GST/HST memorandum 2.1
This memorandum explains who is required to be registered for the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) under the Excise Tax Act. It explains the term "person" to clarify who, or what, is the entity required to register, and explains when and how a person must register.
The information in this memorandum does not replace the law found in the Excise Tax Act and its Regulations. It is provided for your reference. As it may not completely address your particular operation, you may wish to refer to the Act or appropriate Regulation, or contact a Canada Revenue Agency (CRA) GST/HST Rulings Centre for more information. These centres are listed in GST/HST Memorandum 1.2, Canada Revenue Agency GST/HST Rulings Centres. If you wish to make a technical enquiry on the GST/HST by telephone, please call the toll-free number 1-800-959-8287.
If you are located in the Province of Quebec, please contact Revenu Québec by calling the toll-free number 1-800-567-4692 for additional information.
This memorandum replaces GST/HST Memorandum 2.1, Required Registration, dated June 1995. Significant changes are indicated in red text and a shaded background.
Reference in this memorandum is made to supplies taxable at 7% or 15% (the rate of the HST). The 15% HST applies to supplies made in Nova Scotia, New Brunswick and Newfoundland (the "participating provinces"). If a person is uncertain as to whether the supply is made in a participating province, the person may refer to Technical Information Bulletin B-078, Place of Supply Rules under the HST, available from any Revenue Canada tax services office.
Table of Contents
Persons who are required to register
1. Every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada must register for the GST/HST, except where:
- the person is a small supplier (refer to GST/HST Memorandum 2.2, Small Suppliers, for more information on small suppliers);
- the only commercial activity of the person is the making of supplies of real property by way of sale otherwise than in the course of a business; or
- the person is a non-resident person who does not carry on any business in Canada.
2. Registration for the GST/HST is mandatory for every person who carries on a taxi business (as defined in subsection 123(1)) in Canada. These persons are not eligible for small supplier status in respect of their taxi business. However, where a taxi operator, who is also engaged in other commercial activities in Canada, is a small supplier, the registration applies only to the taxi business. It does not apply to any other commercial activities engaged in by the person in Canada. These persons may, however, be eligible for voluntary registration. Information on voluntary registration is set out in GST/HST Memorandum 2.3, Voluntary Registration.
Non-resident suppliers of admissions
ss 240(2) and 148(3)
3. Every person who enters Canada for the purpose of making taxable supplies of admissions to a place of amusement, a seminar, an activity, or an event, regardless of whether that person is carrying on business in Canada or qualifies as a small supplier, must register for the GST/HST before making such supplies. These persons are not eligible for small supplier status, even if the total value of the admissions does not exceed the small supplier threshold.
4. It is important to draw a distinction between persons who are entering Canada and directly charging admissions and those who provide their services to an intermediary in Canada who will charge such admissions. While the former would be required to register as previously described, the latter (i.e., the intermediary) could still qualify as a small supplier. More information on small suppliers is available in GST/HST Memorandum 2.2, Small Suppliers.
Suppliers of prescribed property
5. Every person who, in Canada, solicits orders for, or offers to supply, prescribed property that will be sent to the recipient at an address in Canada by mail or courier is deemed to be carrying on business in Canada, and is required to register for the GST/HST. It should also be noted that soliciting orders for or offering to supply such property in Canada can take place through an employee or agent, or by means of advertising directed at the Canadian market. Registration is not required, however, if the person is a small supplier. More information on activities that are considered to constitute soliciting orders in Canada will be available in Chapter 6, Imports.
6. Under the draft Publications Supplied by a Registrant (GST/HST) Regulations, prescribed property is:
(a) [a book, newspaper, periodical, magazine, and any similar printed publication, other than a publication included in section 1 of Schedule VII; and
(b) an audio recording that relates to a publication included in paragraph (a) and that accompanies the publication when it is submitted to the Canada Post Corporation or a customs officer.](This proposed change is effective November 26, 1997.)
Sponsors of foreign conventions
7. A sponsor (i.e., a person who convenes the convention and supplies admissions to it) of a foreign convention making supplies of admissions to, or exhibition space at, the foreign convention is deemed to be making these supplies otherwise than in the course of a commercial activity of the sponsor. Therefore, a sponsor of a foreign convention will not be required to register for the GST/HST as a result of holding the convention in Canada.
8. A foreign convention is a convention where no more than 25% of convention admissions may reasonably be expected to be supplied to Canadian delegates and where the sponsor is headquartered outside Canada.
9. Where there is a reasonable expectation that more than 25% of convention admissions will be supplied to Canadian delegates, a sponsor (including a non-resident) of the convention will be required to register for the GST/HST. Documentation to support this expectation must be maintained with the sponsor's books and records.
Organizers of conventions
10. Organizers of conventions must register for the GST/HST if they carry on business in Canada and if they are not small suppliers.
Exhibitors at conventions
11. Non-resident exhibitors who are in Canada only to promote their products or services at a convention do not have to register for the GST/HST nor can they charge the tax on any orders taken from delegates during the convention. Non-resident exhibitors who bring products to the convention to sell to delegates should contact the nearest Revenue Canada tax services office to find out whether they must register for the GST/HST. In these cases, non-resident exhibitors who must register will fall under the general provisions explained in paragraph 1. More detailed information on conventions is contained in GST/HST Memorandum 27.2, Conventions, of Chapter 27, Special Sectors: Tourism.
Definition of person
12. For purposes of the GST/HST, a "person" is the entity that registers. The Act defines a person as an individual, a partnership, a corporation, an estate of a deceased individual, a trust, or a body that is a society, union, club, association, commission or other organization of any kind.
13. In some situations a person may have separate businesses or activities. A person with eligible branches or divisions may apply to file separate returns and/or rebate claims for these branches or divisions. More information on branches and divisions is available in GST/HST Memorandum 2.4, Branches and Divisions.
14. The following explains what constitutes a person for GST/HST purposes:
Individual or sole proprietor
(a) The Act defines an individual to be a "natural person". Where an individual carries on one or more commercial activities on his/her own account (i.e., as a sole proprietor), that individual is the entity that must be registered, where applicable, and not the separate trade names of the businesses. For example, where an individual operates two businesses and each business has a separate trade name, the individual must register (unless the individual is a small supplier in respect of the combined businesses). In this case, the single registration is made in the name of the individual and applies to both business operations.
(b) For GST/HST purposes, a partnership is considered to be a person separate from its partners. This differs from the Income Tax Act where each partner accounts for its share of the partnership income separately. Under the GST/HST legislation, anything done by a person as a member of a partnership is deemed to have been done by the partnership and not by the person.
- However, a partner (other than an individual) not engaged in commercial activity other than the commercial activity engaged in by the person as a member of the partnership may be eligible to register voluntarily for GST/HST purposes. Refer to GST/HST Memorandum 2.3, Voluntary Registration, for more information.
Partnerships and sole proprietors
(c) When an individual who carries on a business as a sole proprietor is also a member of a partnership, the individual must separate the two businesses for purposes of determining the requirement to apply for registration. Other than to determine if a person is associated with a partnership of which the person is a member, an individual cannot include the value of taxable supplies made in the course of a sole proprietorship with those of a partnership for registration purposes (a person who is a sole proprietor is a separate person from a partnership).
(d) A corporation is considered a person for GST/HST purposes. This is consistent with the principle of a corporation existing as an entity, separate and distinct from its shareholders, directors and officers. Where a body is incorporated, the corporation, as the legal entity, is the person required to be registered for GST/HST purposes where applicable.
Estate of a deceased individual or a trust
(e) An estate of a deceased individual or a trust is a person for the purposes of the Act, and therefore must be registered for the GST/HST if it makes taxable supplies in Canada in the course of a commercial activity, otherwise than as a small supplier. However, the estate of a bankrupt person is deemed not to be a trust or an estate.
Segregated fund- deemed trust
- A segregated fund of an insurer is deemed to be a trust that is a separate person from the insurer and that does not deal at arm's length with the insurer. The insurer is deemed to be a trustee of the trust and the activities of the segregated fund are deemed to be activities of the trust and not activities of the insurer. The segregated fund (the trust) and the insurer are separate persons for the purposes of registration.
paras 265(1)(e) and (f)
(f) If a person registered for GST/HST purposes becomes bankrupt and begins to engage in commercial activities separate and apart from the bankruptcy after becoming bankrupt, that person may apply and be registered for the GST/HST in respect of those activities which do not relate to the bankruptcy as if the person were a separate person. The small supplier threshold will apply to those activities. The registration of a bankrupt person will continue in relation to the activities of the bankrupt to which the bankruptcy applies as if the trustee in bankruptcy were the registrant in respect of those activities. The trustee in bankruptcy will use the registration number to report and account for activities of the estate of the bankrupt.
(g) A body that is a society, union, club, association, commission, or other organization of any kind is a person for GST/HST purposes. This includes non-profit organizations, charities, professional and trade associations, and other organizations of any kind.
15. Unincorporated bodies, unlike corporations, are not legal persons and may be organized into many different levels and divisions, or groups within groups. An office within an unincorporated organization that has significant control over its own affairs can, however, be considered a person for GST/HST purposes. When an application for registration of a particular unincorporated organization is submitted under section 240, approval of the application will be contingent upon whether the Minister is satisfied that the particular organization has sufficient autonomy to be considered a person in its own right. GST/HST Memorandum 2.4, Branches and Divisions, provides guidelines to determine if an organization meets the criteria of a person.
16. A joint venture is not a person, and therefore cannot register for the GST/HST. However, a participant in a joint venture may be required to be registered in which case it must account for the tax on its commercial activities, including its share of the joint venture activities, unless a joint venture election has been made. Additional information about joint ventures and the election will be available in Chapter 3, Tax on Supplies.
Definition of commercial activity
17. Commercial activity of a person means:
(a) a business carried on by the person (other than a business carried on without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the business involves the making of exempt supplies by the person,
- Business is defined in the Act as including a profession, calling, trade, manufacture or undertaking of any kind whatever, whether the activity or undertaking is engaged in for profit, and any activity engaged in on a regular or continuous basis that involves the supply of property by way of lease, licence or similar arrangement but does not include an office or employment.
(b) an adventure or concern of the person in the nature of trade (other than an adventure or concern engaged in without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the adventure or concern involves the making of exempt supplies by the person, and
- The essential distinction between a business and an adventure or concern in the nature of trade is that a business is engaged in on a regular or continuous basis, while an adventure or concern in the nature of trade may be an occasional or one-time activity.
(c) the making of a supply (other than an exempt supply) by the person of real property of the person, including anything done by the person in the course of, or in connection with, the making of the supply.
- Although the making of supplies of real property generally fall within the definition of commercial activity, many such supplies such as long-term residential rents and sales of used housing are exempt, and therefore excluded from the definition.
18. Exempt supplies are listed in Schedule V and include most health care services, financial services, educational services, day-care services, and certain supplies of real property. Chapter 5, Exempt Supplies, will contain more information on exempt supplies.
How to apply
Requirement for Business Number
19. New businesses that are dealing with Revenue Canada for the first time need a Business Number (BN). The BN is a numbering system that includes Revenue Canada's four major business accounts: corporate income tax, import/export, payroll deductions, and the GST/HST.
20. To register for a BN and Revenue Canada's business accounts, businesses have to complete Form RC1(E), Request for a Business Number (BN). All businesses have to complete Part A of the form and sign the certification in Part F. To register for a GST/HST account, businesses have to complete Part B of the form.
How to register for a Business Number
21. Businesses can register for a BN by telephone, in person, by mail, or by fax.
22. Businesses that already have a BN and want to register for a GST/HST account have to provide the requested information contained on Form RC1A, Business Number(BN) - GST/HST Account Information.
Form GST 10
23. A registered head office that wants a separate GST/HST account for a branch or division to file separate returns should apply by completing, or providing the information requested on, Form GST 10, Application to File Separate GST Returns for Branches or Divisions. More information on branches and divisions is available in GST/HST Memorandum 2.4, Branches and Divisions.
24. Forms RC1, RC1A and GST 10 are available from any Revenue Canada tax services office or electronically from the Revenue Canada site (http://www.rc.gc.ca) on the Internet. Samples of these forms are provided in the Appendices.
25. New businesses will receive a registration confirmation notice providing them with their BN and a listing of the accounts they opened at the time of registration. They will also receive a summary of the information that they provided when they requested a BN. They will be asked to review the summary, complete the areas where information is missing, correct any errors, and return the information to Revenue Canada.
26. Once all registration requirements are met, businesses that applied for a GST/HST account will be sent a notice that confirms, for GST/HST purposes, the registration number, the effective date of registration, the filing frequency, the first reporting period, and the due date of the first GST/HST return.
When to register
27. A person who must register for the GST/HST shall apply to the Minister for registration before the thirtieth day after the day the person first makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada, otherwise than as a small supplier. Exceptions to this rule are explained in paragraphs 28 and 29.
28. A taxi operator who is a small supplier that is required to be registered must apply to the Minister for registration before the thirtieth day after the day the operator first makes a taxable supply in Canada in the course of its taxi business.
Non-resident performers, etc.
29. Every person who enters Canada to make taxable supplies of admissions to a place of amusement, a seminar, an activity, or an event is required to be registered for the GST/HST before making such supplies. Refer to paragraph 3 for more information.
Persons starting a business
30. Persons who are in a start-up position and not yet making taxable supplies may be considered as being engaged in a commercial activity. However, persons commencing a business who apply to be registered, and where the provision of taxable supplies has not yet begun, should be able to demonstrate a clear intention to carry on a business and be engaged in a commercial activity (i.e., they must not intend to make only exempt supplies; if they are in business as individuals, they should have a reasonable expectation of profit).
Change in status of an ongoing business
31. Following registration, persons should advise the Department when certain changes in their status occur. These changes include:
(a) starting operations in a place not covered by the original registration (i.e., a new or additional address);
(b) discontinuing operations at any location covered by the original registration;
(c) a business of a registered person being continued by an administrator, receiver, receiver-manager, assignee, bank executor, trustee in bankruptcy, or other like person;
(d) a change in business address, or the address where the books and records are kept;
(e) a change affecting reporting periods or a change in fiscal year-end;
(f) a change in business name or ownership, or when obtaining a new charter, or a change in legal entity; and
(g) a change in business operations, i.e., from making taxable supplies to making exempt supplies.
Entitlements and obligations of registrants
32. Registration for the GST/HST provides the registrant with certain entitlements. Every person who is registered, or required to be registered, also has certain responsibilities and obligations under the GST/HST legislation. An explanation of the basic entitlements and obligations of registrants under the GST/HST is available from any Revenue Canada tax services office and will be available in other chapters of the GST/HST Memoranda Series.
All GST/HST memoranda and other Revenue Canada publications are available on Internet at the Revenue Canada site http://www.rc.gc.ca/ under the heading "Technical Information" in "General Information".
Appendix A - Form RC1(E), Request for a Business Number (NB)
You can view or download Form RC1(E) in PDF format: Form RC1(E)
Appendix B - Form RC1A, Business number (BN) - GST/HST Account information
You can view or download Form RC1 A in PDF format: Form RC1 A
Appendix C - From GST 10, Application or Revocation of the Authorization to File Separate GST/HST Returns and Rebate Application for Branches or Divisions
You can view or download GST 10 in PDF format: GST 10
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