How to Register for Ontario Sales Tax?
For the one who owns a business or is planning to establish a start-up in Ontario, understanding how to register for the HST (Ontario Sales Tax) is crucial.
Usually, taxes are seen as the horrible aspects of any business due to the rules and policies surrounding them.
Do not be so concerned with this as this is not just happening with you.
Many entrepreneurs exhibit these traits as well, and here only the great knowledge of tax registration can help you.
This blog will help you navigate the all necessary aspects of HST (Ontario Sales Tax), so you can ensure compliance with tax regulations.
What is GST/HST?
GST/HST represents a value-added tax structure – basically a fee that you pay on most goods and services sold or provided in Canada.
These are actually the two taxes combined: The GST (Goods and Services Tax) is a federal tax and on the other hand, the HST (Harmonized Sales Tax) is a provincial tax, and together the standard rate is 13%, consisting of a 5% GST and an 8% provincial portion.
However, some things do not come on the list of being taxed such as basic groceries, prescription drugs, and certain health services.
Also, the tax decreases from 13% to 5% on the purchase and sale of children’s clothes and books.
Why Register for Sales Tax?
Sales tax registration is mandatory for businesses surpassing $30,000 in taxable revenues annually.
This simply means if you have your own business in Ontario, and your firm generates around $30,000 a year, you need to register for sales tax.
For this, you can charge your customer GST/HST to give it as tax to the government.
It’s always best to start as early as possible; register yourself quickly so you can timely learn managing the money following the tax rules.
It’s also a great idea to register the day you have stepped into your business or started it, to manage everything well.
Prerequisites for Registration
Knowing what would be required to make a registration for Ontario Sales Tax will help you make a smoother regular compliance, and avoid the potential risks.
This section has mentioned the necessary steps to prepare for the Harmonized
Sales Tax (HST) process.
Determine Your Obligation to Register
Your business must register for HST if it earns more than $30,000 per year from the sale of goods.
A small business that earns a revenue of under $30,000 can choose to register if they decide to, but it is not mandatory.
Taxi drivers and drivers that drive for ride-sharing apps are examples of a few businesses that have to register regardless of their revenue.
Gather Necessary Documentation
In advance of registering for HST, you will need to obtain a Business Number from the Canadian authorities, and this registration can be accomplished through the Internet with the help of the Business registration online service.
Any administrative difficulties can be avoided by providing accurate and detailed relevant information.
Finalizing every required paperwork in this process can also contribute to quicker registration.
How to Register for Ontario Sales Tax
Several processes and steps must be performed to properly register for the Ontario Sales Tax, especially if your total revenue exceeds CAD 30,000.
Make use of effective strategies so that even the registration stage becomes seamless.
Online Registration Process
To register for the HST online, you can use the Business Registration Online (BRO) service, and also get a Business Number (BN) if you don’t have one.
Ahead you may need to provide your personal information including, your social insurance number (SIN), date of birth, and personal postal code for verification.
In any case of confusion, don’t hesitate to connect with the Ontario Business Central to know how to register, and also to obtain the HST Tax number.
It might take 2-5 business days for the completion of the registration process, as per the feedback from 1000 users.
Moreover, ensure the name you have chosen for your business is different from all by checking it on the Ontario Business Registry (ONBIS), so you don’t fall on delays.
Registering by Mail or Phone
You also have the option of registering over the telephone or by mail if you don’t have access to the Internet.
Once this phase has been completed by mail, it may be able to take anywhere from 10-15 business days, depending upon the workload of the posting services.
Getting in touch with the CRA over the phone is generally quicker since it is completed in about 5-7 business days.
Post-Registration Requirements
After registering for Ontario sales tax, several responsibilities arise to maintain compliance.
Obtaining a Business Number (BN)
A Business Number (BN) is very pivotal for businesses in Canada that want to engage in sales tax activities.
It’s a unique number assigned to a company by the Canada Revenue Agency (CRA).
The number is used by the business owners to identify their company when in contact with any federal, provincial, or local government program.
You can also use the Business Registration Online (BRO) service to obtain the number in a much easier way.
Compliance with Filing Periods
The frequency of filing the sales tax returns is all based on how much money is your company making.
For instance, if your business makes more than CAD 1.5 million, then you will need to file on a monthly basis.
On the other hand, if your company is generating revenue between CAD 500,000 and CAD 1.5 million, you have to file quarterly.
And in case your business is making less than CAD 500,000, then go for the annual filing option.
Use the CRA’s online services to make sure you register or file the submission in a timely, and appropriate way.
Do You Know?
The Government of Ontario and the Government of British Columbia have each introduced a harmonized sales tax (HST) that came into effect on July 1, 2010.
Common Issues and Troubleshooting
Efficiently navigating sales tax registration for your small business in Ontario can present certain challenges. Here are common issues and solutions to help manage them effectively.
Dealing with Registration Delays
Delays in sales tax registration often stem from incomplete or incorrect information.
Therefore, before filing for the registration process, ensure that all the information and details including your Business Number (BN) and Personal
Identification is accurate and complete.
In any case, even after 15 days, your registration status remains the same, don’t hesitate to contact the Canada Revenue Agency (CRA) to know the reason behind it.
Understanding Exemptions and Special Cases
Exemptions apply to specific industries, impacting how you charge and collect sales tax.
Exemptions mean when some businesses are not asked or required to pay for the sale taxes on certain items or services, for example, for basic groceries.
However, the businesses or the organizations that fall in the list of exemptions, have sometimes been required to do something or follow the conditions to prove it.
For instance, if you sell insurance contracts or benefit plans, you might be required to fill out a Purchase Exemption Certificate to validate your claim.
Bear in mind to keep a copy of the certificate, if someday the government visits you to check your records.
Tips for Effective Tax Management
Managing your taxes efficiently is your most prominent responsibility, and fulfilling it well will help you manage your money better.
Also, make sure when handling it you are following the Ontario’s
Harmonized Sales Tax (HST) regulations properly.
Maintaining Accurate Records
Keep detailed financial records of your income and expenses to calculate your sales tax accurately.
There are many software available in the market such as QuickBooks or Xero that can assist you in the well-organization of your transitions.
These software have the features of tracking sales, purchases, and expenses, making it easier for you to handle the bookkeeping, and also according to the statistics you can avoid errors up to 75%.
Ahead, if your business makes more than CAD 30,000 per year, it’s become very pivotal to ensure the accuracy of HST calculations, and that’s where these applications become a money-saver.
Utilizing Available Resources and Tools
Don’t step back to leverage government resources and digital tools provided by the Canada Revenue Agency (CRA) for HST compliance.
- Access the comprehensive guidelines in the guide RC4027.
- Use online portals such as the Business Registration Online (BRO) service for your smoother registration process.
- Attend CRA Webinars to stay aware of the updated taxes.
- Utilize digital calculation tools for automated calculations and reporting.
- Connect your accounting software to CRA’s systems, so your work can be done seamlessly.
- Lastly, don’t miss out on My Business Account Tool to keep track of your payments and for timely HST payments.
Follow up on these tips for smoother registration of your Ontario Sales Tax, and avoid potential issues.
Finance Writer
