Worldwide VAT, GST and Sales Tax Guide
Although the province of Québec is not considered a “participating province,” it replaced its own retail sales tax and eventually harmonized with the GST (subject to some exceptions) after it initially implemented its own Québec sales tax (QST) on 1 July 1992.
The provinces of British Columbia, Manitoba and Saskatchewan continue to impose their own retail sales tax (provincial sales tax [PST]), while the province of Alberta and Canada’s three territories do not impose a retail sales tax.
GST/HST applies to taxable supplies of property and services made in Canada in the course of a business and to imports of goods into Canada. Specific HST rules determine when a supply is made in a participating province and when property or services are brought into a participating province.
The term “property” includes all property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, any right or interest of any kind, and shares and “choses in action” (i.e., personal rights to property). However, it does not include money. The term “tangible personal property” generally means goods.
The term “services” means anything other than property or money. It does not include services provided by an employee in the course of, or in relation to, an office or employment.
For the purposes of GST/HST, the territory of Canada includes the following areas:
• The seabed and subsoil of the submarine areas adjacent to the coast of Canada for which the government of Canada or of a province may grant rights to explore for, or exploit, any minerals (including petroleum, natural gas, related hydrocarbons, sand and gravel).
• The seas and airspace above those submarine areas with respect to any activities carried on in connection with the exploration for, or exploitation of, minerals.
The legislation contains rules that determine whether a supply has been made in Canada for GST purposes. Once it is determined whether a supply is made inside Canada or outside Canada under these GST place-of-supply rules, there is a similar but separate set of rules (known as HST placeof-supply rules) that determines whether the supply is made in a particular province in Canada.
Under the legislation, a sale of goods is deemed to be made in Canada if the tangible personal property (i.e., goods) is delivered or made available to the purchaser at a place in Canada. Any other supply of goods (otherwise than by way of sale), such as a lease, is deemed to be made either inside Canada or outside Canada depending on whether possession or use of the goods is given to the recipient or is made available to the recipient inside Canada or outside Canada.
A service is deemed to be supplied in Canada if the service is performed in whole or in part in Canada. It is deemed to be supplied outside Canada only if the service is performed wholly outside Canada. A supply of intangible personal property is deemed to be made in Canada if the property may be used in whole or in part in Canada. Conversely, a supply is deemed to be made outside Canada if the property cannot be used in Canada.
Effective use and enjoyment. To avoid instances of non-taxation or double taxation, jurisdictions can apply “use and enjoyment” rules that allow a service that is “used and enjoyed” in the jurisdiction to be taxed or prevent a service that is “used and enjoyed” outside the jurisdiction from being taxed. If a service is taxed in the jurisdiction under the “use and enjoyment” provisions, a non-established supplier of the service may be required to register for GST/HST in every jurisdiction where it has customers that are not taxable persons. In Canada, no services are subject to the “use and enjoyment” provisions.
Transfer of a going concern. Normally the sale of the assets of a GST/HST-registered or GST/ HST-registrable business will be subject to GST/HST at the appropriate rate. However, a transfer
In general, crypto asset mining is not considered a supply for GST/HST purposes. For example, a person that acquires a property or service for consumption, use or supply in the person’s crypto asset mining activities is deemed to have done so otherwise than in the course of the person’s commercial activities. As a result, GST/HST does not apply to the provision of crypto asset mining and the person performing the mining cannot claim input tax credits (ITCs). However, the general GST/HST rules may apply if certain conditions are met (e.g., a particular person performs a mining activity for another person and the identity of that other person is known to the particular person).
Exemption from registration. The following are activities that are exceptions from requiring to register for GST/HST purposes:
• The person qualifies as a “small supplier.”
• The person’s only commercial activity is the supply of real property by way of sale other than in the course of a business.
• The person is a nonresident who does not carry on any business in Canada.
The definition of a “person” includes individuals, partnerships, corporations, trusts, estates of deceased individuals and bodies such as societies, unions, clubs, associations, commissions or other organizations of any kind.
A “registrant” is any person that is registered or is required to be registered for GST/HST.
Voluntary registration and small businesses. In addition to mandatory registration requirements, other persons engaged in commercial activities in Canada may apply for registration even if not required to do so under the legislation.
Small supplier threshold. A “small supplier” is a person whose annual worldwide taxable and zero-rated supplies were less than CAD30,000 in the four preceding calendar quarters. The CAD30,000 threshold is determined by reference to the aggregate of taxable and zero-rated supplies made by the person and any associates of the person in the period.
A person whose activities exceed CAD30,000 must register for GST/HST within one month after making the first supply that causes its turnover to exceed the threshold. However, if a person exceeds the CAD30,000 threshold in a single calendar quarter, it ceases to qualify as a small supplier beginning with the supply that causes it to exceed the threshold.
The small supplier threshold for a public service body (i.e., charity, nonprofit organization, municipality, university, public college, school authority or hospital authority) is generally CAD50,000.
The small supplier rules do not apply to the following businesses:
• Persons who solicit orders for publications to be delivered in Canada by mail or courier
• Persons who are registered under the “Electronic Commerce” provisions of the Excise Tax Act section 148(3) (see Digital economy)
• Taxi operators (including commercial ride-sharing services)
• Nonresidents who sell taxable supplies of admissions in Canada for places of amusement, seminars, activities or events held in Canada
Persons engaged in selling real property (under taxable conditions) otherwise than in the course of a business may also register, though they are not required to do so under the legislation. Registration permits these persons to claim ITCs on land purchases at the time of purchase instead of at the time of sale, resulting in significant cash flow advantages.
Other voluntary registrations. Registration is also permitted in the case of a resident parent corporation that has no commercial activity but holds a related corporation’s shares or debt deemed to be property that was last acquired or imported by the parent for use exclusively in the course of commercial activities. Also permitted is the registration of resident corporations that are acquiring or propose to acquire all or substantially all of the capital stock of another corporation.
intangible personal property in CADs, and the tax is payable in the reporting period in which the amount for the service or the intangible personal property was paid or became payable. Registered purchasers of real property are also required to self-assess and remit applicable tax on the consideration paid for the property.
Domestic reverse charge. There are no domestic reverse charges in Canada.
Digital economy. Prior to 1 July 2021, many online vendors who did not have a physical presence in Canada were not considered to be “carrying on business” in Canada. The obligation to pay the GST/HST on supplies was technically on the consumers, who were required to self-assess under the legislation although in practice this was rarely done.
Effective 1 July 2021, new measures were introduced to ensure that GST/HST applies fairly and effectively in the context of an increasingly digital economy. Specifically, nonresident vendors supplying digital products and services to consumers in Canada are required to register for, collect and remit GST/HST with respect to their taxable supplies to Canadian consumers. Similar requirements apply to supplies of short-term accommodation made through digital accommodation platforms, as well as to goods supplied through fulfillment warehouses, as outlined below.
Under these measures, a nonresident vendor is required to register for, collect and remit the GST/ HST if the vendor’s total taxable supplies of digital products or services made to consumers in Canada exceed or are expected to exceed CAD30,000 over a 12-month period. These measures also apply to a nonresident distribution platform operator if the operator’s total taxable supplies of digital products or services made to consumers in Canada, including the supplies of digital products or services by nonresident vendors to consumers in Canada that the operator facilitates, exceed or are expected to exceed that threshold. For purposes of this measure, a consumer is an entity or person not registered for GST/HST and a business is any other entity or person registered for GST/HST.
A nonresident vendor or nonresident distribution platform operator that does not carry-on business in Canada may register under a simplified system allowing them to use a specific online portal for simplified GST/HST collection and remittance. Under the simplified system, they are required to collect and remit GST/HST for supplies made to consumers, but not for supplies to a registrant. As well, they may not claim ITCs to recover GST/HST paid on business inputs. However, a nonresident vendor or nonresident distribution platform operator may claim ITCs if that person registered in accordance with the regular GST/HST rules.
These rules apply to cross-border supplies of digital products and services to the extent the consideration for such supplies becomes due on or after 1 July 2021 or is paid without becoming due. Also effective on the same date, distribution platform operators are required to register under the normal GST/HST rules and to collect and remit the GST/HST for sales of goods that are located in fulfillment warehouses in Canada (or shipped from a place in Canada to a purchaser in Canada) when those sales are made by non-registered vendors through distribution platforms. Moreover, nonresident vendors are required to register under the normal GST/HST rules and to collect and remit the GST/HST for sales of goods that are stored in fulfillment warehouses in Canada when nonresident vendors make such sales on their own account.
Registration requirements apply to both resident and nonresident distribution platform operators if their total qualifying supplies of tangible personal property to purchasers in Canada, including supplies made through their platforms by third-party vendors, exceed or are expected to exceed CAD30,000 over a 12-month period.
GST/HST is required to be collected and remitted in respect of supplies of short-term accommodation made through a digital accommodation platform. A property owner who is a registrant is required to account for GST/HST on such supplies. If the property owner is not a registrant,
QST harmonization – Platform-based, short-term accommodation. Québec has incorporated the GST/HST measures in respect of supplies of short-term accommodation facilitated by a digital platform operator.
Digital service tax. Canada has enacted the Digital Services Tax Act (DSTA), which came into force on 28 June 2024. The DSTA impacts large domestic and foreign businesses whose corporate group has global consolidated revenues of at least EUR750 million and who earn Canadian digital services revenue from providing online marketplace services, online advertising, social media services and the monetizing of user data exceeding CAD20 million. If a taxpayer or its consolidated group meets the required conditions, the taxpayer(s) will be required to pay a tax equal to 3% on their taxable Canadian digital services revenue exceeding CAD20 million in a calendar year.
A taxpayer is required to register under the DSTA if it meets the EUR750 million threshold, and it earns more than CAD10 million of Canadian digital services revenue. Notably, the threshold required for registration is lower than the threshold required for taxation. A taxpayer or an affected member of a consolidated group who is required to register must apply to register by 31 January of the following calendar year. Returns are due annually on or before 30 June of the following calendar year, while payments must be remitted on or before 30 June of the following calendar year.
Notwithstanding the coming into force date, the DST applies retroactively in respect of revenue earned as of 1 January 2022. Impacted entities must register for Canada’s DST by 31 January 2025 and will have to file returns and remit DST for 2022, 2023 and 2024 by 30 June 2025.
Registration procedures. Persons required to register under the legislation must apply to the CRA within 30 days following the first taxable supply made in Canada. Registration can be done online (https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/account-register.html), by mail, by fax or by telephone. To register, the following information must be provided:
• Amount of annual worldwide and domestic GST/HST taxable supplies
• Fiscal year-end
• Effective date of registration
• Reporting period
• Business name
• Business number (if the business already has one – see below)
• Type of business or organization (such as sole proprietor, partnership, corporation, registered charity)
• Name and Social Insurance Number of all owners
• Physical address
• Mailing address (if different from the physical address)
• Description of major business activity
Before registering for GST/HST (or during the process of registering), a business must obtain a business number (BN) from the CRA by using its online service at http://www.businessregistration.gc.ca; by sending a completed Form RC1, Request for a Business Number (BN); or by calling +1 800 959 5525.
The agency will then assign a registration number to the registrant and provide notification in writing of the registration number and the effective date of registration. Organizations can generally expect to receive confirmation of their registration and their nine-digit registration number by mail within two weeks after submitting their completed registration forms (however, the processing time may be longer for nonresident entities). GST/HST registrants who are based in the province of Québec are required to register with Revenu Québec using the online service (https://
Goods sent on approval for sale or return. Goods are often delivered to prospective purchasers on approval, sale or return, consignment or other similar terms. Under these arrangements, title to the goods generally does not pass to the purchaser until the purchaser notifies the seller of its approval or acceptance of the goods, or the purchaser commits some act or default that indicates its adoption of the sale. In these circumstances, the legislation requires that tax be paid no later than the end of the calendar month following the month in which the goods are resold or title to the goods passes to the purchaser.
Reverse-charge services. Generally, tax is applied to imported services or intangible property (or to commercial imports made by importers who are not entitled to ITCs, as well as on specified motor vehicles) where the supply is made outside Canada to a person who is resident in Canada, unless the supply is exempt or zero-rated, or the Canadian resident is acquiring the property or service for use exclusively in the course of commercial activities.
Leased assets. The legislation provides that where a written lease has been entered into, each lease payment is regarded as becoming due on the day on which the lease requires the payment to be made, even if an invoice for the payment is issued before the payment becomes due. Thus, tax applies to each payment of rent under the lease as it becomes due or, where rent is prepaid, on the day the prepayment is made. This rule applies to leases of both real property and tangible personal property, but not to other agreements.
Imported goods. Goods imported into Canada are subject to the GST or the federal part of the HST, except for goods that would be zero-rated if supplied in Canada, which are also zero-rated upon importation. Tax on imported goods becomes due when the goods are released by the Canada Border Services Agency for entry into Canada.
F. Recovery of GST/HST by taxable persons
A registrant (taxable person) may recover the GST/HST payable on property and services that it acquires or imports for consumption or for use or supply in its commercial activities. This is accomplished by claiming ITCs as a deduction on the registrant’s GST/HST return.
A valid tax invoice or customs document must generally be obtained before an ITC may be claimed.
A registrant generally claims its ITCs in the GST/HST return for the reporting period in which the tax becomes payable. However, a registrant may claim an ITC for a previous period at a later date.
The time limit for a taxable person to reclaim input tax in Canada is four years. Recovery is generally possible in any return filed within four years after the end of the reporting period in which the tax became payable. The recovery period is reduced to two years for certain large businesses (more than CAD6 million in annual taxable supplies) and listed financial institutions. However, large businesses whose supplies of goods and services are all or substantially all (90% or more) taxable in either of their last two fiscal years are excluded from this two-year limitation.
Nondeductible input tax. The provinces of British Columbia, Ontario and Prince Edward Island each adopted temporary restrictions on certain ITCs for large businesses when they adopted the HST, similar to those that were formerly in place under the QST regime. These temporary restrictions no longer apply, with Prince Edward Island being the last province to phase them out, effective 1 April 2021.
For purposes of the temporary recapture rules, a person was generally deemed to be a large business if either of the following conditions were met:
• The total amount of the value of the consideration for taxable supplies (including zero-rated supplies) made annually in Canada (other than supplies of financial services and supplies arising from the sale of real properties that are capital properties of the person) by the person and
Pre-registration costs. When a person who was formerly a small supplier, i.e., with annual sales of taxable and zero-rated supplies below CAD30,000, becomes a registrant for GST/HST purposes, it can claim an ITC for the GST/HST it paid on property that was previously acquired but still on hand for use in commercial activities. This property can include capital property, real property, goods for resale and inventory. The GST/HST that can be claimed as an ITC at that time is equal to the basic tax content of the property.
An ITC may also be claimed for GST/HST that became payable before a person became a GST/HST registrant, on services to be rendered after the person becomes a registrant or on any rent, royalty or other similar payment relating to property that is attributable to a period after the person becomes a registrant. The ITC is available only to the extent that the service or rental is for consumption, use or supply in the course of a commercial activity. No ITC is allowed to the extent that the payment is for services provided before registration.
Bad debts. The legislation provides relief for tax charged but not collected in the case of bad debts incurred by a supplier, to the extent these debts are subsequently written off. Specifically, the formula in the legislation provides that the deduction is equal to the tax payable in respect of the supply multiplied by the ratio of the total amount of the bad debt written off (including GST/HST and applicable provincial taxes) to the total amount payable for the supply (including GST/HST and applicable provincial taxes). This relief is not available for bad debts in respect of which an accounting reserve has been established. The debt must be written off in the books of account to access the relief.
Noneconomic activities. Input tax incurred in relation to noneconomic activities is not recoverable in Canada.
G. Recovery of GST/HST by non-established businesses
Input tax incurred by non-established businesses that are not registered for GST/HST in Canada is not recoverable.
H. Invoicing
GST/HST invoices. Strict documentary requirements must be satisfied before a claim can be made to recover tax that has been paid or become payable. Suppliers are required to provide this information on request.
Credit notes. If a registrant has collected an excess amount of tax, it may refund or credit the excess amount to the customer. A registered supplier has up to two years after the day on which it was charged or collected to refund or credit the excess tax. If the supplier chooses to take this action, the supplier must, within a reasonable time, issue a credit note to the recipient for the amount of the refund or credit.
If the supplier has already accounted for GST/HST on the supply, the supplier may use the credit note to reduce its tax liability in the period in which the credit note is issued. Conversely, if the recipient of the supply has already recovered the tax by claiming an ITC or rebate, the recipient must repay the credit or rebate to the CRA.
Similar tax adjustment measures also apply if tax has been charged or collected correctly by the supplier, but the consideration is subsequently reduced for any reason. Both volume discounts and returns are treated as price adjustments for GST/HST purposes.
Electronic invoicing. Electronic invoicing is allowed in Canada, but not mandatory.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is allowed but not mandatory in Canada. There is no threshold beyond which tax-
Registrants with turnover between CAD1.5 million and CAD6 million a year must file returns quarterly (with an option of filing monthly). Registrants with turnover less than CAD1.5 million must file annually (with an option of filing monthly or quarterly).
Any registrant has the option of filing returns monthly, even if revenue from taxable and zerorated supplies is less than CAD6 million.
Nonresident vendors or nonresident distribution platform operators registered under the simplified system for e-commerce must file on a quarterly basis.
The filing deadline for a monthly or quarterly return is one month after the end of the reporting period. The filing deadline for an annual return is generally three months after the end of the fiscal year. Specific filing requirements apply for certain listed financial institutions (e.g., the deadline can be six months after the end of the year) and individual registrants who carry on a business.
Periodic payments. The payment deadline for GST/HST due is the same as the filing deadlines. As such, the payment deadline for a monthly or quarterly returns is one month after the end of the reporting period. The payment deadline for an annual return is generally three months after the end of the fiscal year. Specific payment requirements apply for certain listed financial institutions (e.g., the deadline can be six months after the end of the year) and individual registrants who carry on a business.
Payments must be made in CADs (except under the simplified system for e-commerce where it is possible to pay in US dollars or euros under certain conditions). Payments may be made in various ways, including electronically through CRA’s website, in person or through a financial institution’s internet or telephone banking system, or by mailing a check or money order.
In contrast to the rule that deems a return to be filed when it is mailed, a tax remittance is regarded as having been paid only when it is received by the receiver general. If a person makes their payment or remittance through a financial institution, the CRA is not considered to have received the payment until the financial institution processes the transaction.
Payments and remittances of CAD10,000 or more must be made to the account of the receiver general at or through a bank, credit union, trust company or mortgage lender. As well, such payments must be made electronically unless the payer or remitter cannot reasonably pay the amount in that manner. These measures apply in respect of payments and remittances made after 2023. Recent legislative amendments introduced the electronic remittance requirement and reduced the threshold for mandatory payments made at or through a financial institution from CAD50,000 to CAD10,000. These changes apply for payments and remittances made after 2023.
Electronic filing. Electronic filing is mandatory in Canada, for certain taxable persons.
The legislation allows a person who is required to file a GST/HST return to file returns electronically if the person meets the criteria specified in writing by the minister. There are four electronic filing options that can be used to file GST/HST returns, based on a registrant’s particular reporting circumstances:
• GST/HST NETFILE is a free, internet-based filing service that allows eligible persons with a four-digit access code to file their returns directly with the CRA over the internet.
• GST/HST Electronic Data Interchange (EDI) is a computer-to-computer exchange of information in a standard format. Eligible registrants can use EDI to file their returns and remit their GST/HST payments electronically.
• GST/HST Internet File Transfer (GIFT) is an option that allows eligible registrants to utilize third-party, CRA-approved accounting software to file their returns electronically.
• GST/HST Telefile allows eligible registrants to file GST/HST returns using their four-digit access code, a touch-tone telephone and the toll-free number +1 800 959 2038.
As well, certain persons are specifically required to file their returns electronically using the media specified in writing by the minister in GST/HST Memorandum 7.5, Electronic Filing and Payment. The following persons must electronically file their GST/HST returns in respect of reporting periods that begin before 2024:
• Registrants, other than charities, with greater than CAD1.5 million in annual taxable supplies (calculated by reference to the registrant and all associated persons)
• Registrants required to recapture ITCs for the provincial portion of the HST on certain inputs in Ontario and effective 1 April 2013, in Prince Edward Island Or
• Builders (including builders that are charities) that:
– Sell grandfathered housing, where the purchaser is not entitled to claim a GST/HST new housing rebate or GST/HST new residential rental property rebate
– Sell housing that is subject to HST when it was purchased on a grandfathered basis
– Are required to report a transitional tax adjustment amount – Are reporting a provincial transitional new housing rebate Or
– Apply for the GST/HST new housing rebate on behalf of a purchaser, pay or credit the purchaser with the rebate and claim that amount as a deduction from net tax on a GST/HST return
Nonresident vendors or nonresident distribution platform operators registered under the simplified system for e-commerce are also required to file their returns electronically.
As noted above, registrants with greater than CAD1.5 million in annual taxable supplies are required to file returns electronically for reporting periods that begin before 2024. Mandatory electronic filing thresholds for registrants (other than charities or selected listed financial institutions) have been eliminated for reporting periods beginning after 2023. As a result, most GST/ HST registrants are now required to file returns electronically (i.e., not just those with annual taxable supplies exceeding CAD1.5 million).
Payments on account. Payments on account are not required in Canada.
Special schemes. Small businesses. The Streamlined Accounting (GST/HST) Regulations set out several methods that eligible small businesses as well as eligible public service bodies may elect to use for calculating their net tax liability. The methods, which are intended to simplify the calculation of net tax, are:
• The quick method
• The special quick method for public service bodies
• The streamlined ITC method
Charities that are registered or required to be registered for GST/HST purposes are required to use the special net tax calculation for charities method.
Annual returns. Annual returns are not required in Canada.
Supplementary filings. Financial institutions. Financial institutions are required to file an annual information schedule, Form GST111, Financial Institution GST/HST Annual Information Return. No other supplementary filings are required in Canada. In general, this filing requirement applies to financial institutions with notably total annual revenue exceeding CAD2 million. This threshold has increased from CAD1 million to CAD2 million for fiscal years ending after 9 August 2022.
E-commerce. Certain persons must file information returns with the specified GST/HST regime applicable to e-commerce supplies (see the subsection Digital economy above). An accommodation platform operator that facilitates supplies of short-term accommodation in Canada must file an annual information return concerning the accommodation providers making sales through the
platform. Similarly, a distribution platform operator that is a GST/HST registrant and that facilitates supplies of goods through a digital platform is required to file an annual information return concerning the vendors making sales through the platform.
To help platform operators adjust to the new reporting requirements, the CRA did not require information returns for the 2021 calendar year. Canada has adopted the OECD model rules developed for reporting by digital platform operators on platform sellers (see the subsection Online marketplaces and platforms above). As a result, the CRA has indicated that neither accommodation platform operators nor distribution platform operators are required to file annual information returns until further notice.
Correcting errors in previous returns. Generally, if an error is made in a previous return but the required adjustment would produce an increase in ITCs, with no corresponding increase in the tax collected for the same period (i.e., where there would be a decrease in the net tax payable for the period), an amended return should not be filed. In this case, the adjustment to increase the ITC should be made on the return for the next reporting period. There is an exception to this rule in the case of recaptured ITCs where excess amounts were recaptured, and the excessive recapture must be adjusted. If these recapture errors or any other mistakes are caught by the taxable person and would involve an increase in the net tax payable for a reporting period, refiling of the GST/HST return should be considered.
In Québec province, taxable persons must submit a prescribed form to amend a previously filed QST return. Whereas for registrants based outside of Québec, there is no prescribed form to file. Instead, a letter should be faxed to the local CRA tax center of the registrant (i.e., the tax center where returns are normally filed). This letter should indicate the registrant’s business number, the reporting period being amended, the correct amounts that should have been filed (by line number), and a name and contact number of a person who may be contacted regarding the adjustments if needed. This letter must be signed by an authorized representative. The CRA will also accept amendments to previously filed returns through the My Business Account online portal.
The tax authorities are not obliged to accept amended returns, and the amended return remains subject to audit. In addition, where an error is identified that could require the submission of amended returns for multiple periods, the use of a voluntary disclosure should be considered to minimize applicable interest and penalties and ensure that all appropriate adjustments are made. For further information about the current voluntary disclosure program, see GST/HST Memorandum 16.5, Voluntary Disclosures Program.
Digital tax administration. There are no transactional reporting requirements in Canada.
J. Penalties
Penalties for late registration. Every person who is engaged in a commercial activity in Canada (other than a small supplier, a person whose only commercial activity is the making of supplies of real property by way of sale other than in the course of a business or a nonresident person who does not carry on any business in Canada) is required to apply to be registered for the GST/HST before the 30th day after the day the person first makes a taxable supply in Canada otherwise than as a small supplier.
A person who is required to apply to be registered is also required to collect and remit the GST/ HST on taxable sales whether or not the person is actually registered. Interest is payable at the prescribed rate where a person fails to remit or pay an amount on account of tax when required under the GST/HST legislation.
Penalties for late payment and filings. If a person fails to pay or remit an amount of tax when due, interest (at a rate prescribed by law) is payable on the amount unpaid or not remitted. Interest is compounded daily.
of the body. Where these officers do not exist, any member of a managing committee may be held liable. Where a body does not have such officers or a managing committee, liability falls on each of the body’s members. As is the case with a director of a corporation, a former officer or member of an unincorporated body may not be assessed more than two years after they ceased being an officer or member.
In addition to the civil liability discussed above, where a person other than an individual (such as a corporation, trust, partnership or unincorporated organization) is guilty of an offense under the legislation, every officer, director or agent of the person who directed, authorized, assented to, acquiesced in or participated in the commission of the offense is a party to that offense. If convicted, the officer, director or agent is liable to the same punishment provided for that offense, whether or not the person has been prosecuted or convicted. Under this provision, the liability of an officer, director or agent does not absolve the corporation or other body of liability for the offense.
Statute of limitations. The statute of limitations in Canada is four or seven years. A GST/HST registrant or other person required to file a return for a reporting period may be assessed by the CRA for the tax payable or remittable for the period. The assessment must be made within four years after the day on which the return for the period is required to be filed. Where the return is not filed on time, the assessment may be issued within four years after the day on which the return is actually filed. The same limitation period applies to reassessments. The statute of limitations is seven years in some very specific cases.
Where a taxable person fails to collect tax on a taxable supply in Canada, the minister may assess the recipient of the supply for the tax. An assessment or reassessment of a taxable person for this tax must be issued within four years after the day on which the taxes became payable.
Generally, an assessment or reassessment of a penalty must be issued within four years after the day on which the taxable person became liable to pay the penalty.
The limitation periods on assessments may be set aside in cases of misrepresentation attributable to neglect, carelessness or willful default, or in cases of fraud. This may apply even where there has been a voluntary disclosure by the taxable person. Under the voluntary disclosure program, an administrative program run by the CRA, the CRA’s policy is to not to prosecute or seek civil penalties if a taxable person has disclosed all the facts when no investigation is underway as to the taxable person’s liability.
Under a “stop-the-clock” rule, where requirements for information served to taxable persons or compliance orders are contested, the reassessment period is extended while the requirement for information or compliance order is contested.