Canada VAT Information: rates, registration number

Goods

VAT Standard rate

Some importations such as prescription drugs, medical and assistive devices, basic groceries, agriculture and fishing goods are non-taxable.

However, the rate at which taxes should be collected and levied depends on whether the taxable supplies are made in Canada and whether they are made in the participating province.

Threshold

Small suppliers whose turnover does not exceed $30,000 CAD for more than the last 4 quarters do not need to register. After exceeding this threshold, you need to apply for registration. Important! Specify the effective date – the date when you exceeded the threshold.

Registration procedure

First, apply for a business number. This can be done using an online form or by sending a request by mail or fax. After you are assigned a business number, you will be able to request GST registration.

Applications must include business information about the company, such as the type of business or organization, the legal name of the company, contact information, website address (if applicable), description of the main business activity registration information (Date of incorporation, jurisdiction of registration and certificate number).

Tax representative

The appointment of a tax representative is not a prerequisite. Anyway, we would advise you to appoint a tax representative or consultant to avoid mistakes in tax documents. The tax Service of Canada levies quite large fines.

GST filing and payment

Deadline is end of month after the end of the reporting period. The tax is paid quarterly, based on the calendar quarterly reporting period.

The main currency of payment is the Canadian dollar, but you can apply for permission to make these payments in the appropriate foreign currency.

Penalties

If you submitted the declaration late, you may be charged a fine. The formula for calculating the penalty: A + (A×0.25 × C),

where:

A – 1% of the outstanding amount;

C – the number of full months for which the refund is overdue, but not more than 12 months.

Keeping records

As rule, keep all required documents and supporting data for a period of six years from the end of the last tax year they relate to.

Digital services

VAT Standard rate

Threshold

If your business meets the definition of “cross-border digital products and services” and the threshold exceeds $30,000 CAD, then you are required to register for the GST/HST.

Distinctive feature

Some provinces have separate legislation regarding taxation.

Quebec. The rate is 9.975%. The threshold is 30,000 Canadian dollars (transactions to companies registered as taxpayers are not taken into account).

Saskatchewan. Provincial sales taxes (PST) are applied. The rate is 6%. Registration is required starting from the first transaction.

British Columbia. Provincial sales taxes (PST) are applied. The rate is 7%. The threshold is 10,000 Canadian dollars (transactions to companies registered as a taxpayer are not taken into account).

E-services list

downloads or streaming of music, games, and other media;
software, apps, SaaS or other website subscriptions;
ebooks and some newspaper subscriptions;
application hosting and data warehousing;
telecom services.

Pieces of evidence

To determine the bid correctly, it is necessary to establish the location of the client. To do this, it is necessary to accurately establish two proofs of the customer’s location, such as

the home address of the customer;
the business address of the customer;
the billing address of the customer;
the Internet Protocol address of the device used by the customer or similar data obtained through a geolocation method;
payment-related information of the customer or other information used by the payment system;
the information from a subscriber identity module, or other similar module, used by the customer;
the place at which a landline communication service is supplied to the customer; and
any other relevant information that the Minister may specify.

Registration procedure

To register, you need to fill out an application and send it by fax or mail.

Tax representative

The appointment of a tax representative is not a prerequisite.

GST filing and payment

Deadline is end of month after the end of the reporting period (as rule – quarterly).

Penalties

If you do not file a return after an official request from the tax authority, the fine can be up to 250,000 Canadian dollars.

Keeping records

Six years.