If you’re running a corporation in Canada, it’s important to understand how sales tax works. Sales tax, also known as Goods and Services Tax/Harmonized Sales Tax (GST/HST), is a consumption tax that is added to most goods and services sold in Canada. In this blog post, we’ll explain everything you need to know about sales tax for your corporation.
- What is sales tax?
Sales tax is a tax that is added to the price of goods and services sold in Canada. It is collected by the seller and remitted to the Canada Revenue Agency (CRA). The amount of sales tax charged varies depending on the province or territory where the goods or services are sold.
- Do I need to charge sales tax?
In general, if your corporation is engaged in commercial activity in Canada, you will need to charge sales tax on your taxable supplies of goods and services. However, there are some exceptions to this rule. For example, some goods and services are exempt from sales tax, such as basic groceries, prescription drugs, and medical devices. Additionally, some small suppliers are not required to charge sales tax if they earn less than a certain amount of revenue.
- How do I register for sales tax?
To charge sales tax, you will need to register for a GST/HST account with the CRA. You can do this online, by phone, or by mail. Once you have registered, you will be assigned a GST/HST number that you will use to file your returns and remit your taxes.
- How do I charge sales tax?
When you sell a taxable good or service, you will need to charge the appropriate amount of sales tax based on the location of the buyer. For example, if you are selling a product to a customer in Ontario, you would charge them 13% HST. If you are selling a product to a customer in Quebec, you would charge them 5% GST and 9.975% QST. You can use the CRA’s online calculator to determine the amount of sales tax you need to charge.
- How do I remit sales tax?
You will need to file a GST/HST return and remit the sales tax you have collected to the CRA. The frequency with which you need to file and remit depends on your corporation’s annual sales revenue. For example, if your corporation’s annual sales revenue is less than $1.5 million, you can file annually or quarterly. If your corporation’s annual sales revenue is more than $1.5 million, you will need to file and remit monthly.
In conclusion, understanding sales tax is important for any corporation operating in Canada. By registering for a GST/HST account, charging the appropriate amount of sales tax, and remitting your taxes on time, you can avoid penalties and ensure that your corporation is in compliance with Canadian tax laws.