HST REGISTRATION, COLLECTION, and REPORTING

Regarding GST/HST, the two questions self-employed persons need to consider:

1.        Do I need to register for the GST/HST program under the Excise Tax Act required?

2.        If I am registered, do I have to charge HST to the person or company I am supplying goods or services to?

These are separate questions. A person might be required to register, but they might not need to charge HST, in particular if the goods or services supplied are “zero-rated” in which case the HST rate is 0%.

Obligation to get an HST/GST registration under the Excise Tax Act:

In Ontario, the Harmonized Sales Tax (HST) is a 13% tax that combines the federal Goods and Services Tax (GST) and the Ontario provincial sales tax (PST). It applies to the supply of most goods and services and is governed by Part IX of the Excise Tax Act.

A self-employed person in Ontario must register for a GST/HST account if their gross business revenue (before expenses) reaches $30,000 or more over four consecutive calendar quarters (January–March, April–June, July–September, October–December) or if revenue exceeds $30,000 in a single quarter.

When registering, the CRA issues a 9-digit business number (BN) and a GST/HST program account number starting with RT. For example: 123456789RT0001.

If the $30,000 threshold is not met, the person is considered a small supplier and does not have to register or charge HST.  When calculating revenue, some types of supply are “exempt” and not counted.

A person must register and start charging HST in the month following the month they exceed $30,000 in gross earnings, even if their supply of goods or services is zero-rated and they will not be charging HST.

Examples (Fiscal year January 1 – December 31):

1. Hairdresser: Earns $35,000 in 2024. By mid-October, earnings reach $30,000. They must register by November 1, 2024, and start charging HST. A GST/HST return is due by March 31, 2025.
2. Construction Sub-contractor: Invoiced $35,000 between April 1, 2023, and March 31, 2024. Reaches $30,000 by mid-January 2024. They must register by February 1, 2024 and start charging HST. A return is due March 31, 2025.
3. Bookkeeper: Earns $35,000 between July 1 and September 30, 2024. Reaches $30,000 by August 15. They must register by August 15, 2024, and start charging HST. A return due March 31, 2025.

If a business later declines and annual sales fall below $30,000 then HST collection can stop in the following fiscal year.

An exception applies to providers of personal passenger service, like taxi and Uber drivers. For such providers, registration is required regardless of their revenue amount, and they must collect HST on all revenue.

Exempt Supplies:

Exempt supplies include most health services, some education/tutoring services, child care, and music lessons.

Zero-rated services - delivering for Uber Eats, Door Dash, Skip the Dishes:

Certain goods and services are taxable at a rate of 0% HST, referred to as zero-rated supplies, meaning that HST is not charged or collected. These are listed in Schedule VI of the Excise Tax Act and include items such as:

• basic groceries,
• most prescription drugs,
• medical devices, and
• goods and services sold to non-residents of Canada.

The CRA apparently takes the position that food delivery services provided to platforms like Uber Eats, Door Dash and Skip the Dishes are zero-rated services, but this is unclear.^[1]

Input Credits:

Digital Economy Workers and HST:

Some people earn money selling physical or digital items through an internet platform, where the platform brings together the supplier and customer. Examples are Etsy, eBay, and Kijiji. If the individual seller is registered under the Excise Tax Act they may be required to include HST in their price, collect it, and remit it to the CRA. If the seller is not registered, the platform itself may be required to charge HST and remit to the CRA.^[2]