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Can I collect GST/HST without my Business number?
February 26, 2020
11:11 pm
mapleleafman
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US business, applied for BN in January. CRA has told me they are very backed and slow right now to issue BN's. However they did give me my import/export portion of the BN.

My business and inventory are sitting at a stand still for many months as I wait for BN. Can I collect GST/HST for my Canadian sales before my BN is issued? I may not get BN until late March, and 3 months with no income is very painful.

February 27, 2020
12:36 am
Loonie
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Are you referring to the H/GST number?
As soon as your business hits 30,000 in sales, I believe you MUST charge the HST/GST.
There is info about this online from the government.
As I recall, the income goes by quarters of the year. It's a little hard to follow but you can figure it out.

I guess the question is whether your customers will be willing to wait for the number.

February 27, 2020
1:11 am
mapleleafman
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The $30k number is for residents of Canada. Non-resident/foreign entities must register immediately starting at $0.

Im probably going to go ahead and start collecting and just use the number they already gave me for import/export as it will be the same as the GST/HST number, simply the only difference is RT and RM.

February 27, 2020
9:06 am
Bill
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A BN can be for income tax, import/export, HST and/or payroll deductions, each has its own distinct extension. It's the RT extension that is required in order to file a HST return to report any HST you collect. I suppose you could collect it before then from your customers and send it to CRA on a non-registered return (i.e. anybody who collects HST has to remit it, even if they've no RT account) but your customers won't be able to claim it back because they can't provide a valid RT account number until you've got one.

Non-residents who don't "carry on business" in Canada don't have to register for HST, i.e. if you're not really targeting Canadian market but just happen to make some sales here sometimes you can just opt out RT registration and not have to charge HST.

The $30K threshold refers to worldwide sales, so if you're over that when you make your first sale in Canada then as a non-resident you have to register, again only if you're c.o.b in Canada.

mapleleafman, are you considered to be c.o.b in Canada, i.e. are you required to get an RT account? Also did CRA indicate whether they would backdate the RT registration date to when you first applied?

February 27, 2020
12:55 pm
mapleleafman
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Bill said
A BN can be for income tax, import/export, HST and/or payroll deductions, each has its own distinct extension. It's the RT extension that is required in order to file a HST return to report any HST you collect. I suppose you could collect it before then from your customers and send it to CRA on a non-registered return (i.e. anybody who collects HST has to remit it, even if they've no RT account) but your customers won't be able to claim it back because they can't provide a valid RT account number until you've got one.

Non-residents who don't "carry on business" in Canada don't have to register for HST, i.e. if you're not really targeting Canadian market but just happen to make some sales here sometimes you can just opt out RT registration and not have to charge HST.

The $30K threshold refers to worldwide sales, so if you're over that when you make your first sale in Canada then as a non-resident you have to register, again only if you're c.o.b in Canada.

mapleleafman, are you considered to be c.o.b in Canada, i.e. are you required to get an RT account? Also did CRA indicate whether they would backdate the RT registration date to when you first applied?  

I carry on business in Canada. My sales well be well over 30k. My inv is stored and sold in Canada. I have no permanent establishment in Canada.

I called the CRA and the rep was very unclear and could not give a clear answer. IE: "Yes, they possibly could backdate it, but this will be discussed with the agent who issues your RT" and "You need an RT to collect GST/HST".

Im literally burning cash right now as I wait.

February 27, 2020
3:52 pm
Bill
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mapleleafman, the way the $30K rule works is like this: Count your worldwide HST-taxable (if all sales had been in Canada) sales at the end of each calendar quarter (i.e. not tied to your own fiscal periods) for the last 12 month period, if they're over $30K you have to start collecting HST by the beginning of a month later, e.g. by May 1 if you're over in the year-ending March 31. But if you're under, repeat process at end of next calendar quarter, drop a quarter and add the latest one. (Unless you go over $30K in one quarter alone, in that case you have to register the day you go over.)

Based on that, if you're required to register by a certain date and you apply in time CRA will normally backdate, it's their fault for keeping you waiting. If you're not required, i.e. you're registering voluntarily before you are required to, they won't backdate.

In any event, I'd start collecting it as of the day I was required to be registered, at the latest, because they can/will assess you back to that date. I certainly wouldn't hold up my business waiting for the RT account, just send in all tax collected on your first return once you get the RT account open. Are your customers end-users or are they resuppliers that will be wanting to claim back the HST they pay you on their returns?

February 27, 2020
5:01 pm
mapleleafman
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Bill said
mapleleafman, the way the $30K rule works is like this: Count your worldwide HST-taxable (if all sales had been in Canada) sales at the end of each calendar quarter (i.e. not tied to your own fiscal periods) for the last 12 month period, if they're over $30K you have to start collecting HST by the beginning of a month later, e.g. by May 1 if you're over in the year-ending March 31. But if you're under, repeat process at end of next calendar quarter, drop a quarter and add the latest one. (Unless you go over $30K in one quarter alone, in that case you have to register the day you go over.)

Based on that, if you're required to register by a certain date and you apply in time CRA will normally backdate, it's their fault for keeping you waiting. If you're not required, i.e. you're registering voluntarily before you are required to, they won't backdate.

In any event, I'd start collecting it as of the day I was required to be registered, at the latest, because they can/will assess you back to that date. I certainly wouldn't hold up my business waiting for the RT account, just send in all tax collected on your first return once you get the RT account open. Are your customers end-users or are they resuppliers that will be wanting to claim back the HST they pay you on their returns?  

The $30K rule is irrelevant. From my understanding Non-resident entities are required to collect GST/HST starting at $0 as this $30k rule does not apply to them. Even if it did, I will still apply voluntarily as its required for me to conduct sales in my eCommerce channels (Amazon).

If these means they can backdate it or not, im not sure. So far its almost 3 months with no sales as I wait for the RT BN.

The customers are end-users (amazon.ca). Amazon requires the BN to collect. I can give them my BN as I already have it from the RM (import/export) the CRA gave me.

Suggestions?

February 27, 2020
6:39 pm
Bill
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Your understanding about non residents and the $30K is incorrect. What normally happens is that non-residents, by the time they request a RT account from CRA, already have worldwide sales exceeding the $30K, so at that point it's moot and that's why someone told you the $30K rule doesn't apply to non-residents. But it does. See attached link which indicates non-residents must register unless they are a "small supplier", i.e. unless they are under the $30K.
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/when-register-charge.html

And, as I said, CRA's policy re backdating varies depending on whether you're registering voluntarily or because you're required to.

Your problem is that Amazon requires a BN RT account so that they can charge HST to your customers on your behalf, so I suppose if it makes Amazon happy you can give them your BN, maybe they'll assume it includes an RT account effective now. At least your customers are not going to be making claims for HST paid to you, so that's complication's not present here. Then you can just report & remit the HST collected starting now by Amazon prior to CRA giving you your RT account on your first HST return whenever it's filed.

February 28, 2020
5:16 am
fbeaulie
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Bill said
Your understanding about non residents and the $30K is incorrect. What normally happens is that non-residents, by the time they request a RT account from CRA, already have worldwide sales exceeding the $30K, so at that point it's moot and that's why someone told you the $30K rule doesn't apply to non-residents. But it does. See attached link which indicates non-residents must register unless they are a "small supplier", i.e. unless they are under the $30K.
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/when-register-charge.html  

Bill is right, the $30K small supplier threshold also applies to non-residents. That being said, a non-resident can have $100K sales in Canada and still not be required to register and collect GST/HST - see paragraph (c):

Registration required
240 (1) Every person who makes a taxable supply in
Canada in the course of a commercial activity engaged in
by the person in Canada is required to be registered for
the purposes of this Part, except where
(a) the person is a small supplier;
(b) the only commercial activity of the person is the
making of supplies of real property by way of sale otherwise
than in the course of a business; or
(c) the person is a non-resident person who does not
carry on any business in Canada.

Selling goods in Canada through Amazon is, by itself, generally not enough to be considered carrying on a business in Canada (unless you are a Canadian vendor).

When a person is required to register, they have to collect GST/HST irrespective of the actual registration date (but purchasers will have an issue if they want to claim input tax credits (if entitled) since they need the registration number of the vendor in order to do so!)

In the case of a voluntary registration, you are only required to collect GST/HST as of the effective date of the registration. But if you do collect GST/HST before that date, you still have to remit the GST/HST you collected to the CRA.

February 28, 2020
5:35 am
Bill
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Agreed, fbeaulie, selling through Amazon alone is not enough for non-residents to be considered to be carrying on business in Canada for HST purposes, but mapleleafman said he kept inventory in Canada so I accepted his assumption that he has enough of a presence here to be considered to be carrying on business in Canada.

Per CRA "whether a person is carrying on business in Canada is a question of fact requiring consideration of all relevant facts". In CRA publication P-051R2 under Guidelines there are 12 factors listed to consider in making this determination. As well, examples 7 - 13 are relevant for non-residents selling goods in Canada.
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p-051r2/p-051r2-carrying-on-business-canada.html

February 28, 2020
5:47 am
fbeaulie
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Bill said
Agreed, fbeaulie, selling through Amazon alone is not enough for non-residents to be considered to be carrying on business in Canada for HST purposes, but mapleleafman said he kept inventory in Canada so I accepted his assumption that he has enough of a presence here to be considered to be carrying on business in Canada.

Keeping inventory in Canada might not be enough (e.g., in an Amazon fulfillment warehouse):

https://www.thor.ca/blog/2013/01/cra-comments-on-us-company-holding-inventory-in-canada/

The CRA usefully commented that the mere storage of inventory in an unaffiliated company’s warehouse should not, standing alone, result US Co carrying on business in Canada.

I'm not saying that he is not required to register. I'm only saying that it is not possible to answer that question based on the information provided.

February 28, 2020
6:19 am
Bill
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Agreed, P-051R2 lists the location of inventory as only 1 of the 12 factors to consider.

If not considered to be cob in Canada then no requirement for RT account for non-residents thus registration would be voluntary. Note that getting RT account or not has nothing to do with, independent of, getting RM import/export account on the BN.

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