What Is an HST Number & Why Your Business Might Need One
Navigate Canadian HST rules. Learn if your business needs an HST number, how to register, and what responsibilities come with it.
The Harmonized Sales Tax (HST) in Canada represents a combined federal and provincial sales tax, simplifying the taxation landscape for businesses and consumers alike. This integrated tax system streamlines the process of collecting consumption taxes by consolidating the federal Goods and Services Tax (GST) with provincial sales taxes into a single levy. Businesses operating in participating Canadian provinces are often required to manage this tax, making the concept of an HST number a fundamental aspect of their financial operations.
Understanding the HST Number
An HST number functions as a unique identifier issued by the Canada Revenue Agency (CRA) to businesses that are registered to collect and remit the Harmonized Sales Tax. This number is an extension of a business’s primary nine-digit Business Number (BN), which serves as a standard identifier for various business interactions with the CRA.
The purpose of an HST number is to enable businesses to legally charge, collect, and subsequently remit HST on the taxable goods and services they supply. It provides the CRA with a clear method to track the tax obligations and remittances of registered businesses. For businesses, possessing an HST number is an indicator of their compliance with Canadian tax regulations, particularly in provinces where HST applies.
Determining if You Need an HST Number
A primary factor in determining whether a business needs an HST number is its total revenue from taxable supplies. The Canada Revenue Agency (CRA) mandates registration for businesses that are no longer considered a “small supplier.” A business ceases to be a small supplier if its total revenue from taxable supplies exceeds $30,000 in a single calendar quarter, or over four consecutive calendar quarters.
This threshold applies to revenue generated from goods and services that are subject to HST, excluding certain types of sales like capital property or financial services. The effective date of registration is the day the threshold was exceeded.
Even if a business’s revenue falls below the $30,000 threshold, it might still opt for voluntary HST registration. Voluntary registration allows a business to claim Input Tax Credits (ITCs) for the HST paid on its business expenses. This can be particularly beneficial for new businesses with significant startup costs or those that regularly incur HST on their purchases.
Steps to Register for an HST Number
Obtaining an HST number involves a straightforward process through the Canada Revenue Agency. Businesses can register for an HST account using several methods, with online registration being the most common and efficient. The CRA’s Business Registration Online (BRO) service allows for immediate application for a Business Number and various program accounts, including HST.
Alternatively, businesses can register by phone by contacting the CRA’s business inquiries line, or by mail by completing and submitting a request form. Regardless of the method chosen, specific information about the business is required to complete the registration. This typically includes the legal name of the business, its physical and mailing addresses, and a description of its primary activities.
Applicants also need to provide their Social Insurance Number (SIN) for identification purposes, along with details such as the estimated total annual revenue and the desired fiscal year-end for tax reporting. The effective date of registration, which might be the date the business exceeded the small supplier threshold or the date of the voluntary request, is also a required piece of information.
Ongoing Responsibilities for HST Registrants
Once a business has registered for an HST number, it assumes several ongoing responsibilities to ensure compliance with Canadian tax law. A primary duty is to charge HST on most taxable goods and services provided to customers in participating provinces. This collected tax must then be remitted to the Canada Revenue Agency.
HST registrants are also entitled to claim Input Tax Credits (ITCs) for the HST paid on eligible business expenses and purchases. These ITCs can offset the HST collected from customers, reducing the net amount payable to the CRA. Maintaining meticulous records of all HST collected and paid is essential to support these claims and ensure accurate reporting.
Businesses must file regular HST returns, with the filing frequency determined by their annual taxable revenue. Businesses with annual taxable sales under $1.5 million typically file annually, while those between $1.5 million and $6 million file quarterly, and businesses exceeding $6 million in sales are required to file monthly. These returns must be filed even if no HST was collected or if a refund is due.