuals” on page 66. When you decrease the use in your commercial activities, use the following formula to calculate the amount of the GST/HST you are considered to have collected: (A × B) - C where: A is the basic tax content of the property at the time of the change in use B is the percentage by which you reduced the use of the property in your commercial activities 65 C is the amount of any GST/HST that you are considered to have collected on the fair market value of the property, or a part of the property, because you appropriated the property (or part) that was used as capital property in your business or commercial activities for your or a related individual’s personal use and enjoyment, including residential use. For more information see “Changing the use of the property to primarily personal use – Individuals” on page 66. Example 3 – Decreasing use – Individuals Continuing with example 2, you later decrease your use of the property in commercial activities from 80% to 40% (a decrease of 40% of the original purchase). You are now using the building 60% to provide the exempt daycare services. As a result of this change in use, you are considered to have made a taxable sale of the part of the building that you were using in commercial activities and are now using in exempt activities (40%). The fair market value of the property at the time you reduce its use in commercial activities is $650,000. The GST you are considered to have collected on that sale is calculated as follows: Basic tax content = (A - B) × C = ($25,000 - $0) × $650,000/$500,000 = $25,000 × 1 (maximum)* = $25,000 GST collected = (A × B) - C = ($25,000 × 40%) - $0 = $10,000 *The CRA uses 1 as the value for C in the above calculation because C is equal to the lesser of 1 and the fair market value at the time of the change in use divided by the cost of the property and improvements made since it was last purchased. Stopping use in commercial activities without changing the use to primarily personal use – Individuals If you reduce the use of capital real property in your commercial activities to 10% or less and begin to use it exclusively (90% or more ) for other purposes (but not primarily for your or a related individual’s personal use and enjoyment), you are considered to have stopped using the property in commercial activities, to have sold the property and, unless the sale is exempt, to have collected the GST/HST on the sale. In most cases, the GST/HST you are considered to have collected is equal to the basic tax content of the property at the time of the change in use. Example 4 – Stopping use in commercial activities – Individuals Continuing with example 3, in which the property was being used 40% in commercial activities and 60% in exempt activities, you now decide to use the entire building to 66 provide exempt daycare services. The property is no longer being used in commercial activities. As a result, you are considered to have sold the property. The fair market value of the property at the time of this change in use is still $650,000. As you have not appropriated the property for personal use, the GST you are considered to have collected is based on the basic tax content and is calculated as follows: Basic tax content = (A - B) × C = ($25,000 - $0) × $650,000/$500,000 = $25,000 × 1 (maximum)* GST collected = $25,000 Account for the tax you are considered to have collected by including $25,000 GST on line 103 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or in your line 105 calculation if you are filing using GST/HST TELEFILE, for the reporting period during which you stopped using the building in your commercial activities. Since you are considered to have made a taxable sale of the building as a registrant, you may be eligible to claim an ITC to recover the tax you previously paid on the property but were not entitled to recover. For details see “Claiming ITCs when you make a taxable sale of real property” on page 68. *The CRA uses 1 as the value for C in the above calculation because C is equal to the lesser of 1 and the fair market value at the time of the change in use divided by the cost of the property and improvements made since it was last purchased. Changing the use of the property to primarily personal use – Individuals If you were using capital real property in your commercial activities and not primarily for your or a related individual’s personal use and enjoyment, and begin using the property primarily for your or a related individual’s personal use and enjoyment, you are considered to have: - stopped using the property in your commercial activities - sold the property - collected the GST/HST on that sale (unless that sale is exempt) The method used to calculate the GST/HST you are considered to have collected depends on the extent to which you increase the personal use or enjoyment of the property. If you begin to use the property primarily for personal use but do not use it exclusively (90% or more) for personal use, the GST/HST you are considered to have collected is equal to the basic tax content of the property at the time you and/or a related individual begin to use it primarily for personal use. Example 5 – Changing use to primarily personal use – Individuals Returning to example 3, in which the property was being used 40% in commercial activities and 60% in exempt activities, you later decide to close your daycare business and you begin to use that part of the building only as a place of storage for your personal items. This means that you are now using 40% of the building for commercial use and 60% for personal use. Because you are using the property primarily (but not exclusively) for personal use, you are considered to have stopped using the property in your commercial activities. The fair market value of the property at the time you begin to use it primarily for personal use is $700,000. The basic tax content of the property (as calculated in example 3) is $25,000. The GST you are considered to have collected because you began using the property primarily (but not exclusively) for your personal use is equal to the basic tax content of the property at the time you began using it primarily for personal use ($25,000). Report the $25,000 GST that you are considered to have collected on your regular return for the reporting period in which you changed the use of the property (on line 103 if you are filing electronically using GST/HST NETFILE or if you are filing a paper GST/HST return, or in your line 105 calculation if you are filing using GST/HST TELEFILE). Changing use to exclusively (90% or more) personal use – Individuals If you begin to use the property exclusively (90% or more ) for personal use and cease business use of the property, you are considered under two separate provisions to have sold the property and, unless the sale is exempt, to have collected the GST/HST on the sale. Under the first provision (which applies to the appropriation of real property for personal use), you are considered to have collected the GST/HST calculated on the fair market value of the property because you had used the property as capital property in a business or commercial activity and began to use it entirely for your and/or a related individual’s personal use and enjoyment. Under the second provision (which applies to the cessation of use in commercial activities), you are considered to have collected the GST/HST calculated under the following formula: A - B where: A is the basic tax content of the property at the time of the change in use B is the amount of the GST/HST, if any, that you are considered to have collected on the fair market value of the property, or part of the property, because you had used the property, or part, as capital property in a business or commercial activity and begin using it for you or a related individual’s personal use and enjoyment The combined effect of these two provisions is that where you begin to use the property exclusively (90% or more ) for personal use and cease business use of the property, you are considered to have collected tax equal to the greater of tax on the fair market value of the property or the basic tax content of the property. Example 6 – Changing use to exclusively (90% or more) personal use – Individuals Returning to example 3, in which the property was being used 40% in commercial activities and 60% in exempt activities, you now decide to use the entire building as a place of storage for your personal items. The property is no longer being used in any commercial activity or business activity. As a result, you are considered to have sold the property. The fair market value of the property at the time of this change in use is $700,000. The basic tax content of the property (as calculated in example 3) is $25,000. Because you have appropriated the property for personal use, you are considered (under the first provision) to have collected the GST calculated on the fair market value of the property at the time you began using it exclusively for personal use. GST collected $700,000 × 5% = $35,000 You are also considered (under the second provision) to have collected the GST because you stopped using the property in commercial activities. In this case, the GST is $0, calculated as follows: GST collected = A - B = $25,000 - $35,000 = $0* * Since the result of this calculation is negative, the amount you are considered (under the second provision) to have collected for stopping the use in commercial activities is equal to $0. Therefore, you are considered to have collected a total of $35,000 GST (under the first provision). Since you are considered to have made a taxable sale of the building, as a registrant, you may be eligible to claim an ITC to recover the tax you previously paid on the property but were not entitled to recover. See “Claiming ITCs when you make a taxable sale of real property” on the next page. Public service bodies If you are a public service body (PSB), the change-in-use rules that apply to capital real property are generally the same as those that apply to capital personal property. For more information, see the following guides: - Guide RC4049, GST/HST Information for Municipalities - Guide RC4081, GST/HST Information for Non-Profit Organizations 67 - Guide RC4082, GST/HST Information for Charities If you have filed an election (Form GST26) to treat your exempt supplies of certain real property as taxable, the change-in-use rules for capital personal property do not apply. The change-in-use rules for capital real property that apply to corporations and partnerships would apply, but only for the property for which you filed the election. For more information, see “Change-in-use rules for corporations and partnerships” on page 62. Financial institutions The change-in-use rules for real property that apply to financial institutions are similar to those that apply to corporations and partnerships, described on page 62; however, there are some differences. For more information, see GST/HST Memorandum 19-4-2, Commercial Real Property – Deemed Supplies. Claiming ITCs when you make a taxable sale of real property If you are a GST/HST registrant and you make a taxable sale (including a deemed taxable sale) of real property, you may be entitled to claim an ITC for some or all of the GST/HST embedded in the property (generally tax that you paid for your last purchase of the property or for a later improvement to the property, but were not previously entitled to recover). Your last purchase could, for example, be when you originally purchased the property, or when you were last considered to have purchased it under the self-supply rules for builders of new housing. For more information, see GST/HST Memorandum 19-2-3, Residential Real Property – Deemed Supplies, GST/HST Memorandum 19-4-2, Commercial Real Property – Deemed Supplies, or call 1-800-959-8287. Example 1 – Corporations and partnerships Returning to example 4 on page 63, since the registrant corporation is considered to have made a taxable sale of the building, the corporation may be eligible to claim an ITC to recover some or all of the tax it previously paid on the property but was not entitled to recover. To calculate the amount of the ITC that may be available, multiply the percentage that the property was used in non-commercial activities immediately before the sale that the corporation is considered to have made by the lesser of the following two amounts: - the basic tax content of the property at the time of the deemed sale - the tax payable (the tax the corporation is considered to have collected) on that sale The corporation would be eligible to claim an ITC as follows: ITC = 70%* × $25,000** = $17,500 * The CRA uses 70%, because it is the percentage of use in non-commercial activities immediately before the corporation’s deemed sale (since the corporation was using the property 30% in its commercial activities and 70% in making exempt supplies) 68 ** The CRA uses $25,000 because, in this case, the basic tax content of the building and the tax payable on the deemed sale both equal $25,000 Example 2 – Individuals You are an individual who is a GST/HST registrant and you construct a building in Saskatchewan. You paid a total of $500,000 plus $25,000 GST to purchase land, goods, and services to construct the building. You use 40% of the building to provide exempt daycare services and 60% to provide taxable construction services. The building is capital property used primarily in a commercial activity. You claimed ITCs of $15,000 (60% × $25,000) for the tax paid on the land and on your construction costs. Because you are using 40% of the building in exempt activities, you were unable to recover the GST you paid on the land and construction costs that relate to those activities. You then make a taxable sale of the building for $700,000, plus $35,000 GST. Since you made a taxable sale of the building, you are eligible to claim an ITC to recover some or all of the tax that you paid on your purchase of the property but that you could not previously recover. To calculate the amount of the ITC that may be available, multiply the percentage that the property was used in non-commercial activities immediately before the sale by the lesser of the following two amounts: - the basic tax content of the property at the time of that sale - the tax payable on that sale In this case, you would be eligible to claim an ITC as follows: ITC = 40%* × $25,000** = $10,000 * The CRA uses 40% since it is the percentage of use in non-commercial activities immediately before the sale (you were using it 60% in your commercial activities and were already entitled to claim ITCs for the property for that use) ** The CRA uses $25,000, which is the basic tax content of the property, since this is less than the $35,000 tax payable on the sale ### Returns and warranties Returnable beverage containers Refundable deposits There is no GST/HST on deposits for returnable beverage containers that are refundable to consumers. When a bottler or manufacturer sells beverages in sealed returnable containers to you, the GST/HST is not charged on the refundable deposit. When you sell the beverages in the sealed containers to your customer, you do not charge the GST/HST on the refundable deposit. When you accept used and empty containers from customers, no part of the refund to the consumer is a refund of tax and, therefore, you would not claim an ITC for that refund. When you return used containers to a depot or a bottler, there is no GST/HST charged on the refund you receive. Example You are a retailer in a non-participating province. You sell a beverage in a returnable container to a consumer in a non-participating province and charge a fully refundable deposit. You calculate the sale price as follows: Beverage................................................................... $1.00 Deposit..................................................................... 0.15 Subtotal.................................................................... $1.15 Plus GST ($1 × 5%)................................................. 0.05 Total......................................................................... $1.20 Non-refundable deposits In some provinces, only part of the deposit is refundable to the consumer. Non-refundable amounts such as environmental levies and recycling fees are separately charged in addition to the refundable deposit. In these cases, you only exclude the GST/HST from the amount of the deposit refundable to the consumer. The non-refundable amounts are subject to the GST/HST at the same rate as the beverage. Example You are a retailer in a non-participating province. You sell a beverage in a returnable container to a consumer and charge a deposit. Half of the deposit is refundable. You calculate the sale price as follows: Beverage................................................................... $1.00 Deposit (includes $0.05 refundable)..................... $ 0.10 Container recycling fee.......................................... 0.15 Subtotal.................................................................... $1.25 Less: refundable part of the deposit..................... (0.05) Total subject to tax.................................................. $1.20 Plus GST ($1.20 × 5%)............................................ 0.06 Total ($1.25 + $0.06)............................................... $1.31 You have to collect and remit the GST/HST on non-refundable deposits you charge when you sell beverages. Also, you may be eligible to claim ITCs for the GST/HST you are charged on non-refundable deposits you pay when you purchase beverages, unless you are located in a participating province. Special rules apply in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island where the deposits include tax, and only part of the deposit on certain beverage containers is refundable. A bottler or manufacturer sells the beverages to you and charges the deposit. The bottler or manufacturer sends the HST included in the deposit to the CRA. You do not claim an ITC for the HST included in the deposit. When you sell the beverages and containers to your customer, you remit the HST on the sale of the beverage and the HST included in the non-refundable part of the deposit. For the list of all applicable GST/HST rates, go to and select “GST/HST calculator (and rates)” under “Most requested.” Example You are a retailer in New Brunswick. You sell a beverage in a returnable container to a consumer and charge a deposit, half of which is refundable. You calculate the sale price as follows: Beverage.................................................................. $1.00 Deposit ($0.05 of which includes HST)............... $ 0.10 Beverage + deposit................................................. $1.10 Beverage.................................................................. $1.00 Portion of non-refundable deposit excluding tax ($0.10 - 0.05) × (100 ÷ 115) = $0.043 rounded at............................................................... $ 0.04 Total subject to tax................................................. $1.04 Amount paid for beverage + deposit.................. $1.10 HST ($1.04 × 15%).................................................. 0.16 Total......................................................................... $1.26 Some registrants, such as take-out establishments that provide eating areas on their premises, may charge tax on the refundable deposit. If you are such a registrant, and you do not charge tax on the refundable deposit, you have to pay an amount equal to the tax on the refundable deposit when you collect the empty containers from your premises and redeem them for the refunds. For more information, see Technical Information Bulletin B-089, Returnable Containers. Returnable containers The GST/HST generally applies to empty returnable containers. However, the CRA considers usual packaging or containers (other than returnable beverage containers) to be part of the goods they cover or contain and tax them on the same basis as the goods they hold. For example, containers filled with medical oxygen are zero-rated. When a customer returns a container that held goods, you can treat the transaction in one of the following ways, depending on the terms of the original agreement: - a sale by the customer to you (the original supplier) - a refund you pay to the customer If the return of the container is treated as a sale, the customer, if a registrant, charges you the GST/HST on the return of the container. You may be eligible to claim an ITC for the GST/HST payable on the purchase of the container. If the return is treated as a refund, you may have to issue a credit note to the customer or, alternatively, the customer may have to give you a debit note. In that case, see “Returned goods” on page 70. For more information, see Technical Information Bulletin B-038, Returnable Containers Other than Beverage Containers. 69 Returned goods If you give customers a refund or credit for all or part of an amount they paid or were charged for goods they return, you can adjust, refund, or credit the customer the GST/HST you first charged or collected on these goods. If you do this, issue a credit note to the customer, or have the customer issue a debit note to you. Be sure the following information is included on the credit or debit note: - a statement or other indication that the document is a credit or debit note - your business or trading name, or the name of your intermediary, and your business number (BN), or the BN of the intermediary - the customer’s name or trading name, or the name of the customer’s authorized agent or representative - the date on which the note is issued - one of the following: - the amount of the adjustment, refund, or credit for tax - a statement that the total amount for which the note is issued includes the adjustment, refund or credit of tax, the tax rate (GST or HST) that applies to each taxable supply for which tax is reduced, and either the total amount and tax reduced for all the supplies to which the same tax rate applies or the total amount and tax reduced for each supply You can deduct the amount of the GST/HST adjusted, refunded, or credited in determining your net tax for the reporting period in which you issued the credit note or received the debit note, as long as that amount was previously included in your net tax. In turn, if your customer claimed an ITC, the customer has to add that amount back when calculating its net tax. If your customer claimed a rebate, the customer has to repay that amount. You have four years from the end of the reporting period during which you reduced the purchase price to make the adjustment, refund, or credit. If you refund only a certain percentage of the purchase price (for example, 85%) and keep the balance as a restocking charge, you refund only 85% of the GST/HST you first collected. You would issue a credit note, or the customer would issue a debit note, for the amount of the GST/HST you refunded. You can also choose not to refund or credit the customer the GST/HST that was previously paid. You may wish to forgo the GST/HST refund if you have already sent the tax to the CRA and the customer is a GST/HST registrant who has already claimed an ITC. In this case, you refund the amount without including the GST/HST that the customer first paid. You and your customer do not have to make any adjustments on your GST/HST returns. For more information, see GST/HST Memorandum 12-2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act. 70 Warranty reimbursements When warrantors, under a warranty in respect of the quality, fitness or performance of goods, reimburse warranty holders for goods or services covered under the terms of a warranty and provided by a third party, they may be eligible to claim ITCs for the GST/HST portion of the reimbursement. For example, if you are a warrantor you may reimburse a warranty holder who pays for repairs. The ITC you can claim is based on the part of the total cost that you reimburse the warranty holder. Calculate your ITC using the formula: A × B C A is the GST/HST payable by the warranty holder for the repairs B is the amount of the reimbursement C is the cost to the warranty holder of the repair Include with the reimbursement a written statement that part of the reimbursement represents the GST/HST. If the warranty holder is registered for the GST/HST, the warranty holder may be entitled to claim an ITC or a rebate for all or part of the GST/HST it paid on its purchase of the repairs. However, part of the reimbursement a warranty holder receives from a warrantor is for some of the GST/HST the warranty holder paid on the purchase of the repairs. Where the warranty holder was also entitled to claim an ITC or rebate for the GST/HST on that purchase, the CRA considers the warranty holder to have made a taxable supply at the time the reimbursement is paid. The warranty holder has to remit an amount of tax in respect of the supply calculated using the following formula: A × B C A is the amount of the GST/HST reimbursed B is the total of ITCs and rebates that the warranty holder was entitled to claim for the goods and services C is the GST/HST payable by the warranty holder for the goods and services Example Michael is a sales person in Saskatchewan who uses his car, which is subject to a warranty, 80% in his commercial activities. He is a GST/HST registrant. His car breaks down and he calls for emergency roadside assistance. There is no dealer nearby, and the only repair shop within towing distance is an independent garage. The garage tows and repairs the car for a total of $630 ($500 plus $100 for a remote service charge, plus $30 GST). Michael pays the bill and sends it to the warrantor who agrees to reimburse him for his repair costs plus the applicable GST, except for the remote service charge and the deductible, as provided for under the terms of the warranty. There is a $50 deductible plus the GST under the warranty. The warrantor reimburses Michael $472.50, calculated as follows: Total paid by Michael............................................ $630.00 Less $100 remote service charge plus $5 GST..... (105.00) Less $50 deductible plus $2.50 GST...................... (52.50) Amount reimbursed to Michael.......................... $472.50 The warrantor provided Michael with a written statement that part of the reimbursement represents GST. The warrantor can claim an ITC of $22.50 calculated as follows: ITC = $30.00 × $472.50 $630.00 = $22.50 Since Michael uses his car 80% in commercial activities, he is entitled to claim an ITC of $24 ($30 × 80%) for the GST he paid on the car repair charges. The CRA considers Michael to have made a taxable supply and to have collected tax at the time of the reimbursement. This means that he has to remit the GST calculated as follows: GST to remit = $22.50 × $24.00 $30.00 = $18.00 Michael remits $18 by adding this amount to line 103 of his GST/HST return if he is filing electronically using GST/HST NETFILE or filing a paper GST/HST return, or in the line 105 calculation if filing using GST/HST TELEFILE, for the reporting period in which he received the reimbursement. Michael can claim an ITC of $24 by including this amount on line 107 if he is filing electronically using GST/HST NETFILE or filing a paper GST/HST return, or in his line 108 calculation if he is filing using GST/HST TELEFILE. ### Selling goods, services, and rights for others Auctioneers If you are a registrant auctioneer selling goods for a person (who may be referred to as a vendor, owner, or principal), you are considered to have made a taxable sale of goods. This means that it does not matter if the vendor is, or is not, a GST/HST registrant, because it is the auctioneer who must charge and remit the GST/HST on the sale of the vendor’s goods, unless you made a zero-rated sale of goods. There is no GST/HST charged on your commission or other services provided to the vendor that relate to the sale of the goods, such as short-term storage and advertising. For more information, see GST/HST Info Sheet GI-010, Auctioneers. Election A vendor (who may also be referred to as an owner or principal) and an auctioneer can make a joint election to have the vendor account for the GST/HST on the sale of auctioned goods if the following conditions are met: - Both the vendor and auctioneer are GST/HST registrants. - The sale of the goods would be a sale of taxable goods if sold by the vendor. - The goods are prescribed property in the Property Supplied by Auction (GST/HST) Regulations for the purposes of the Excise Tax Act. - At least 90% of the value of the goods sold at auction on a particular day on behalf of the vendor is for prescribed property. Prescribed property includes: - motor vehicles designed for highway use - cut flowers, potted plants, and plant bulbs - horses - machinery and equipment designed for use in certain industries Once the auctioneer makes a joint election with a vendor, the auctioneer collects the GST/HST on the sale of the goods (90% or more of which is prescribed property) and gives it to the vendor. The vendor accounts for the GST/HST. The auctioneer charges the vendor the GST/HST on their commission and on any services provided to the vendor, such as short-term storage and advertising and accounts for that GST/HST in their net tax calculation. To make an election, fill out Form GST502, Election and Revocation of Election Between Auctioneer and Principal. Both the vendor and the auctioneer must keep a signed copy of the election in their records. Agents If you are acting as an agent (excluding auctioneers of goods) making taxable supplies of property and services on behalf of a person (who may be referred to as a vendor, owner or principal), different rules apply to determine who has to charge and account for the GST/HST on the sale. These rules depend, in part, on whether the vendor would have had to charge the GST/HST if the vendor had sold the goods or services directly to the purchaser. To help you determine whether you are acting as an agent of another person, see GST/HST Info Sheet GI-012, Agents. When the vendor has to charge the GST/HST If a vendor would have had to charge the GST/HST for taxable property and services sold directly to the purchaser, it is the vendor who must charge and account for the GST/HST on the taxable property and services sold through you as the agent. 71 If you are a registrant, charge and account for the GST/HST on your commission and on any other services provided to the vendor that relate to the sale of the property or services. Vendors who are registrants may be eligible to claim an ITC to recover the GST/HST paid or payable for your services. Example Daniel, a registrant vendor, gives a painting to an art gallery (agent) in Alberta to sell on his behalf. As Daniel’s agent, the art gallery sells the painting for $2,000 plus the GST. Transaction summary Amount agent charges purchaser Painting................................................................ $2,000.00 Plus GST ($2,000 × 5%)..................................... 100.00 Amount purchaser pays...................................... $2,100.00 Amount agent charges vendor Commission......................................................... $400.00 Advertising........................................................... 50.00 Subtotal............................................................... $450.00 Plus GST ($450 × 5%)........................................ 22.50 Total..................................................................... $472.50 Amount agent gives vendor Amount purchaser pays...................................... $2,100.00 Less agent’s charges (472.50) Amount due to Daniel....................................... $1,627.50 GST to report and remit Agent Vendor GST charged to vendor: GST charged to purchaser: $22.50 $100.00 The art gallery includes Daniel includes this this amount in its net tax amount in his net tax Joint election A joint election can be made between a vendor (who may also be referred to as an owner or principal) and an agent when a vendor is required to collect tax but would prefer the agent to do so. The joint election can also be made between a vendor and a billing agent. A billing agent is a person acting as an agent only for charging and collecting the tax, but not for making the sale. In order to make the joint election, the agent or billing agent must be a registrant. By making this election, the agent becomes responsible for collecting, reporting, and remitting (as required), the tax on the supply of taxable property or services made on behalf of the vendor. The joint election is made by filling out and signing Form GST506, Election and Revocation of an Election Between Agent and Principal. Both the vendor and the agent must keep a copy of Form GST506 in their records. Agents who make this election must charge the GST/HST on the commission and other services they provide to the vendor that relate to this supply. Agents must also include the tax on their supplies in their GST/HST return. However, a billing agent is not required to charge the GST/HST on their service of acting as a billing agent if the vendor is registered under the simplified GST/HST (Subdivision E of Division II of the Excise Tax Act ). 72 Note The rules pertaining to bad debt adjustments, the recovery of bad debts, and returned goods apply to agents and billing agents of a vendor who have made the election. For more information, see “Bad debt adjustments” and “Bad debt recovered” on page 33, and “Returned goods” on page 70. When the vendor does not have to charge the GST/HST If a vendor would not have had to charge the GST/HST for sales of goods (other than zero-rated or exempt sales of goods) to a purchaser, then, as a registrant agent, you have to charge and include the GST/HST on the sale of the goods in your net tax calculation. However, you do not charge the GST/HST on your commission or any other services provided to the vendor that relate to the sale of the goods. Example Marie, a non-registrant vendor, gives a used car to an agent in Ontario to sell for her. The agent, a registrant, sells the used car for $6,000 plus the HST. The agent charges Marie a commission of $600 plus an advertising fee of $25. The agent does not charge the HST on the commission and advertising. Transaction summary Amount agent charges purchaser Used vehicle.............................................................. $6,000 Plus HST ($6,000 × 13%)......................................... 780 Amount purchaser pays............................................ $6,780 Amount agent charges vendor Commission.............................................................. $600 Advertising................................................................ 25 Total.......................................................................... $625 Amount agent gives vendor Selling price excluding HST...................................... $6,000 Less agent’s charges................................................ (625) Amount due to Marie (vendor)............................... $5,375 HST to report and remit Agent Vendor Agent includes the $780 Marie does not report any HST charged to purchaser HST for this sale in his or her net tax Exception Generally, agents have to charge and remit the GST/HST on goods sold for a registrant vendor that were not used in commercial activities. However, sometimes a registrant vendor may want to charge and remit the tax. In these situations, the vendor and agent may jointly elect in writing to make the sale of those goods taxable. When the goods are sold, the vendor charges the tax and includes it in its net tax. The vendor also pays the GST/HST on the services provided by the agent and may be able to claim an ITC for this tax. However, the vendor cannot claim ITCs for other expenses related to the supply that were not charged to the vendor by the agent. Zero-rated and exempt goods When zero-rated or exempt goods are sold, neither the agent nor the vendor charges the purchaser the GST/HST. Whether the vendor is a registrant or not, the agent charges the GST/HST on its commissions and other services, such as advertising, provided in relation to the sale. Example As an agent of a vendor, you made zero-rated sales of medical supplies in June 2024, in Ontario, for $2,000. Your commission was 20% of the selling price and you charged an advertising fee of $100. Transaction summary Amount agent charges vendor Commission ($2,000 × 20%).................................... $400 Advertising................................................................ 100 Plus HST ($500 × 13%)........................................... 65 Total.......................................................................... $565 Amount agent gives vendor Amount purchaser pays........................................... $2,000 Less agent’s charges............................................... (565) Amount due to vendor........................................... $1,435 HST to report Agent Vendor Agent includes HST of HST charged $65 charged to vendor to purchaser in his or her net tax. is $0 Consignment sales A consignment sale is a transaction in which one party, the consignor, delivers goods to a second party, the consignee, who tries to sell the goods for the consignor. If you, as a consignee, sell goods on consignment, the consignor still owns the goods until you sell them. This means that even though the consigned goods are in your possession, you do not include these items in your inventory. There are two types of consignment arrangements: - agency - buy and resell If you are not buying and reselling goods, then it is likely that you are acting as the consignor’s agent (see “Agents” on page 71). When you are buying and reselling goods, the CRA considers two transactions to take place at the time you sell the goods: - You buy the goods from the consignor. - You sell the goods to your customer. If the consignor is a GST/HST registrant, you pay the GST/HST on the price the consignor charges you (assuming your purchase of the goods is taxable, other than zero-rated) and collect the GST/HST from your customer on your selling price (assuming your sale of the goods is taxable, other than zero-rated). If the consignor is not a registrant, you do not pay the GST/HST to the consignor, and you collect the GST/HST from your customer on your selling price. Example You sell clothing on consignment to a customer in Saskatchewan for $100 plus the GST, which you include on your GST/HST return. You pay the consignor $60. You are considered to have bought the clothing from the consignor for $60 immediately before the sale. The consignor, if a GST/HST registrant, charges you the GST on the $60, which you can claim as an ITC on your return. If not a registrant, the consignor does not charge you the GST. When you return any unsold items to the consignor, you do not have to pay the GST/HST on these items since the consignor never sold you the goods. For more information, see GST/HST Info Sheet GI-009, Consigned Goods. Direct selling industry Businesses in the direct selling industry sell their products directly to consumers through sales representatives or to independent sales contractors who, in turn, sell the products to purchasers. Their business structure is usually based on one or both of the two following models: - direct sellers who sell their products to distributors and independent sales contractors who, in turn, sell them to purchasers - network sellers who sell their products directly to consumers through sales representatives who receive commissions for arranging the sales Alternate collection method Direct sellers may apply for approval to use the alternate collection method (ACM), another method for accounting for the GST/HST on their sales of exclusive products. Under the ACM, direct sellers charge and account for the GST/HST on the suggested retail price of the exclusive products as if they had made the sales directly to purchasers. For more information, including how to apply for approval to use the ACM, see GST/HST Info Sheet GI-125, Direct Selling Industry – The Alternate Collection Method for Approved Direct Sellers and Approved Distributors. With the ACM, most independent sales contractors do not have to register for the GST/HST because they do not include revenues from their sales of exclusive products in their calculation to determine if they are small suppliers. For more information, see GST/HST Info Sheet GI-126, Direct Selling Industry – The Alternate Collection Method for Independent Sales Contractors. Network sellers method Network sellers who meet certain conditions may apply for approval to use the network sellers method. As a result, the commissions paid to sales representatives for arranging for the sale of the network seller’s select products would not be subject to the GST/HST and would 73 not be used for determining whether sales representatives are small suppliers. For more information, including how to apply for approval to use the network sellers method, see GST/HST Info Sheet GI-052, Direct Selling Industry – The Network Sellers Method for Network Sellers and Sales Representatives. ### Supplies to diplomats, governments, and First Nations Diplomats As a registrant, you must charge and collect the GST/HST on taxable supplies of property and services you provide to diplomatic missions, consular posts, international organizations, and foreign representatives and officials. Foreign representatives and officials include diplomatic agents, consular officers, members of administrative and technical staff of diplomatic missions, designated officials of international organizations, and the family members forming part of their respective household. If approved by Global Affairs Canada, diplomatic missions, consular posts, international organizations, and foreign representatives and officials may obtain a rebate of the GST/HST by filing Form GST498, GST/HST Rebate Application for Foreign Representatives, Diplomatic Missions, Consular Posts, International Organizations, or Visiting Forces Units. For more information, see GST/HST Memorandum 18-3, GST/HST Relief for: Foreign Representatives, Diplomatic Missions, Consular Posts, International Organizations; and International Bridge and Tunnel Authorities. Federal government In general, the CRA considers the federal government to be a single entity that includes all its departments, branches, agencies and some corporations. Federal Crown corporations are separate legal entities and are registered separately for GST/HST purposes. The federal government pays the GST/HST on its taxable purchases. Therefore, as a registrant, you have to charge the GST/HST on the taxable supplies of property and services you make to the federal government. Special rules may apply to supplies of real property. For more information, see GST/HST Memoranda Series Chapter 19, Real Property. The federal government also has to charge the GST/HST on its taxable supplies. Provincial and territorial governments The governments of British Columbia, Nunavut, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador have agreed to pay the GST/HST on their taxable purchases. Therefore, you have to charge the GST/HST on taxable supplies of property and services you make to the departments and agencies of these governments. 74 The governments of Alberta, Manitoba, Northwest Territories, Saskatchewan, and Yukon, including all their government departments or ministries, and some of their Crown corporations, boards, commissions, and agencies, do not pay the GST/HST on their taxable purchases if they provide certification. You do not charge the GST/HST on taxable supplies of property and services made to these governments if an authorized official provides evidence that the supplies are being purchased by a provincial or territorial department or entity. The CRA will accept a certification clause that an authorized official of a provincial or territorial government entity, in one of these provinces or territories, has signed as satisfactory evidence. This is a statement on provincial or territorial purchase documents that certifies that a provincial or territorial government is purchasing the property or services on its own behalf. As the vendor, keep the purchase documents with the certification clause in case the CRA asks to see them. Employees of a provincial or territorial government who make official business purchases in their own name have to pay the GST/HST. You may be eligible to claim ITCs for any GST/HST paid or payable on purchases you made to make taxable supplies of property and services to provincial or territorial governments. For more information on claiming ITCs, see Input tax credits on page 21. Provincial and territorial governments have to charge the GST/HST on their taxable supplies of property and services. For more information, see GST/HST Memorandum 18-2, Provincial Governments. Municipalities Municipalities pay the GST/HST on their taxable purchases. As a registrant, charge the GST/HST on the taxable supplies of property and services you make to municipalities. Municipalities also have to charge the GST/HST on their taxable supplies. Certain property and services provided by municipalities are exempt from the GST/HST. Most supplies of property and services made between municipalities and their own para-municipal organizations are also exempt. For more information, see Guide RC4049, GST/HST Information for Municipalities. First Nations Individuals registered under the Indian Act, Indian bands, and band-empowered entities pay the GST/HST on the taxable purchases they make unless they provide proper documentation and the purchases meet the conditions outlined in the following sections. The CRA recognizes that many First Nations people in Canada prefer not to be described as Indians. However, the CRA uses the term Indian because it has legal meaning under the Indian Act. Notes The Government of Ontario made regulations under the Retail Sales Tax Act of Ontario that allow for point-of-sale rebate equal to the 8% provincial part of the HST to be provided to individuals registered under the Indian Act, Indian bands, and councils of an Indian band for eligible purchases made off a reserve. Ontario refers to this credit as the Ontario First Nations rebate. As a result, GST/HST registrant suppliers in Ontario may credit an amount equal to the 8% provincial part of the HST at the point-of-sale. For information on which goods or services qualify, who is eligible, and the documents required to support the amounts credited, go to the Ontario Ministry of Finance website at -harmonized-sales-tax-hst-rebate. To see the regulations, go to the Government of Ontario website at . Goods You do not charge the GST/HST on supplies of goods that you make on a reserve to an individual registered under the Indian Act, Indian bands or band-empowered entities provided they show you appropriate documentation. You also do not charge the GST/HST on supplies of goods that you make to an individual registered under the Indian Act, Indian bands or band-empowered entities when you, or your agent, delivers the goods to a reserve, and the purchaser shows you the appropriate documentation. Services You do not charge the GST/HST on supplies of services you make to an individual registered under the Indian Act if you perform the services entirely on a reserve or the services are for real property interests on a reserve, and they show you the appropriate documentation. You also do not charge the GST/HST on supplies of services you make to an Indian band or band-empowered entity for band management activities or for real property on a reserve, even when the services are performed off a reserve, provided they provide you with the proper documentation. However, Indian bands and band-empowered entities have to pay the GST/HST on all off-reserve purchases of transportation, short-term accommodation, meals, and entertainment. In some circumstances, there may be a rebate available to the purchaser. Services provided to an Indian band or band-empowered entity for real property located off a reserve are subject to the GST/HST. Intangible personal property Intangible personal property, such as a right to use software or a membership, is not a physical object and it cannot be delivered to a reserve. However, GST/HST relief may apply if the right supplied can be used or exercised exclusively on a reserve. Documentation An individual registered under the Indian Act must present you with proof of registration under this Act to purchase goods or services without paying the GST/HST. For individuals, the CRA accepts the original Certificate of Indian Status card as proof of registration or the original Temporary Confirmation of Registration Document. The Temporary Confirmation of Registration Document includes: - Indigenous Services Canada letterhead - Individual’s registration number (10 digits) - effective date of registration and the expiration date of the document - raised seal of the Indian Registrar - Canada logo with a red flag A photocopy or an altered version of the Temporary Confirmation of Registration Document is not valid. You must keep, as evidence, a notation on the invoice or other sales document of the 10 digit registry number or the band name and family number (commonly referred to as the band or treaty number) from the card, or the registration number and the expiration date of the Temporary Confirmation of Registration Document. Note An individual presenting any other membership or association type card, such as a Métis Association card, is not entitled to tax relief. When the purchaser is an Indian band or band-empowered entity, you must obtain and keep a certificate from the purchaser that shows one of the following, as applicable: - that the property is being purchased by an Indian band or an unincorporated band-empowered entity - in the case of an incorporated band-empowered entity, that the property is being purchased for band management activities or for real property on a reserve - that the service is being purchased for band management activities or for real property on a reserve When goods are delivered to a reserve, you must also keep proof of delivery, such as a waybill. You may be eligible to claim ITCs for any GST/HST paid or payable on purchases you made to supply taxable goods and services to individuals registered under the Indian Act, Indian bands and band-empowered entities, even though you did not collect the GST/HST on the supply. For more information on claiming ITCs, see Input tax credits on page 21. For more information, see Technical Information Bulletin B-039, GST/HST Administrative Policy – Application of the GST/HST to Indians. ### Trade-ins If, in the course of your business, you accept used goods in trade as full or partial payment for goods you sell or lease, special rules apply depending on whether the person from whom you are accepting the trade-in has to charge tax on the trade-in. 75 When the customer has to charge tax If you accept used goods in trade from a person who has to charge the GST/HST (for example, if the trade-in is an asset of a registrant’s business), two separate transactions take place. You purchase the trade-in from your customer and you make a sale or a lease to the same customer. Collect the GST/HST on the full price charged for the goods you sell or lease, and pay the GST/HST on the value of the trade-in. Example Axle Company, a registrant in Alberta, sells new machinery to Gilson Company, also a registrant, for $50,000. Axle Company accepts old machinery as a trade-in with a trade-in value of $20,000. Axle Company will invoice and collect the GST on the full $50,000 selling price. Gilson Company will invoice and collect the GST on the trade-in value of $20,000. Both you and your customer can generally claim an ITC for the GST/HST paid or payable. When you accept a trade-in from a customer who has to collect the GST/HST, make sure the invoice includes the information listed in the chart, “Input tax credit information requirements” on page 19, so that you can claim an ITC. When the customer does not have to charge tax A different rule applies for used goods you accept in trade from a person who does not have to charge the GST/HST (usually a person who is not a GST/HST registrant). A person may also trade in a leasehold interest in used goods. In this case, you charge the GST/HST on the net amount (the price of the goods you sell or lease minus the amount you allow for the trade-in). This is similar to the treatment of trade-ins under most provincial sales taxes. For more information, see Technical Information Bulletin B-084R, Treatment of Used Goods. Example John has used his car for personal use only. He goes to a registered car dealer in Manitoba to trade in his used car for a new one. The selling price of the new car is $25,000, and the dealer allows $10,000 for the used car. The dealer charges the GST on $15,000. The dealer calculates the sale price as follows: Selling price of new car............................................ $25,000 Less trade-in of used car.......................................... (10,000) Subtotal...................................................................... $15,000 Plus GST ($15,000 × 5%).......................................... 750 John pays................................................................... $15,750 76 Sale-leaseback arrangements When you purchase goods from a person who does not have to collect tax on the sale and you immediately lease the goods back to that person, the amount of the GST/HST on the lease is determined by deducting the amount paid or credited for the sale from the lease payments. The total credit is usually spread evenly over the number of lease payments. Determine the credit for each lease payment at the beginning of the lease by dividing the sale price of the goods by the number of lease payments. If the terms of the lease change, recalculate this amount. The maximum you can deduct from any one lease payment is the amount needed to bring that payment to zero. Example Larry sells a piece of heavy duty equipment to a leasing company in Alberta for $100,000, who leases it back to Larry. The terms of the lease were for 100 monthly lease payments of $1,200. Larry is not registered for the GST/HST. The leasing company calculates the GST on the monthly lease payment as follows: Lease payment.......................................................... $1,200 Less purchase credit ($100,000 ÷ 100).................... (1,000) Value of each lease payment for GST purposes... $200 GST per lease payment ($200 × 5%)....................... $10 If the terms of the lease do not change, Larry will pay $10 GST on each lease payment. When there is a renewal, variation, or early termination in a lease that changes the number of lease payments, or when the lease is assigned to a new lessor but the lessee and the goods remain the same, you recalculate the amount that you can credit against each lease payment. When a lessee exercises an option to purchase the goods, you can deduct any unused credit from that purchase price up to the amount of the purchase price. Barter-exchange networks A barter-exchange network is a group of persons who have agreed in writing to accept credits (barter units) on the accounts of the group members in exchange for property or services traded among members. The accounts are maintained by an administrator, who is responsible for administering, maintaining, or operating a system of members’ accounts to which barter units may be credited. When supplied by a GST/HST registrant, tax applies on the exchange value of the barter unit and on the goods and services provided for the units. The administrator of a barter-exchange network may apply to have the network designated for GST/HST purposes. Members of a designated barter-exchange network do not have to pay tax on barter units accepted in exchange for their supplies of goods or services. However, if they are registered for the GST/HST, they would continue to charge tax on their taxable supplies of goods and services provided for the barter units. ### Selling your business If you are selling your business, you can jointly elect with the purchaser to have no tax payable on the sale if: - you sell the business that you established or carried on - under the agreement for the sale, the purchaser purchases ownership, possession, or use of at least 90% of the property that can reasonably be regarded as being necessary for the purchaser to be capable of carrying on the business Note You may also be eligible to make this election if you are selling part of a business. To make this election, use Form GST44, Election Concerning the Acquisition of a Business or Part of a Business. Any property not purchased under the agreement but that the purchaser needs to carry on the business has to fall within the remaining 10% of the fair market value of all the property purchased. For example, where real property such as land and a building is not included in the supply, but is purchased elsewhere, it and any other property purchased generally must not exceed 10% of the fair market value of all the property required to carry on the business. In addition, the purchaser has to be able to carry on the same kind of business that you established or carried on with the property that the purchaser has purchased under the agreement. This election can only be made if: - a registrant is selling to another registrant - a non-registrant is selling to another non-registrant - a non-registrant is selling to a registrant You still have to charge the GST/HST on the following supplies even if you and the purchaser made the election: - taxable services to be rendered to the purchaser - taxable supplies of property by way of lease, licence, or similar arrangement - a taxable sale of real property to a purchaser who is not a registrant This election cannot be used for selling individual assets of your business, or if you are a registrant and the purchaser is not. The purchaser has to file the GST44 election with the CRA no later than the due date of the GST/HST return for the purchaser’s first reporting period in which tax would have been payable if the election had not been made. For more information on selling your business and the election to have no tax payable on the sale, see GST/HST Memorandum 14-4, Sale of a Business or Part of a Business. Will you have any more business activity? After you sell the assets of your business, you may or may not intend to carry on with another type of business activity. If you sell your entire business and have no intention of continuing in any business activity, contact the CRA to close your GST/HST account. Unless you notify the CRA, you will continue to receive your GST/HST returns and the CRA will expect you to fill out and file them with the CRA. To close your GST/HST account, send a letter or a filled out Form RC145, Request to Close Business Number Program Accounts to your tax centre. The tax centres are listed at . If you do intend to carry on with another type of business activity, call 1-800-959-5525 to determine if you can continue to use your current BN or if you will need to apply for a new one. ### Cancelling your registration You can request to cancel your registration if: - You are a small supplier (other than a person who is carrying on a taxi business or a commercial ride-sharing service) and you have been registered for at least one year. - You decide to close your business or stop making taxable supplies and you no longer need to be registered for the GST/HST. However, you may have to remit the GST/HST on capital property used in your commercial activities, and on other property you have on hand when you cancel your registration. When you cancel your registration, file all GST/HST returns and remit any GST/HST that was charged or collected on taxable supplies while you were a registrant. For more information, see GST/HST Memorandum 2-7, Cancellation of Registration. Non-capital property held at the time of deregistration When you cancel your registration, you are considered to have sold each property (other than capital property) that you held for consumption, use, or supply in a commercial activity and to have collected the GST/HST on these sales. As a result, ITCs previously claimed on such property will be recaptured. Determine the GST/HST on the fair market value of each of these properties immediately before you cease to be a registrant. Report the GST/HST on your last return as a registrant and remit any net tax owing. Capital property held at the time of deregistration When you cease to be a registrant, you are considered to have stopped using capital property you held for use in your commercial activities immediately before ceasing to be a registrant. Some examples of capital property include land, buildings, vehicles, and computers. Use the change-in-use rules for this property to determine if you have tax owing. Under these rules, you are considered to have sold the capital property immediately before you cancel your registration and to have collected tax equal to the basic tax content of the capital property at that time. 77 Include the tax you are considered to have collected in your net tax calculation on your last return as a registrant. Generally, all or part of the ITCs previously claimed on this property have to be repaid. For more information, see “Change-in-use rules for capital personal property” on page 26 and “Change-in-use rules for capital real property” on page 62. ITCs for services, rent, royalties, and similar payments You cannot claim ITCs for the GST/HST payable on services, to the extent that the services were supplied to you after you cease to be a registrant, or on rent, royalties, or similar payments that relate to the period after that time. You have to make an adjustment to your net tax calculation on your final return if you have claimed ITCs for the GST/HST paid or payable on these payments. However, you may be eligible to claim ITCs for the GST/HST that becomes payable after you cancel your registration for services, rent, royalties, or similar payments that relate to a period before you cease to be a registrant. For more information on claiming ITCs, see Input tax credits on page 21. Filing your final GST/HST return When you cancel your registration, you are considered to have two separate reporting periods. You may, therefore, have to file two returns as follows: - a return for a reporting period that ends the day before you cancel your registration - a second return for a reporting period that begins the day you cancelled your registration and ends on the last day of that month. This return is only required if you have tax to remit for that period If you do have tax to remit or ITCs to claim after your business closes, call 1-800-959-5525 to determine what cancellation date to use for your GST/HST account. Example 1 You are an annual filer with a reporting period of January 1 to December 31, 2023. You close your business (cease to be a registrant) on January 1, 2024. Send to the CRA: - a final return for the period January 1 to December 31, 2023. As this is a return for a reporting period that is a full fiscal year, the return is due March 31, 2024 (three months after the end of your fiscal year) or for an individual, the due date of the return is June 15, 2024 - an additional return if your business has tax to remit for the period January 1 to 31, 2024, which is due February 28, 2024 (one month after the end of your deemed reporting period) 78 Example 2 You are an annual filer with a reporting period of January 1 to December 31, 2023. You close your business (cease to be a registrant) on October 21, 2023. Send to the CRA: - a final return for the period January 1 to October 20, 2023, which is due November 20, 2023 - an additional return if your business has tax to remit for the period October 21 to 31, 2023, which is due November 30, 2023 Note If you are an annual filer, and you cancel your registration part-way through your fiscal year, you will generally have to file your return within one month after the date you cancel your registration. Example 3 You are a quarterly filer with a reporting period of January 1 to March 31, 2024. You close your business (cease to be a registrant) on March 14, 2024. Send to the CRA: - a final return for the period January 1 to March 13, 2024, which is due April 13, 2024 - an additional return if your business has tax to remit for the period March 14 to 31, 2024, which is due April 30, 2024 Sole proprietor of the business has passed away When the sole proprietor of the business has passed away, the individual’s date of death should be provided to the CRA as soon as possible by contacting your tax service office or calling 1-800-959-5525. If the commercial activity of the individual has subsequently ceased, the GST/HST account has to be closed and a final GST/HST return will have to be filed for a reporting period that ends on the day the individual died. The due date of the return is one month after the end of the reporting period. However, in cases where tax becomes payable or remittable by the individual’s estate, the GST/HST account has to remain open until all obligations under the estate are satisfied. A reporting period that includes the day the individual died is separated into two reporting periods. Generally, two returns have to be filed as follows: - a return for a reporting period that ends on the day the individual died - a second return for a reporting period of the estate that begins on the next day after the individual died and ends on the day the reporting period would have ended if the individual had not died For both of these reporting periods, the due date of the return is one month after the end of the reporting period. Example 1 The individual is a quarterly filer with a reporting period of January 1 to March 31, 2024. The individual passed away on February 14, 2024 and the GST/HST account is subsequently closed. Send the CRA a final return for the period of January 1 to February 14, 2024, which is due March 14, 2024. Example 2 The individual is an annual filer with a reporting period of January 1 to December 31, 2024. The individual passed away on September 15, 2024. The individual’s estate has tax to remit and continues to use the current GST/HST account. Send the CRA both: - a return for the period of January 1 to September 15, 2024, which is due October 15, 2024 - a second return for the period of September 16 to December 31, 2024, which is due January 31, 2025 For more information, call 1-800-959-5525. How to cancel your registration To cancel your registration, send a letter or a filled out Form RC145, Request to Close Business Number Program Accounts to the CRA. For more information, call 1-800-959-5525. ## Instructions for filling out your GST/HST return To fill out your GST/HST return, you usually need the following amounts: - your sales and other revenues - the GST/HST you charged (even if it wasn’t collected) - your GST/HST paid and payable You might have to include other amounts, such as instalments that you paid during the year, adjustments to your net tax and transitional information relating to new housing in Ontario, Nova Scotia, New Brunswick, or Newfoundland and Labrador. If you expect a refund from a previous reporting period but have not yet received it, do not include this information on your current GST/HST return. A special net tax calculation method must be used by most charities for reporting the GST/HST they charge and collect and for claiming input tax credits (ITCs). For more information, see Guide RC4082, GST/HST Information for Charities. All GST/HST registrants, except for most charities and selected listed financial institutions, are required to file electronically. A penalty will apply if you are required to file electronically and you do not do so. For more information, see “Mandatory electronic filing” on page 35. The CRA offers a printer-friendly version of the GST/HST return working copy at . This working copy is provided to enable registrants who file electronically to keep a copy of their GST/HST return calculations for record purposes. If you file a paper return, the CRA will send you the GST34-2 filing information package, which also includes personalized returns. You can use the access code provided in the package if you decided to start using GST/HST NETFILE or GST/HST TELEFILE. The package will be sent before your first return is due and will contain: - a cover letter with your reporting periods and filing due dates - all returns you are required to file - remittance vouchers for each period - your access code The CRA has also made some changes to the layout of the return. There are two returns on each piece of paper; one on the bottom and another one inverted at the top. For line-by-line instructions on using the regular method for filing both electronic and paper returns, see “Regular method” on this page. ### Quick method This is a method of calculating and reporting your GST/HST. Whether the quick method will be more beneficial for you to use than the regular method depends on your specific situation. You have to file an election to use this method before you file your return using the quick method. For information on eligibility for the quick method and how it works, see “Quick method of accounting” on page 33. For detailed information and line-by-line instructions to fill out your GST/HST return, see Guide RC4058, Quick Method of Accounting for GST/HST. If you are a public service body (other than a charity that is not a designated charity), go to our webpage “Special quick method of accounting for public service bodies.” ### Regular method The following section explains how to file your GST/HST return, using the regular method of calculating and reporting your GST/HST. Line 135, line 136, and Schedules A, B, and C do not apply to paper returns. If you are filing using GST/HST TELEFILE, you will only need to enter amounts on certain lines. For example, you will enter an amount on line 105. However, to give you the amount applicable for line 105, you will need to total the GST/HST collected and collectible and the GST/HST adjustments on your working copy by following the instructions for line 103 and line 104. The following section advises which of the line numbers do not appear on GST/HST TELEFILE. 79 Line 101 – Sales and other revenue If you file your return online, use the following instructions: You will be asked if you want to report one or more of the following types of sales on your return: - exempt supplies, zero-rated exports, goodwill, financial services, sales of capital real property, and supplies made outside of Canada - taxable sales of my associates (including zero-rated supplies) made in Canada Reporting these sales will help the CRA to properly calculate your reporting period threshold amount. If you choose to do so, you will be asked to fill out lines 90, 91, and 102. If you choose not to do so, follow the line 101 instructions for filing a paper GST/HST return using the regular method on page 79. Line 90: Enter the total of your taxable sales including zero-rated supplies made in Canada for this reporting period. Do not include zero-rated exports and other sales and revenues. Other sales and revenues include goodwill, financial services, sales of capital real property, and supplies made outside of Canada. If you have nothing to report, enter “0.” Line 91: Enter the total of your exempt supplies, zero-rated exports, and other sales and revenues for this reporting period. If you have nothing to report, enter “0.” Line 101: Line 101 is populated based on what is entered on lines 90 and 91. To make sure your reporting period stays accurate, put your supplies and sales on the correct lines. Reporting periods are generally determined based on the total of your reported taxable supplies and the supplies of any associates. For more information, see “Reporting periods” on page 15. Line 102: Enter your associates’ total of all taxable sales and other revenues including zero-rated supplies made in Canada for this reporting period. Do not include zero-rated exports, and other sales and revenues. Other sales and revenues include goodwill, financial services, sales of capital real property, and supplies made outside of Canada. If you have nothing to report, enter “0.” If you file a paper return, use the following instructions: Line 101 Enter the total amount of revenue from supplies of property and services, including zero-rated and exempt supplies, and other revenue for the reporting period. Do not include the provincial sales tax, the GST, the HST, or any amounts you reported on a previous return. Round off the amount to the nearest dollar. Enter this amount on Part 2 of the return that you take to the bank with your payment or that you send to the CRA. Enter a “0” if you have no revenue to report. 80 Notes Registrants using the quick method of accounting for GST/HST enter the total amount of revenue from taxable supplies of property and services including the GST/HST. Do not include provincial sales tax, supplies on which no GST/HST was charged such as zero-rated and exempt supplies, supplies made outside Canada, or property and services sold to First Nations or provincial or territorial governments that are relieved of paying the GST/HST. Similar instructions apply for the special quick method of accounting for public service bodies. Instructions for filling out the GST/HST return using the quick method can be found in guide RC4058, Quick Method of Accounting for GST/HST, or go to “Special quick method of accounting for public service bodies” webpage. Line 103 – GST/HST collected or collectible Enter all GST/HST you were required to collect as well as all amounts collected on property and services (including the GST/HST you collected or were required to collect on any sale of real property and other capital property). Notes Do not include the tax on a taxable sale of real property if you are not required to collect the tax payable (unless you collected it by mistake). For more information, see “Who remits the tax for a taxable sale of real property – Vendor or purchaser?” on page 59. If you provide the Ontario First Nations point-of-sale relief, the amount of HST collected or collectible on the supply must be included at the full 13% rate. For each reporting period, include the amount of the GST/HST you collected, or were required to collect, on both paid and unpaid invoices. Line 103 does not appear on GST/HST TELEFILE. Line 104 – Adjustments to be added to the net tax Fill out line 104 only if you have to make adjustments to increase the amount of your net tax for the reporting period. Enter the total of all adjustments. For example: - If you wrote off the GST/HST amount of any bad debts on a previous return, and then recovered some or all of those debts, add the amount of the GST/HST you have recovered. For more information, see “Bad debt recovered” on page 33. - If you have claimed 100% ITCs for lease payments for a passenger vehicle during the year, and these lease payments are more than the maximum lease costs that are deductible under the Income Tax Act, once a year you have to add the amount of the ITCs over-claimed on line 104. The maximum lease cost is $950 per month (this amount does not include federal or provincial taxes). Although you are allowed to claim 100% ITCs for lease payments greater than $950 during the year, you have to pay back the ITCs claimed for the portion of lease payments that are greater than $950 per month. Note The limits on deductible leasing costs that applied in prior years were as follows: $800 per month ( not including the GST/HST - and PST), for new leases entered into before 2022 $900 per month ( not including the GST/HST - and PST), for new leases entered into on or after January 1, 2022 but before 2023 There are proposed amendments to increase the limit on deductible leasing costs as follows: - to $1,050 from $950 per month, ( not including the GST/HST and PST), for new leases entered into on or after January 1, 2024. - If you have claimed 100% ITCs for meal and entertainment expenses during the year, once a year you have to add 50% (or the applicable percentage for long-haul truck drivers – see “Long-haul truck drivers” on page 23) of those credits to your net tax. For more information, see “Meal and entertainment expenses” on page 23. Line 104 does not appear on GST/HST TELEFILE. Line 105 – Total GST/HST and adjustments for the period If you file a paper return or use GST/HST TELEFILE, add line 103 and line 104, and enter the result on line 105. If you file a paper return, enter this amount on Part 1 and Part 2 of the return. If you file your return electronically using GST/HST NETFILE, line 105 will be automatically calculated based on the information you provided to fill out the other lines. Note If you provide the Ontario First Nations point-of-sale relief, the amount of HST collected or collectible on the supply must be included in the line 105 calculation at the full 13%. Report the amount credited at the point-of-sale on line 111. Line 106 – GST/HST paid or payable (ITCs) Enter on line 106 eligible ITCs for the GST/HST paid or payable on the value of property and services you purchased, imported, or brought into a participating province to the extent they are for consumption, use, or supply in the course of your commercial activities. Enter the total of all ITCs for the reporting period. Include any ITCs you did not claim in an earlier reporting period, provided the time limit for claiming the ITCs has not expired. Line 106 does not appear on GST/HST TELEFILE. Line 107 – Adjustments to be deducted when determining the net tax Fill out line 107 if you have adjustments that decrease the amount of your net tax for the reporting period. Enter the total of all adjustments. For example, you can claim the amount of any GST/HST on bad debts you write off if you have previously accounted for the full amount of the GST/HST on the supplies that resulted in those debts, and you have remitted any net tax owing. For more information, see “Bad debt adjustments” on page 32. You can also make an adjustment if you are a participating employer of a pension plan that made an election with a pension entity to share a pension rebate amount. You can make an adjustment on line 107 for the following amounts you paid or credited a purchaser: - If you are a builder who is eligible to file a paper return, the amount of a new housing rebate you paid or credited to a purchaser in that reporting period, as long as you submit the purchaser’s new housing rebate application, Form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder, with your GST/HST return. In addition, Form RC7190-ON, GST190 Ontario Rebate Schedule, may also be required to be attached to Form GST190, to account for the provincial portion of a new housing rebate. If you electronically file your return, mail Form GST190, and the Ontario rebate schedule if applicable, to the appropriate tax centre no later than the due date of the electronically filed return. (Builders also have the option of electronically submitting GST190 Type 1A or Type 1B rebate applications online with their return.) For more information, see Guide RC4028, GST/HST New Housing Rebate. - If you paid or credited the amount of a rebate on a sale of a specially equipped motor vehicle, and you fill out and send Form GST518, GST/HST Specially Equipped Motor Vehicle Rebate Application, with your GST/HST return. - If you are a registrant organizer of a foreign convention or a convention facility operator, the rebate amount you paid or credited for the convention facility and related convention supplies. Fill out Form GST106, Information on Claims Paid or Credited for Foreign Conventions and send it to your tax centre at the address shown on your GST/HST return. - The amount of a rebate you paid or credited to a non-resident for taxable installation services if you filed the rebate application, Form GST189, General Application for GST/HST Rebates, with your GST/HST return. - The amount you paid or credited in respect of a point-of-sale rebate if you included the total HST collected or collectible (for example, 13% in Ontario) on line 103. This does not include Ontario First Nations point-of-sale relief. Line 107 does not appear on GST/HST TELEFILE. Line 108 – Total ITCs and adjustments If you file a paper return or use GST/HST TELEFILE, add line 106 and line 107, and enter the result on line 108. If you file a paper return, enter this amount on the return portion (Part 2) that you will send to the CRA. If you file your return electronically using GST/HST NETFILE, line 108 will be automatically calculated based on the information you provided to fill out the other lines. 81 If you file using GST/HST NETFILE, and you are required to fill out Schedule B, the amount for line 108 will be calculated automatically based on the information you entered on Schedule B. See “Schedule B, Calculation of recaptured input tax credits ” on page 84. Builders who are required to file their returns electronically using GST/HST NETFILE, can submit Form GST190 for Type 1A or Type 1B rebate applications online together with their GST/HST return for the reporting period in which the amount of the rebate was paid or credited to the buyer. These rebate amounts are not automatically included on line 108. Therefore, builders must include these rebate amounts on line 107, and also enter these amounts on line 135 or, if the builder is required to fill out Schedule B, the builder must include these amounts on line 1400 of Schedule B and line 135 of its GST/HST NETFILE return. Line 109 – Net tax Subtract line 108 from line 105. The difference is your net tax. Enter the amount on line 109. If you file a paper return, enter this amount on the return portion (Part 2) that you will send to the CRA. If you file your return electronically using GST/HST NETFILE or GST/HST TELEFILE, line 109 will be automatically calculated based on the information you provided to fill out the other lines. If you file your return late and line 109 shows an amount owing, after taking into account any instalments you have already paid, the CRA may charge you a penalty and interest on the amount. If the amount entered is negative (total ITCs and adjustments are more than the total GST/HST and adjustments), put a minus sign in the box to the left of the amount. Line 110 – Instalment and other annual filer payments Enter the total amount of the quarterly instalments you paid in the year. If you file a paper return, enter this amount on the return portion (Part 2) that you will send to the CRA. For more information, see “Instalment payments” on page 41. If you are an individual with business income for income tax purposes and have a December 31 fiscal year-end, your return due date is June 15. However, your net tax remittance is due April 30. If you remitted your net tax and you are now filing your GST/HST return, add the amount of your remittance to the instalments you made, if any, and enter the total on line 110. Do not enter any other amount on line 110. You cannot use this line to report the ITCs or refunds you expect to receive. Line 111 – Rebates Some rebates can reduce or offset your amount owing. Those rebate forms contain a question asking you if you want to claim the rebate amount on line 111 of 82 your GST/HST return. If you want to offset the amount owing by a rebate that you are entitled to claim, tick yes on the rebate form and include it with your paper return when you send it to the CRA. For more information, see “Using a rebate or refund to decrease an amount owing on your GST/HST return” on page 37. If you are required to file an electronic return, some applicable rebate forms have to be mailed separately on or before the due date of your GST/HST return. If you want to offset the amount owing by a rebate that you are entitled to claim, enter the amount on line 111 of your GST/HST return. However, the following rebate applications can be filed electronically with your return, using GST/HST NETFILE, or the “File a return” service, in My Business Account or in Represent a Client at - Form GST66, Application for GST/HST Public Service Bodies’ Rebate and GST Self-Government Refund (non-personalized) - Form GST189, General Application for GST/HST Rebates (Reason Code 23 – rebate application for the Ontario First Nations point-of-sale relief and credited by a supplier) - Form GST189, General Application for GST/HST Rebates (Reason Codes 1A, 1C, 5, 7, 8, 9, 12, 13, 16, 20, 24, and 25) - Form GST524, GST/HST New Residential Rental Property Rebate Application Enter the total amount of the rebate(s) you are claiming. If you file a paper return, enter this amount on the return portion (Part 2) that you will send to the CRA. Notes If you provide the Ontario First Nations point-of-sale relief, include the amount credited at the point of sale on line 111. You can fill out and file this rebate application electronically. If you file a paper return, fill out and send Form GST189, General Application for GST/HST Rebates (application for reason code 23) with your return. On Form GST189, indicate in Section 2 of Part D, the reporting period in which the amounts credited at the point of sale have been set off on line 111. The amount of HST collected or collectible on the supply must be included on line 105 at the full 13% rate. For more information, see GST/HST Info Sheet GI-106, Ontario First Nations Point-of-Sale Relief – Reporting Requirements for GST/HST Registrant Suppliers. Do not include the following on line 111: - amounts from rebate applications that you have not sent with the return - ITCs - pension entity rebate amounts shared with participating employers under an election made with a participating employer of a pension plan - amounts you paid or credited to the purchaser such as amounts from: - Form GST189, General Application for GST/HST Rebates, under reason code 10, and 26 - Form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder, types 1A and 1B - Form GST386, Rebate Application for Conventions - Form GST518, GST/HST Specially Equipped Motor Vehicle Rebate Application, under reason code 17 Line 112 – Total other credits If you file a paper return, add line 110 and line 111, and enter the result on line 112. Line 112 does not appear on an electronic return. Line 113 A – Balance If you file a paper return, subtract line 112 from line 109, and enter the result on line 113 A. If the result is negative, put a minus sign in the box to the left of the amount. Line 113 A does not appear on an electronic return. Line 205 – GST/HST due on the purchase of real property or purchases of emission allowances Fill out this line only if you purchased taxable real property (other than an individual who purchased a residential complex) or taxable emission allowances for use or supply primarily ( more than 50%) in your commercial activities and the supplier was not required to collect the tax and was not deemed to have collected the tax. For example, you may be required to self-assess tax on this line if you purchased taxable real property in Canada from a non-resident. If you qualify for an input tax credit on the purchase, include this amount on line 106 ( line 108 if you are filing using GST/HST TELEFILE). Enter the amount of the GST/HST due on the purchase of real property or emission allowances on this line. If you file a paper return, enter this amount on the return portion (Part 2) that you will send to the CRA. Line 405 – Other GST/HST to be self-assessed Fill out this line if you are in any of the following situations: - You are a registrant and have to self-assess the provincial part of the HST on property or services brought into a participating province. For more information, see “Tax on property and services brought into a participating province” on page 47. - You are a registrant who imports a taxable supply for consumption, use, or supply in less than 90% of your commercial activities and you have to self-assess the GST/HST. Enter on this line the total amount of the GST/HST due on imported property or services. For more information, see “Imported goods” and “Imported services and intangible personal property” on page 57. - You are an international organization and internal use of a support resource or intangible resource occurs in Canada for a supply of a service or intangible personal property that was made outside Canada, but that is not exclusively (90% or more ) for consumption, use, or supply in commercial activities, and you have to self-assess the GST/HST on the deemed supply. - You are a financial institution and a qualifying taxpayer and have to self-assess the GST/HST using the special rules for financial institutions. For information, see GST/HST Technical Information bulletin B-095, The Self-assessment Provisions of Section 218.01 and Subsection 218.1(1.2) for Financial Institutions (Import Rules). If you file a paper return, enter this amount on the return portion (Part 2) that you will send to the CRA. Line 113 B – Total other debits If you file a paper return, add line 205 and line 405, and enter the result on line 113 B. Line 113B does not appear on an electronic return. Line 113 C – Balance If you file a paper return, add line 113 A and line 113 B, and enter the result on line 113 C. If the result is negative, put a minus sign in the box to the left of the amount. Line 113 C does not appear on an electronic return. Line 114 – Refund claimed If the amount on line 113 C is negative, enter this amount on line 114 to claim your refund. If you file a paper return, enter this amount on the return portion (Part 2) that you will send to the CRA. If you are filing your return using GST/HST NETFILE or TELEFILE, line 114 will be calculated automatically based on the information you have already provided. Note After the CRA processes your return and applies any interest and/or penalty charges, if an amount of $2 or less is owed to you, the amount will not be refunded; however, the CRA will apply it to any existing liability you may have. Line 115 – Amount owing If the amount on line 113 C is positive, enter this amount on line 115. You can pay electronically using your financial institution’s online or telephone banking services. You do not need a remittance voucher to pay online. You can also pay electronically using the CRA’s My Payment option. For more information, go to . Another online option is to authorize the CRA to withdraw a pre-determined payment from your bank account to pay tax on a specific date or dates. You can set up an agreement in My Business Account at . If you file a paper return and choose not to pay electronically, enter the amount from line 115 on the return portion (Part 2) that you will send to the CRA. Use Form RC158, Remittance Voucher – Payment on Filing, to 83 make your payment and enclose with your return and voucher a cheque for the amount owing. Note After the CRA processes your return and applies any interest and/or penalty charges, if the total amount owing at that time is $2 or less, you will not have to pay that amount. ### Schedule A, Builders – transitional information Note The CRA has removed Schedule A from the “File a return” and the “Adjust a return” options in GST/HST electronic services. GST/HST registrants are still able to adjust a Schedule A if it was already filed on the original return. It is still available to view for previously filed returns. ### Schedule B, Calculation of recaptured input tax credits Note For reporting periods that begin on or after April 1, 2021, Schedule B is no longer applicable. ### Schedule C, Reconciliation of recaptured input tax credits (RITCs) Fill out Schedule C electronically if you are required to recapture ITCs for the provincial part of the HST on specified property and services, and you elected to use the estimation and reconciliation method to report them. This schedule must be filled out within three months of your fiscal year-end. Line 105 – Total GST/HST and adjustments for the period (before RITC reconciliation) Enter on line 105 the total amount of GST/HST you were required to charge during this reporting period and any adjustments (for example, bad debts that you recovered) that increase your net tax for the reporting period. Only include amounts for the current reporting period. Do not include amounts for the fiscal year being reconciled. Line 108 – Total ITCs and adjustments (before RITC reconciliation) Line 108 before RITC reconciliation is calculated automatically based on the information you provided on Schedule B, if applicable. 84 If Schedule B is not applicable, enter on line 108 all ITCs and any adjustments (for example, rebates paid or credited to customers or for bad debts) that decrease the net tax for this reporting period. Include ITCs for the provincial part of the HST on specified property or services that are subject to recapture. Only include amounts that decrease the net tax for this reporting period. Do not include amounts for the fiscal year being reconciled. Line 1402A – Actual Net RITCs for the fiscal year Enter on line 1402A the actual amount of net RITCs for the provincial part of the HST on specified property and services purchased during the fiscal year being reconciled. This would be determined by reviewing your financial records at the end of the fiscal year. Line 1402R – Total Net RITCs reported on Schedule B for the fiscal year Enter on line 1402R the total amount of net RITCs that was reported on line 1402 of Schedule B throughout the fiscal year being reconciled. Line 116 – Adjustment to Net Tax Line 116 will be calculated automatically based on the information you provided for line 1402A and line 1402R when you select the Next button at the bottom of Schedule C. This is the adjustment to net tax that will be automatically added or subtracted from your net tax amounts reported on your GST/HST return. Line 105 – Total GST/HST and adjustments for the period (after RITC reconciliation) Line 105 will be automatically calculated when you select the Next button at the bottom of Schedule C. In most cases, line 105 will not be affected by the reconciliation of input tax credits. Line 108 – Total ITCs and adjustments (after RITC reconciliation) Line 108 after RITC reconciliation will be automatically calculated when you select the Next button at the bottom of Schedule C. This amount will equal line 108 before RITC reconciliation less line 116. ## Publications and forms The CRA offers a wide range of publications in both official languages. For a list of all GST/HST publications, go to . - Pamphlets and booklets are available on a variety of subjects. - Guides contain more detailed information on how the GST/HST affects specific types of businesses and organizations. - Info Sheets provide explanations on specific topics. - GST/HST Memoranda give more in-depth technical information on administrative and policy aspects of the GST/HST, and are aimed at tax professionals. - GST/HST Notices provide explanations on recent changes. - Technical Information Bulletins announce changes to GST/HST legislation and administrative policy in specific areas. Revenu Québec administers the GST/HST in Quebec. If the physical location of your business is located in Quebec, contact Revenu Québec at 1-800-567-4692, unless you are a person that is an SLFI for GST/HST or QST purposes or both then go to . ### Forms There are a number of options available to businesses and organizations to make it easier to comply with the GST/HST. These options, called elections or applications, allow you to adapt the administrative requirements of the GST/HST to your own business activity. While some options are available to all registrants, other options are available only to organizations and businesses that meet certain conditions. Other forms are used to remit an amount of tax. They are called returns or remittance vouchers. Elections You can make an election if you meet all the eligibility criteria. You are responsible for ensuring that you meet the conditions of an election. At the time of an audit, the CRA reserves the right to verify your eligibility and to disallow an election if you have not met the requirements. Applications Applications are different from elections. You have to meet the necessary requirements, and for many applications, you can call the CRA or fill out the form and mail it to the CRA. The CRA has to acknowledge that your application has been processed and approved before you can begin to use the procedure for which you have applied. 85 ## Digital services ### GST/HST electronic filing and remitting You have several options for filing your GST/HST return or remitting an amount owing electronically. For more information, go to or see “How to file your return” on page 35. ### Handling your business taxes online My Business Account lets you access your business tax information and interact with the CRA online throughout the year. Profile - Manage your addresses, direct deposit information, business activity, program account names, operating names, phone numbers, business numbers in your profile, and language preference - Manage your notification preferences and receive email notifications when important changes are made to your account - Manage your authorized representatives and authorization requests - Manage your multi-factor authentication settings and security options Balances and payments - Make a payment online to the CRA with My Payment, create a pre-authorized debit (PAD) agreement, or create a QR code to pay in person at Canada Post for a fee - View and pay account balance - View account transactions - Transfer payments and immediately view the updated balance - View interest - Calculate future balance - View direct deposit transactions - Calculate and pay instalment payments Transactions - File a return, view the status of filed returns, and adjust returns - File and adjust a rebate - File and view an election related to GST/HST - Track the progress of certain files and enquiries you have submitted to the CRA - Make an online request regarding your account and view answers to common enquiries - Request relief of penalties and interest - File a formal dispute (Notice of Objection) - Submit a PDF form with electronic signature 86 - Close an account Correspondence - View mail from the CRA - Submit documents to the CRA - Submit an audit enquiry For more information, go to . Access My Business Account To access My Business Account, go to -in-services and sign in to or register for a CRA account. Receive your CRA mail online Register for email notifications to find out when CRA mail, like your notice of assessment, is available in My Business Account. You will no longer receive your CRA mail by paper. For more information, go to . ### Create a pre-authorized debit agreement for payments from your Canadian chequing account A pre-authorized debit (PAD) is a secure online self-service payment option for individuals and businesses to pay their taxes. A PAD lets you authorize withdrawals from your Canadian chequing account to pay the CRA. You can set the payment dates and amounts of your PAD agreement using the CRA’s My Business Account at /cra-sign-in-services. PADs are flexible and managed by you. You can use My Business Account to view your account history and modify, cancel, or skip a payment. For more information, go to . ### Electronic payments Make your payment using: - your Canadian bank or credit union’s online banking, mobile app, or telephone service - the CRA’s My Payment service at -payment with your activated debit card from a participating Canadian bank or credit union with a Visa® Debit or Debit MasterCard® logo (does not include credit cards) - pre-authorized debit (PAD) at which lets you: set up payments to the CRA from a Canadian - chequing account on pre-set dates starting in five or more business days - pay an amount due, repay overpaid amounts, or make instalment payments - view your account history and modify, cancel, or skip a payment (for more information on PAD, go to ) - the “Proceed to pay” button on the “View and pay account balance” page and other pages within My Business Account - your credit card, Interac e-Transfer, or PayPal through one of the third-party service providers for a fee For more information, go to . 87 ## For more information ### If you need help For help with common topics, current contact centre wait times, and links to online self-serve options, go to . ### Direct deposit Direct deposit is a fast, convenient, and secure way to receive your CRA payments directly in your account at a financial institution in Canada. For more information, go to or contact your financial institution. ### Forms and publications The CRA encourages you to file your return electronically. If you need a paper version of the CRA's forms and publications, go to . ### Ordering personalized remittance forms The following personalized remittance forms are not available on our website. The CRA only provides them in a pre-printed format: - RC158, Remittance Voucher – Payment on Filing - personalized - RC159, Remittance Voucher – Amount Owing - personalized - RC160, Remittance Voucher – Interim Payments - personalized - RC177, Remittance Voucher – Balance Due - personalized You can order most remittance vouchers or payment forms through My Account, My Business Account, Represent a Client or by calling the CRA. Sign in or register to access these services at . ### Electronic mailing lists The CRA can send you an email when new information on a subject of interest is available on its website. To subscribe, go to . ### Teletypewriter (TTY) and Video Relay Service (VRS) users If you use a TTY for a hearing or speech impairment, call 1-800-665-0354. Register with Canada VRS to download the app, by going to srvcanadavrs.ca/en/get-the-app, and call the VRS line. If you use another operator-assisted relay service, call the CRA’s regular telephone numbers instead of the TTY number or VRS line. 88 ### Excise and GST/HST News As a GST/HST registrant, you may want to review the quarterly issues of the Excise and GST/HST News, which discuss different issues that concern GST/HST registrants, including new digital services. The CRA can notify you by email when new information on a subject of interest to you is available on our website. To subscribe to our electronic mailing lists, go to . You can also go to to read the latest edition of Excise and GST/HST News online. ### GST/HST rulings and interpretations You can request a ruling or interpretation on how the GST/HST applies to a specific transaction for your operations. This service is provided free of charge. For the mailing address or fax number of the closest GST/HST Rulings centre, see GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, or call 1-800-959-8287. ### Formal disputes (objections and appeals) You have the right to file an objection or an appeal if you disagree with an assessment, a determination, or a decision. For more information, go to . ### CRA service feedback program Service complaints You can expect to be treated fairly under clear and established rules, and get a high level of service each time you deal with the CRA. For more information about the Taxpayer Bill of Rights, go to . If you are not satisfied with the service you received, you can: 1. Try to resolve the matter with the employee you have been dealing with or call the telephone number provided in the correspondence you received from the CRA. If you do not have contact information for the CRA, go to 2. If you have not been able to resolve your service-related issue, you can ask to discuss the matter with the employee’s supervisor 3. If the problem is still not resolved, you can file a service-related complaint by filling out Form RC193, Service Feedback. For more information and to learn how to file a complaint, go to ### Reprisal complaints If you received a response about a previously submitted service complaint or formal review of a CRA decision and felt you were not treated fairly by a CRA employee, you can submit a reprisal complaint by filling out Form RC459, Reprisal Complaint. For more information, go to . ### Due dates When a due date falls on a Saturday, Sunday or public holiday recognized by the CRA, your payment is considered on time if the CRA receives it on or before the next business day. For more information, go to . ### Cancel or waive penalties and interest The CRA administers legislation, commonly called “taxpayer relief provisions,” that gives the CRA discretion to cancel or waive penalties and interest when taxpayers cannot meet their tax obligations due to circumstances beyond their control. The CRA’s discretion is limited to any period that ends within 10 calendar years before the year the request is made. Penalties The CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year you make your request. For example, your request made in 2025 must relate to a penalty for a tax year or fiscal period ending in 2015 or later. Interest on a balance owing The CRA will consider only the amounts that accrued during the 10 calendar years before the year in which you make your request. For example, your request made in 2025 must relate to interest that accrued in 2015 or later. Taxpayer relief requests can be made online using the CRA’s My Account, My Business Account (MyBA), or Represent a Client digital services. You can also fill out Form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties and Interest, and send it: - online using My Account, My Business Account, or Represent a Client - by mail or courier to the designated office, as shown on the last page of the form, based on your place of residence For information about submitting documents online, go to . For more information about cancelling or waiving penalties and interest, go to . 89