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Doing Business in Canada – GST/HST Information for Non-Residents

From: Canada Revenue Agency

RC4027(E) Rev.21

Our publications and personalized correspondence are available in braille, large print, e-text, or MP3 for those who have a visual impairment. For more information, go to Order alternate formats for persons with disabilities or call 1-800-959-5525.

Unless otherwise stated, all legislative references are to the Excise Tax Act or, where appropriate, the Regulations made under the Excise Tax Act.

This guide uses plain language to explain the most common tax situations. It is provided for information only and does not replace the law.

La version française de ce guide est intitulée Renseignements sur la TPS/TVH pour les non-résidents qui font affaire au Canada.

Table of Contents

 

Is this guide for you?

This guide explains how the Canadian goods and services tax/harmonized sales tax (GST/HST) applies to non-residents doing business in Canada. It provides guidelines to help you determine whether you are carrying on business in Canada, information on GST/HST registration requirements, and instructions on how to charge, record, calculate, and remit the GST/HST. It also provides detailed information about the GST/HST as it applies to specific business activities carried on by non-residents of Canada.

Selected listed financial institutions

This guide does not include information on the special rules for selected listed financial institutions (SLFI). If you are an SLFI, see Guide RC4050, GST/HST Information for Selected Listed Financial Institutions.

Note

All references to dollar amounts are in Canadian dollars.

For more information, see Guide RC4022, General Information for GST/HST Registrants.

GST/HST and Quebec

In Quebec, Revenu Québec generally administers the GST/HST. If the physical location of your business is in Quebec, you have to file your returns with Revenu Québec using its forms, unless you are a person that is an SLFI for GST/HST or Quebec sales tax (QST) purposes or both. For more information, see the Revenu Québec publication IN-203-V, General Information Concerning the QST and the GST/HST, available at Revenu Québec. If you are an SLFI, go to GST/HST and QST – Financial institutions, including selected listed financial institutions.

What’s new?

We list the major changes below.

GST/HST Covid-19 – Deferring GST/HST remittances and payments

The CRA announced measures on March 27, 2020, to help businesses manage certain GST/HST payments, remittances and returns. For more information, go to Filing your GST/HST returns.

Online services for representatives

Authorized representatives can now register for online mail on behalf of their business clients by entering an email address when filing a GST/HST NETFILE return. For more information, go to Represent a client.

Mandatory electronic filing

Under proposed changes, the threshold for mandatory electronic filing of information returns will be lowered from 50 to 5 returns. If you file more than 5 information returns of a particular return type, you will be required to file them electronically as of January 1, 2022.

You can file information returns electronically, as well as amend, cancel or add slips by using the “File a return” service in My Business Account or Represent a client. If you have a Web access code, you can file up to 100 slips electronically in a single submission by using our Web Forms service.

For more information about filing information returns electronically, go to Filing Information Returns Electronically (T4/T5 and other types of returns) – Overview.

GST/HST for digital economy businesses

As of July 1, 2021, digital economy businesses, including digital platform operators, may have potential goods and services tax/harmonized sales tax (GST/HST) obligations under three new measures. This means you may have new obligations, including registering and charging and collecting the GST/HST.

Where the affected businesses and platform operators show that they have taken reasonable measures but are unable to meet their new obligations for operational reasons, the CRA takes a practical approach to compliance and exercises discretion in administering these measures during a 12-month transition period, starting July 1, 2021.

Before the CRA exercises its discretion in the administration of the new measures, an affected business or platform operator must first obtain the CRA’s written approval that such discretion will be exercised. Submissions may be made to the CRA after July 1, 2021, until further notice.

A number of publications may be revised at a later date to reflect the new GST/HST digital economy measures. For more information on these new measures and the definitions for the digital economy, go to GST/HST for digital economy businesses: Overview.

Non‑Resident Business Number and Account Registration Web Form

Non‑Resident clients can now register their business for a CRA business number and certain program accounts using the Non‑Resident Business Number and Account Registration Web Form. For more information go to How to register for a business number or Canada Revenue Agency program accounts.

Definitions

Arm’s length generally refers to a relationship or a transaction between persons who act in their separate interests. An arm’s length transaction is generally a transaction that reflects ordinary commercial dealings between parties acting in their separate interests.

Related persons are not considered to deal with each other at arm’s length. Related persons include individuals connected by blood relationship, marriage, common-law partnership, legal adoption or adoption in fact. A corporation and another person or two corporations may also be related persons. In addition, for GST/HST purposes, a member of a partnership is related to the partnership.

Unrelated persons may not be dealing with each other at arm’s length at a particular time. Each case will depend upon its own facts. The following factors are useful criteria that will be considered in determining whether parties are not dealing at arm’s length:

For more information, see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm’s Length.

Associated person for GST/HST purposes, means a person that is generally associated with another person where one controls the other. Associated persons (referred to generally as “associates”) may include:

Calendar quarter means a period of three months beginning on the first day of January, April, July, or October in each calendar year.

Calendar year means a year that begins on January 1 and ends on December 31.

Charity means a registered charity or registered Canadian amateur athletic association for income tax purposes, but does not include a public institution. A charity can issue official donation receipts for income tax purposes.

Commercial activity means any business or adventure or concern in the nature of trade carried on by a person, but does not include:

Commercial activity also includes a supply of real property, other than an exempt supply, made by any person, whether or not there is a reasonable expectation of profit, and anything done in the course of making the supply or in connection with the making of the supply.

Exempt supplies are supplies of property and services that are not subject to the GST/HST. GST/HST registrants generally cannot claim input tax credits to recover the GST/HST paid or payable on property and services acquired to make exempt supplies.

Financial institution includes a person that is a listed financial institution, as defined below, and a person (referred to as a de minimis financial institution) whose income from certain financial services exceeds specific thresholds. For more information, see GST/HST Memorandum 17-6, Definition of “Listed Financial Institution” and GST/HST Memorandum 17.7, De Minimis Financial Institutions.

Fiscal year means the tax year of the person, or where a person has elected to change their fiscal year, the period that the person elected to be their fiscal year.

Input tax credit (ITC) means a credit that GST/HST registrants can claim to recover the GST/HST paid or payable for property or services they acquired, imported into Canada, or brought into a participating province for use, consumption, or supply in the course of their commercial activities.

Listed financial institution includes a person that is:

For more information, see GST/HST Memorandum 17.6, Definition of “Listed Financial Institution.”

Participating province means a province that has harmonized its provincial sales tax with the GST to implement the harmonized sales tax (HST). Participating provinces include New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, but do not include the Nova Scotia offshore area or the Newfoundland offshore area except to the extent that offshore activities, as defined in subsection 123(1) of the Excise Tax Act, are carried on in that area.

Person means an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or any organization such as a society, a union, a club, an association, or a commission.

Property includes goods, real property, and intangible personal property such as trademarks, rights to use a patent, and admissions to a place of amusement, but does not include money.

Public institution means a registered charity for income tax purposes that is also a school authority, a public college, a university, a hospital authority, or a local authority determined by the Minister of National Revenue to be a municipality.

Public service body means a charity, non-profit organization, municipality, university, public college, school authority, or hospital authority.

Registrant means a person that is registered or has to be registered for the GST/HST.

Small supplier refers to a person whose revenue (along with the revenue of all persons associated with that person) from worldwide taxable supplies was equal to or less than $30,000 ($50,000 for public service bodies) in a calendar quarter and over the last four consecutive calendar quarters.

Charities and public institutions are also considered small suppliers if they meet the gross revenue test of $250,000 or less.

Supply means the provision of property or a service in any way, including sale, transfer, barter, exchange, licence, rental, lease, gift, or disposition.

Taxable supplies are supplies of property and services that are made in the course of a commercial activity and are subject to the GST/HST (including zero-rated supplies).

Zero-rated supplies are supplies of property and services that are taxable at the rate of 0%. This means there is no GST/HST charged on these supplies, but GST/HST registrants (other than charities using the net tax calculation for charities) may be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to provide these supplies.

What is the GST/HST?

The goods and services tax (GST) is a tax that applies to most supplies of goods and services made in Canada. The GST also applies to many supplies of real property (for example, land, buildings, and interests in such property) and intangible personal property such as trademarks, rights to use a patent, and digitized products downloaded from the internet and paid for individually.

The participating provinces harmonized their provincial sales tax with the GST to implement the harmonized sales tax (HST) in those provinces. Generally, the HST applies to the same base of property (for example, goods) and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on certain qualifying items. For more information, see Point-of-sale rebates.

GST/HST registrants who make taxable supplies (other than zero-rated supplies) in the participating provinces collect tax at the applicable HST rate. GST/HST registrants collect tax at the 5% GST rate on taxable supplies they make in the rest of Canada (other than zero-rated supplies). Special rules apply for determining the place of supply. For more information, see Place-of-supply rules.

The HST rate can vary from one participating province to another. For the list of all applicable GST/HST rates, go to GST/HST calculator (and rates).

Who pays the GST/HST?

Almost everyone has to pay the GST/HST on purchases of taxable supplies of property and services (other than zero-rated supplies). However, Indians and some groups and organizations, such as certain provincial and territorial governments, do not always pay the GST/HST on their purchases and expenses. For more information, see Guide RC4022, General Information for GST/HST Registrants.

Note

We recognize that many First Nations people in Canada prefer not to be described as Indians. However, we use the term Indian because it has a legal meaning in the Indian Act.

False GST/HST exemptions

Some individuals, businesses, and organizations are falsely claiming to be exempt from paying the GST/HST. In some cases, they may even present a fake exemption card to avoid paying the tax on their purchases.

If you do not collect the GST/HST from a person who falsely claims to be exempt from paying the GST/HST, you still have to account for the tax you should have collected.

Some provinces exempt farmers, municipalities, and certain businesses from paying the provincial sales tax. However, these provincial exemptions do not apply to the GST/HST.

Who charges the GST/HST?

Generally, GST/HST registrants have to charge and collect the GST/HST on all taxable (other than zero-rated) supplies of property and services they provide to their customers. For more information, see Should you register?

Exception 

In certain cases, you do not have to collect the GST/HST on a taxable sale of real property (for example, if you are a non-resident of Canada). Instead, the purchaser may have to pay the tax directly to the CRA. For more information, see Guide RC4022, General Information for GST/HST Registrants.

Taxable supplies

Most property and services supplied in or imported into Canada are subject to the GST/HST.

Taxable supplies (other than zero-rated)

The items listed below are examples of taxable supplies (other than zero-rated supplies):

For the list of all applicable GST/HST rates, go to GST/HST calculator (and rates)

Zero-rated supplies

Some supplies are zero-rated under the GST/HST – that is, GST/HST applies at a rate of 0%. This means that you do not charge GST/HST on these supplies, but you may be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to provide these supplies. The following are examples of supplies taxable at 0% (zero-rated):

As a GST/HST registrant, you can generally claim an ITC for any GST/HST paid or payable on your business purchases which you use to provide taxable property and services (including zero-rated supplies).

For more information, see GST/HST Memoranda Series, Chapter 4, Zero-rated supplies.

Exempt supplies

Some supplies are exempt from the GST/HST – that is, no GST/HST applies to them. This means that you do not charge the GST/HST on these supplies of property and services, and you are generally not entitled to claim ITCs on property and services acquired to provide these supplies. Generally, you cannot register for the GST/HST if your business provides only exempt supplies.

The following are examples of exempt supplies:

Taxable and exempt supplies

Taxable

You charge the GST/HST

You can claim ITCs

Exempt

You do not charge the GST/HST

You cannot claim ITCs

Determining resident and non-resident status in Canada

This section provides guidelines to help you determine whether you are a resident or a non-resident of Canada for GST/HST purposes.

Individuals

Residency status is determined according to:

For example, if you have a dwelling, spouse or dependants, personal property, and social ties in Canada, this is a strong indication that you are resident in Canada.

In addition, government personnel posted abroad are treated as residents of Canada for GST/HST purposes.

For more information, see GST/HST Memorandum 3-4, Residence and Income Tax Folio S5-F1-C1, Determining an Individual's Residence Status.

Persons other than individuals

A person other than an individual includes a corporation, a partnership, a trust, an estate, or any organization such as a society, a union, a club, an association, or a commission. These persons are considered to be Canadian residents for GST/HST purposes in the following circumstances:

A corporation that is not incorporated in Canada may still be considered to be resident in Canada under general legal principles. It is also considered to be a resident of the place where its central management and control mechanisms are located. Factors that determine whether an organization is centrally managed or controlled include the place where:

Generally, a trust is resident in the country where the trustee who has management and control of the trust lives. If more than one trustee has management and control, the trust is resident in the country where the majority of the trustees live.

Permanent establishment

Even if persons are considered to be non-residents based on any of the previous factors, they may be considered to be Canadian residents in relation to activities carried on through their permanent establishment in Canada.

A permanent establishment of a person means:

If you are a Canadian resident, but have a permanent establishment located outside Canada, we consider you to be a non-resident of Canada only for the activities carried on through that establishment.

Whether a person has a permanent establishment in Canada is a question of fact requiring consideration of all relevant facts.

For more information, see GST/HST Policy Statement P-208R, Meaning of Permanent Establishment in Subsection 123(1) of the Excise Tax Act (the Act).

Are you carrying on business in Canada?

Determining whether you are carrying on business in Canada is an important step in establishing if you have to register for the GST/HST. Non-residents who carry on business in Canada must register for the GST/HST if they make taxable supplies in Canada and are not small suppliers.

Note

A non-resident person is not necessarily considered to be carrying on business in Canada for income tax purposes simply because that person is considered to be carrying on business in Canada for GST/HST purposes. Likewise, a person who is considered to be carrying on business in Canada for income tax purposes is not necessarily considered to be carrying on business in Canada for GST/HST purposes.

Meaning of carrying on business

A business includes a profession, calling, trade, manufacture, or undertaking of any kind, whether or not the activity or undertaking is performed for profit. It also includes any activity done regularly or continually that involves providing property by way of lease, licence, or similar arrangement. This does not include an office or employment.

The meaning of business is not limited to the examples noted above, but also includes the commonly accepted meaning of business.

Carrying on business means that the business activity is done regularly or continually. Each case is evaluated on its own facts such as the person's history and intentions.

Meaning of carrying on business in Canada

After you determine if you are carrying on business, you have to determine if you are carrying on business in Canada. You can be carrying on business in Canada even if you do not have a permanent establishment in Canada.

Whether a person is carrying on business in Canada is a question of fact requiring consideration of all relevant facts. The factors determining whether a non-resident person is carrying on business in Canada for GST/HST purposes in a particular situation are:

For more information, see GST/HST Policy Statement P-051R2, Carrying on business in Canada.

Should you register?

You have to register for the GST/HST if:

If your business is registered for the GST, it is also registered for the HST.

Companies, corporations, and partnerships register for the GST/HST as single entities. Branches and divisions cannot usually register separately. However, if you have divisions or branches that have separate accounting systems, and are separately identifiable by their activities or locations, you can apply to have these branches file separate GST/HST returns by filling out Form GST10, Application or Revocation of the Authorization to File Separate GST/HST Returns and Rebate Applications for Branches or Divisions and send it to the CRA.

You do not have to register if you are either:

For non-resident, the Tax Centre (TC) you should contact depends on the physical location of your business outside of Canada. Contact the Non-Resident TC that is closest to where you conduct your business: Prince Edward Island TC or Sudbury TC. To get the mailing address and telephone number, go to Non-resident GST/HST enquiries.

Small supplier

You are a small supplier and do not have to register if you meet one of the following conditions:

In determining the total amount of revenues from taxable supplies (including zero-rated supplies) of property and services made inside and outside Canada by you and your associates, do not include revenues from supplies of financial services, sales of capital property, and goodwill from the sale of a business.

Note

You are no longer a small supplier and you must register for the GST/HST if your total revenues from taxable supplies (and those of your associates) are over $30,000 ($50,000 for public service bodies) in a single calendar quarter or over the last four consecutive calendar quarters.

Voluntary registration

Even if you do not have to register for the GST/HST because you are a small supplier or because you do not carry on business in Canada, you can choose to register voluntarily in the following cases:

You have to stay registered for at least one year before you can ask to cancel your registration. By registering, you may be eligible to claim ITCs for the GST/HST paid or payable on purchases related to your commercial activities. If you are a small supplier and register voluntarily, you have to charge, collect, and remit the GST/HST on your taxable supplies of property and services (other than zero-rated).

If you choose not to register, you do not charge the GST/HST (other than on certain taxable supplies of real property), and you cannot claim ITCs.

Business number

The business number (BN) is the standard identifier for businesses and is unique to each business. It is combined with program accounts which are used for specific business activities that must be reported to the CRA. For example, a GST/HST program account. For more information, see Business number registration.

If you have to register for the GST/HST, or you choose to do so voluntarily, contact a tax services office to apply for a BN. You will have to complete the Non-Resident Business Number and Account Registration Web Form. For more information, go to How to register for a business number or Canada Revenue Agency program accounts. Alternatively, you may fill out Form RC1, Request for a business number and certain program accounts, and send it to your tax services office. For more information on the appropriate tax services office for your location, go to Non-resident GST/HST Enquiries.

Security deposit

Generally, if you do not have a permanent establishment in Canada, or if you make supplies in Canada only through another person's fixed place of business, and you apply to be registered for the GST/HST, you have to provide the CRA with a security deposit.

Exception

If you estimate that you will sell or provide taxable property and services in Canada of not more than $100,000 annually and your net tax will be between $3,000 remittable and $3,000 refundable annually, a security deposit is not required.

The initial amount of the security deposit is 50% of your estimated net tax, whether positive or negative, during the 12-month period after you register. For subsequent years, the amount of security is equal to 50% of your actual net tax for the previous 12-month period whether this amount is positive or negative. The maximum security deposit that we may require is $1 million, and the minimum is $5,000.

Your security deposit may be in the form of cash, certified cheque, money order, or a qualifying bond. The use of cash or cash equivalents (certified cheque or money order, etc.) may result in the cash being used to pay other outstanding debts to the CRA at the time the security is released. The CRA does not accept non-transferable bonds such as Canada Savings Bonds.

For current security requirements, contact your Tax Centre. The Tax Centre (TC) you should contact depends on the physical location of your business outside of Canada. Contact the Non-Resident TC that is closest to where you conduct your business: Prince Edward Island TC or Sudbury TC. To get the mailing address and telephone number, go to Non-resident GST/HST enquiries.

Note

All security deposits are payable in Canadian dollars.

Foreign conventions

If you are the sponsor of a foreign convention, you cannot register for the GST/HST if your only commercial activity in Canada is making sales of admissions or related convention supplies or leasing exhibition space at a foreign convention. However, if you sell books, posters, education material, or other items at the foreign convention, you may be able to, or you may have to register for the GST/HST.

Note

Sponsor of a convention means the person who convenes the convention and supplies admissions to it. This is sometimes referred to as the host of the convention. A person that supports a convention through financial or other sponsorship of the event is not a sponsor of the convention for GST/HST purposes.

A foreign convention is a convention held in Canada where both of the following applies:

If more than 25% of the admissions are reasonably expected to be Canadian residents, you have to register for the GST/HST and you must do so before the event takes place.

If you are a non-resident exhibitor, the requirement to register for the GST/HST is based on whether you are carrying on business in Canada or whether you sell admission fees directly to spectators or attendees.

For more information about foreign conventions, go to Foreign Convention and Tour Incentive Program, or see Guide RC4036, GST/HST Information for the Travel and Convention Industry.

Calculating your net tax

If you are a GST/HST registrant, you have to calculate your net tax for each GST/HST reporting period and report this on your GST/HST return. To do so, calculate both:

The difference between these two amounts, including any adjustments, is called your net tax. It is either your GST/HST remittance or your GST/HST refund. If you charged or collected more GST/HST than the amount paid or payable on your purchases, send the difference to the CRA. If the GST/HST paid or payable is more than the GST/HST you charged or collected, you can claim a refund of the difference.

Notes

This net tax calculation is not applicable if you are using a streamlined method of accounting. For more information, see Streamlined accounting methods.

Charities that are GST/HST registrants have to use a special net tax calculation for charities. For more information, see Guide RC4082, GST/HST Information for Charities.

Input tax credits

As a registrant, you recover the GST/HST paid or payable on your purchases and expenses related to your commercial activities by claiming an input tax credit (ITC) in your line 108 calculation if you are filing electronically or on line 106 if you are filing a paper GST/HST return.

You may be eligible to claim ITCs only to the extent that your purchases and expenses are for consumption, use, or supply in your commercial activities.

GST/HST payable and not paid

When you calculate your ITCs, you can include the GST/HST for purchases and expenses for which you have been invoiced but not yet paid. This means that you can get a credit for the GST/HST you owe to your suppliers before you pay the invoice.

Time limits for claiming ITCs

Most registrants claim their ITCs when they file their GST/HST return for the reporting period in which they made their purchases. However, you may have ITCs that you did not claim when you filed the return for the corresponding reporting period.

If so, you can claim those previously unclaimed ITCs on a future GST/HST return. ITCs must be claimed by the due date of the return for the last reporting period that ends within four years after the end of the reporting period in which the ITC could have first been claimed.

To support your claim for ITCs, the invoices or receipts you use must contain specific information. See the chart, "Input tax credit information requirements" in Guide RC4022, General Information for GST/HST Registrants, for details on what is required.

The time limit for claiming ITCs is reduced to two years for both:

Under the two-year limit, you can claim your ITCs on any future return that is filed by the due date of the return for the last reporting period that ends within two years after the end of your fiscal year. This two year period must include the reporting period in which the ITC could have first been claimed.

ITCs for reimbursements and allowances paid to employees and partners

If you are a GST/HST registrant and you reimburse your employees or partners (in the case of a partnership), or pay them a reasonable allowance for expenses they incurred in Canada, you can claim an ITC for the GST/HST you pay on the reimbursement or allowance.

If you are a non-resident corporation or a non-resident affiliate of a Canadian corporation and send your employees to Canada for meetings, training sessions, work projects, and so forth, you have to be a GST/HST registrant to claim an ITC for the GST/HST you pay on expenses incurred by your employees.

Employees of a non-resident affiliate of a Canadian corporation are not employees of the Canadian corporation. Therefore, you cannot recover the GST/HST paid or payable on your employees' expenses in Canada by having the Canadian corporation reimburse the employees and claim the ITC.

ITCs on imports into Canada

If you are an importer, you have to pay the GST or the federal part of the HST on most commercial goods you import into Canada, whether or not you are a GST/HST registrant. If you are a registrant, you can generally claim an ITC to recover the GST or the federal part of the HST paid or payable if the goods are imported for consumption use or supply in the course of your commercial activities.

Flow-through of ITCs

If you import goods into Canada and you are not a GST/HST registrant, you cannot claim an ITC for the GST or the federal part of the HST in respect of the importation. However, if you supply the imported goods, and deliver or make them available in Canada, to a GST/HST registrant, that registrant may be able to claim the GST or the federal part of the HST paid in respect of the importation as an ITC. As long as you give the registrant a satisfactory proof that you paid the GST or the federal part of the HST when you imported the goods, you can pass on the ITC to that registrant. Satisfactory proof includes a copy of Canada Border Services Agency (CBSA) Form B3-3, Canada Customs Coding Form, showing that the GST or the federal part of the HST was paid at the time of import.

You may also need the sales invoice, an agreement in writing between you and the buyer, or other relevant documents showing both:

If you distribute products to more than one registered customer who is a Canadian resident, CBSA Form B3-3 alone may not provide enough information to support an ITC claim by your customers. For example, there may not be a CBSA Form B3-3 for each transaction. If this is the case, your customers must get a statement from you indicating the amount of tax paid or payable on the goods delivered to them. Each declaration must be accompanied by the corresponding CBSA Form B3-3 transaction number.

You can also pass on an ITC to a registrant if the registrant takes physical possession of the imported goods in Canada for the purpose of supplying commercial services to you in respect of the goods, including:

You have to give the registrant satisfactory proof that you paid the GST or the federal part of the HST when you imported the goods.

Note

Certain public service bodies may also claim a rebate to recover part of the tax paid. For more information, see Guide RC4034, GST/HST Public Service Bodies' Rebate.

New registrants

If you are a new registrant, you may be eligible to claim an ITC for the GST/HST paid or payable on property that you had on hand to use in your commercial activities at the time you became a registrant. We consider that you bought the property at that time and paid GST/HST equal to the basic tax content of the property, such as capital property, real property, and inventory that you had on hand to use in your commercial activities at the time you became a registrant. You may be eligible to claim an ITC for the GST/HST paid or payable on these supplies. In the case of services for consumption, use or supply in the course of a person's commercial activities, an ITC may be claimed for the tax that became payable, before you become a registrant, in respect of services to be supplied after you become a registrant. The same applies to the tax payable in respect of rent, royalty or a similar payment that relates to property used in the course your commercial activities after you become a registrant. The amount of tax may be included in determining the ITCs for the first reporting period that ends after you become a registrant. However, no amount of tax should be included in determining the ITCs to the extent that the tax became payable after you become a registrant and the services to which the tax relates was supplied to you before you became a registrant. Similarly, tax in respect of rent, royalty or a similar payment attributable to a period before you became a registrant cannot be included in determining the ITCs.

You can also claim an ITC for any GST/HST you prepaid for rent, royalties, or similar payments for property that relate to the period after you became a registrant, to the extent that the property is for consumption, use or supply in the course of your commercial activities. You cannot claim an ITC for the GST/HST paid or payable on services supplied to you before you became a registrant, or on the value of any rent, royalty, or similar payment that relates to a period before you became a registrant, even if you paid that GST/HST after you became a registrant.

Streamlined accounting methods

We have developed two streamlined accounting methods to help reduce paperwork and bookkeeping costs associated with calculating the GST/HST:

If you qualify to use these methods, you can use either one or both of them for any given fiscal year.

Note

A Special Quick Method for Public Service Bodies is available to certain qualifying non-profit organizations, selected public service bodies, specified facility operators and designated charities. For more information, go to Special quick method of accounting for public service bodies.

Streamlined Input Tax Credit Method

The Streamlined Input Tax Credit Method for claiming ITCs is another way for eligible registrants to calculate their ITCs when filling out  their GST/HST return using the regular method of filing.

When you use the Streamlined Input Tax Credit Method for claiming ITCs, you do not have to show the GST/HST separately in your records. Instead, total the amount of your taxable purchases for which you can claim an ITC. You still have to keep the usual documents to support your ITC claims in case the CRA asks to see them.

You are eligible to use the Streamlined Input Tax Credit Method for claiming ITCs if you meet all of the following conditions:

In addition, if you are a public service body, you must be able to reasonably expect that your taxable purchases in the current fiscal year will not be more than $4 million.

Exception

Listed financial institutions cannot use the Streamlined Input Tax Credit Method to calculate ITCs.

If you qualify, you can start using the Streamlined Input Tax Credit Method for claiming ITCs at the beginning of a reporting period. You do not have to file any forms to use it. Once you decide to use this method, you have to use it for at least one year if you continue to qualify.

How does the Streamlined Input Tax Credit Method work?

If you make purchases in both participating and non-participating provinces, you have to separate your taxable purchases based on the rate of GST/HST you paid.

You can use this simplified method to calculate ITCs only for purchases you use to provide taxable property and services. If you use your purchases for personal use, or to provide both taxable and exempt property and services, only the part used for providing taxable property and services can be included in the ITC calculation. If you use a purchase at least 90% of the time to provide taxable property and services, include the total purchase price in your ITC calculation.

With the simplified method for claiming ITCs, you do not have to separate the amount of the GST/HST payable on each invoice; instead, you only have to track the total amount of your eligible taxable purchases. However, you have to separate your GST-taxable purchases from your HST-taxable purchases, and you have to keep the usual documents to support your ITC claims in case the CRA asks to see them.

To calculate ITCs using the simplified method, follow these steps:

Step 1

Add up your ITC eligible business expenses. When you make purchases in both participating and non-participating provinces, you have to separately add up your purchases that are taxed at different GST/HST rates. For the list of all applicable GST/HST rates, go to GST/HST calculator (and rates).

Include purchases of capital personal property and improvements to such property if you use the property more than 50% in your commercial activities. Your totals will include:

Do not include:

Note

If you also use the quick method of accounting, only include business purchases for which you are entitled to claim ITCs such as purchases of capital equipment. 

Step 2

Multiply the amount(s) you calculated in Step 1 by:

Step 3

Add the following amounts, if they apply, to your ITC amount calculated in Step 2:

Include this total in your line 108 calculation if you are filing electronically or enter it on line 106 of your paper GST/HST return.

Example (includes 5% GST and 7% PST)

Woodworks Company

123 4th Street

Brandon MB  R7B 1T7
Description Expenses
RentFootnote 1 $1,120
Employees' salariesFootnote 2 $3,000
InsuranceFootnote 2 $50
Capital property used more than 50% in commercial activitiesFootnote 3 $575
AdvertisingFootnote 3 $214
Office suppliesFootnote 3 $230
Inventory purchasesFootnote 3   $1,150
LandFootnote 4  $21,400
Total purchases and expenses $27,739

Step 1

Add all purchases and expenses, including the GST and PST

$27,739.00

 

Subtract rent, employees' salaries, insurance, and land
($1,120 + $3,000 + $50 + $21,400)

(25,570.00)

 
Taxable expenses

$2,169.00

Step 2

Multiply taxable expenses by 5/105 ($2,169 × 5/105)

$103.29

Step 3

ITCs on taxable expenses

$103.29

 

Add ITC on rent and land ($50 + $1,019.05)

$1,069.05

 
ITC

$1,172.34

 

Streamlined Accounting Quick Method

The Streamlined Accounting Quick Method is another option for eligible registrants to calculate their net tax for GST/HST purposes. This method reduces paperwork and makes it easier to calculate GST/HST remittances and file GST/HST returns because it eliminates the need to report the actual GST/HST paid or payable on most purchases.

When using the quick method, you still charge the GST at the rate of 5% or the HST at the applicable rate on your taxable supplies of property and services. To calculate the amount of GST/HST to remit, multiply the revenue from your supplies (including the GST/HST) for the reporting period by the quick method remittance rate, or rates, that apply to your situation.

The remittance rates of the quick method are less than the applicable rates of GST/HST that you charge. This means that you remit only a part of the tax that you collect, or that is collectible. Since you cannot claim ITCs on most of your purchases when you use this method, the part of the tax that you keep accounts for the approximate value of the ITCs you would otherwise have claimed.

You can begin using this method if the total revenue from your annual worldwide taxable supplies and those of your associates (including zero-rated supplies) is no more than $400,000 (including the GST/HST) in any four consecutive fiscal quarters over the last five fiscal quarters. The $400,000 limit does not include the following:

You must have a permanent establishment in Canada to use the quick method. Certain registrants cannot use the quick method, including lawyers (or law offices), accountants, bookkeepers, financial consultants, and listed financial institutions (for the complete list, see ‘’Exceptions’’ under ‘’Quick method of accounting’’ in Guide RC4022, General Information for GST/HST Registrants).

For more information or wish to use the Streamlined Accounting Quick Method, see Guide RC4058, Quick Method of Accounting for GST/HST.

How does the Streamlined Accounting Quick method work?

With the quick method of accounting, you charge and collect the GST/HST on taxable property and services you supply to your customers in the usual way. However, to calculate the net GST/HST to remit, you multiply your taxable supplies including the GST and your taxable supplies including the HST made during the reporting period by the applicable quick method remittance rate(s).

The remittance rates depend on the following factors:

The quick method remittance rates are less than the GST/HST rates of tax that you charge. This means that you remit only a part of the tax that you charge or collect. The part that is not remitted under this method is reported as income on your income tax return. 

If you use the quick method of accounting, you have to continue using it for at least a year. There are other rules as well.

For more information, see Guide RC4058, Quick Method of Accounting for GST/HST.  

Input tax credits

You cannot claim ITCs for your operating expenses if you use the quick method of accounting. The quick method remittance rates take into account the GST/HST you pay on these purchases and expenses. You do not have to keep track of the GST/HST paid or payable on your operating expenses (such as utilities, rent, and telephone expenses), meal and entertainment expenses, and inventory purchases. However, you still have to keep records of your purchases and expenses.

You may be eligible to claim ITCs for certain purchases such as purchases of land and purchases for which you can claim a capital cost allowance for income tax purposes, such as computers, vehicles, and other large equipment and machinery.

How do I start using the quick method?

Before you start using the quick method of accounting, you need to file an election. To do this, use the CRA's online services at My Business Account or Represent a Client, or fill out and send Form GST74, Election and Revocation of an Election to Use the Quick Method of Accounting to your tax service office.

For more information and line-by-line instructions on how to fill out your GST/HST return using the quick method, see Guide RC4058, Quick Method of Accounting for GST/HST.

How long does the election stay in effect?

Generally, the election stays in effect as long as the total annual revenue from your worldwide taxable supplies (including the GST/HST), and those of your associates, does not exceed the $400,000 limit (explained above), or until you become a person that cannot use the quick method because of the type of business you carry on.

Do not include supplies of financial services and sales of real property, capital property, and eligible capital property (including goodwill).

If your election ceases to be in effect, you have to start accounting for the GST/HST using the regular method:

Note

At the end of each fiscal year, make sure that your business is still eligible to use the quick method for the following year. Also make sure that the same category of rates applies to your business. Base your calculations on supplies made in the fiscal year that just ended.

For more information and line-by-line instructions on how to fill out your GST/HST return using the quick method, see Guide RC4058, Quick Method of Accounting for GST/HST.

Filing your GST/HST returns

Reporting periods

When you register for the GST/HST, we give you a reporting period. Reporting periods are the periods of time for which you file your GST/HST returns. For each reporting period, you have to prepare and send the CRA a GST/HST return showing the amount of the GST/HST you charged or collected from your customers and the amount of the GST/HST paid or payable to your suppliers.

Notes

Covid-19 measures; The CRA allowed all businesses to defer, until June 30, 2020, any GST/HST payments or remittances that became owing on or after March 27, 2020, and before July 2020. Penalties and interest will not be charged if your payments or remittances were made by June 30, 2020.

The deadline for businesses to file their returns remain unchanged. However, recognizing the difficult circumstances faced by businesses, the CRA won't impose penalties where a return is filed late provided that it was filed by June 30, 2020.

Your reporting period is determined based on the revenue from your total taxable supplies of property and services made in Canada in your immediately preceding fiscal year or in all preceding fiscal quarters ending in that fiscal year. This revenue includes zero-rated supplies of property and services made in Canada, and those of your associates.

Do not include revenue from:

When you register for the GST/HST, we generally assign an annual reporting period. However, you may choose a more frequent reporting period. The chart, "Assigned and optional reporting periods" that follows shows the threshold revenue amounts that determine the assigned reporting periods, and the optional reporting periods available if you want to file a return more frequently.

To change your assigned reporting period, send the CRA a filled out Form GST20, Election for GST/HST Reporting Period.

Assigned and optional reporting periods
Annual taxable supplies
threshold amounts 		Assigned
reporting period 		Optional
reporting periods
$1,500,000 or less Annual Monthly,
quarterly
More than $1,500,000
up to $6,000,000		 Quarterly Monthly
More than $6,000,000 Monthly Nil

If your revenue from taxable supplies is more than the threshold amount for your reporting period, you have to report more frequently beginning with the first fiscal quarter after you went over the threshold amount.

We assign annual reporting periods to most listed financial institutions and charities, regardless of their revenues. They can choose to file monthly or quarterly GST/HST returns using Form GST20, Election for GST/HST Reporting Period. For more information, see GST/HST Notice 265, GST/HST Registration for Listed Financial Institutions (Including Selected Listed Financial Institutions), or Guide RC4082, GST/HST Information for Charities.

GST/HST returns filed by non-residents

If you are a non-resident, fill out your GST/HST return in Canadian dollars, sign the return, and remit any amounts owing in Canadian dollars.

If you choose to make your payment in foreign funds, the exchange rate you receive for converting the payment to Canadian dollars is determined by the financial institution processing your payment, and may be different from the exchange rate that the CRA uses.

Filing and remitting due dates

Monthly and quarterly filers

If you have a monthly or quarterly reporting period, you have to file your GST/HST return and remit any amount owing no later than one month after the end of your reporting period.

Annual filers

If you have an annual reporting period, you usually have to file your return and remit any amount owing no later than three months after the end of your fiscal year.

Exceptions 

Exception 1 

Your GST/HST payment is due by April 30 if all of the following conditions are met:

  • You are an individual with business income for income tax purposes.
  • You file annual GST/HST returns.
  • You have a December 31 fiscal year-end.

Although your payment is due by April 30, you have until June 15 to file your GST/HST return.

Exception 2

In some situations, you may have to file a GST/HST return before leaving Canada. For example, if you give a performance where you sell admission fees, you have to file a GST/HST return and remit any GST/HST due before you or any of your employees leave Canada. You have to do this even if your reporting period has not yet ended.

Exception 3

A registrant listed financial institution (other than a corporation that is deemed to be a listed financial institution because it has an election in effect to deem certain taxable supplies to be financial services) that has an annual reporting period has six months after its fiscal year-end to file its return and remit any amount owing.

As an annual filer, you may have to pay quarterly instalments. If so, they are due no later than one month after the last day of each fiscal quarter. For more information, see Instalment payments.

Note

A financial institution that is a registrant and has annual revenue of over $1 million will also generally be required to file Form GST111, Financial Institution GST/HST Annual Information Return, within 6 months of the end of its fiscal year end, in addition to its regular GST/HST return. For more information, see Guide RC4419, Financial Institution GST/HST Annual Information Return.

Filing nil returns

File a GST/HST return for every reporting period, even if you have no net tax to remit and are not expecting a refund. In other words, even if you have no business transactions in a reporting period, you still have to file a return. Otherwise, you may experience delays in getting refunds and you could receive a failure to file notice and may be liable for a failure-to-file penalty. For more information, see Penalties and interest.

If you are filing a nil return, be sure to fill it out using zeros. Do not send a blank return to the CRA.

Notice of (re)assessment

We issue a notice of (re)assessment if we owe you a refund or rebate or if the (re)assessment results in an amount owing greater than the payment made on filing. If you are registered for online mail, once we have processed your GST/HST return we will send you an email notification to inform you that there is mail available for you to view online. You can sign up for online mail by entering an email address when filing a GST/HST NETFILE return.

This notice explains the results of our assessment of your GST/HST return. It also explains any changes that we made to your return. If there is an amount owing, we will send you Form RC159, Remittance Voucher – Amount Owing, with your notice. Use this form to pay any outstanding amount.

You will not receive a notice of (re)assessment when either:

You can also pay the outstanding amount online at Pay now with My Payment.

Filling out your return

Calculate the total amount of the GST/HST you have collected or charged on your taxable supplies during the reporting period and the total amount of the GST/HST that was paid or payable on your business purchases and expenses. Use these figures to fill out your GST/HST return.

If you make two consecutive electronic payments, the CRA will no longer send you an electronic filing package unless you request one. You still have to file your return by the due date even if you did not receive a personalized return.

If you file a paper return, the CRA will send you the GST34-2 filing information package, which includes personalized returns for each period in your fiscal year. You can use the access code provided in the package if you decide to start filing your returns using GST/HST NETFILE or GST/HST TELEFILE. To stop receiving the printed GST/HST returns go to My Business Account or Represent a Client and select “Enquiries service” and then “Change mailing instructions.”

If you need a new return package or access code, do one of the following:

If you are filing a nil return, be sure to fill it out using zeros. Do not send a blank return to the CRA.

You have to fill out and sign your GST/HST return and remit your payment in Canadian dollars or foreign funds.

Note

You can make your payment in foreign funds. However, the exchange rate you receive for converting the payment to Canadian dollars is determined by the financial institution processing your payment.

How to file your return

It is mandatory for many registrants to file electronically. GST/HST registrants, excluding registrants that have accounts administered by Revenu Québec, are eligible to file their GST/HST returns and remit amounts owing electronically. GST/HST returns in paper format can be filed by mail or, if you are making a payment, at your Canadian financial institution.

A penalty will apply if you are required to file electronically and you do not do so. For more information, see Failure to file electronically.

There are five methods of electronically filing a GST/HST return. They are:

If your representative is a non-resident living in the United States, follow these steps:

  1. Your representative must apply for a non-resident representative number (NRRN) by filling out Form RC391, Application for a Canada Revenue Agency Non-Resident Representative Number (NRRN).
  2. When your representative receives the NRRN, they can access the Represent a Client service and send you an authorization request.
  3. Fill out the authorization request and have your representative send the certification page through Represent a Client.

For more information, go to Registration process to access the CRA sign-in services.

We offer a printer-friendly version of the GST/HST return working copy. This working copy is provided to enable registrants who file electronically to keep a copy of their GST/HST return calculations for record purposes. Do not use the printer-friendly version to replace and file a lost pre-printed return or to make payments at your financial institution. To print a copy, go to GST/HST Return Working Copy.

For payment options, see How to remit an amount owing.

Mandatory electronic filing

Most GST/HST registrants must file their returns electronically, if:

For builders who need more information, see GST/HST Info Sheet GI-099, Builders and Electronic Filing Requirements, to help determine the filing option that can or must be used.

Penalties will be applied to any person who does not file electronically when required to do so.

How to remit an amount owing

There are three ways to make a payment:

GST/HST payments that are $50,000 or more must be paid electronically or at your financial institution.

You have to make arrangements with your Canadian financial institution when you make a payment of more than $25 million.

Note

You can make your payments in foreign funds. In this case, the financial institution handling your transaction determines the exchange rate for converting the payment to Canadian dollars.

Electronic payments and paying at a Canadian financial institution

You can pay electronically using your financial institution’s online or telephone banking services. You do not need a remittance voucher to pay online.

You can also pay electronically using the CRA’s My Payment option. My Payment allows individuals and businesses to make payments online from an account at a participating financial institution, using the CRA website. For more information, go to Pay now with My Payment.

Another online option is to authorize the CRA to withdraw a pre-determined payment from your bank account to pay tax on a specific date or dates. You can set up an agreement at My Business Account.

You can make a payment at your financial institution for an amount owing on a return that has already been electronically filed using GST/HST NETFILE or GST/HST TELEFILE. However, you must include Form RC158, Remittance voucher – Payment on Filing, when making the payment.

If you are not filing electronically, you can file your return and make your payment at your participating financial institution in Canada.

If you are paying at a financial institution and your return requires attached documentation, you will have to send these documents separately to the CRA.

You cannot file your return at a financial institution if you are:

In these cases, you have to use one of the other filing methods described in this section.

By mail

If you are not filing electronically, or at a participating financial institution in Canada, mail your return and your payment that is under $50,000, to the address shown on your GST/HST return.

Note

If you send your return by mail, we consider the date of the postmark to be the date we received it.

If you are filing using GST/HST NETFILE or GST/HST TELEFILE or GIFT, you can pay by cheque or money order. However, you must include Form RC158, Remittance Voucher – Payment on Filing, with your payment when you send it to the CRA. Do not photocopy or include any portion of any paper GST/HST return that you may have. Form RC158 is not available on our website. We only provide it in pre-printed format. 

Print your business number on your cheque or money order and make it payable to the Receiver General. Do not send cash in the mail. To avoid processing delays, do not staple or attach receipts or other supporting document to our return.

Instalment payments

Who has to make instalment payments?

If you are an annual filer and your net tax for the previous fiscal year was $3,000 or more, and your net tax for the current fiscal year is $3,000 or more, you have to make quarterly instalment payments during the current fiscal year, even if you have a rebate that reduces your amount owing to less than $3,000. If you do not remit instalments, you may incur penalty and interest.

To calculate your instalment payments and view the related due dates, go to My Business Account or Represent a Client.

These quarterly payments are due within one month after the end of each of your fiscal quarters and are usually equal to one quarter of your net tax from the previous year. You may also choose to base your quarterly instalment payments on an estimate of your net tax for the current year if you expect that your net tax for the current year will be less than it was for the previous year.

Note

If you estimate your instalments based on your current year and the instalment payments you make are less than the amount you should have paid, the CRA will charge instalment interest on the difference.

When you file your GST/HST return at the end of the fiscal year, deduct the instalment payments you made throughout the year from the net tax you owe on line 110 of your return.

Generally, if the instalments you paid are less than your net tax, you have to remit the difference. If the instalments you paid are more than your net tax, you can claim the difference as a refund. For more information, see Guide RC4022, General Information for GST/HST Registrants.

Penalties and interest

Penalties

Failure to file

A penalty will apply to any return you file late unless there is a $0 amount owing or we owe you a refund on that return. We calculate the penalty as follows:

                                                               A + (B x C)           

where:

A is 1% of the amount owing

B is 25% of the A

C is the number of months the return is overdue (to a maximum of 12 months)

Demand to file

If you receive a demand to file a return and do not do so, a penalty of $250 will be charged.

You cannot claim an income tax deduction for any penalty paid or payable for failing to file a GST/HST return.

Failure to file electronically

If you are required to file your returns electronically (see Mandatory electronic filing), but you do not do so, a penalty will be applicable:

There are additional penalties, which can be significant, for failing to correctly report certain amounts and information on an electronically filed return, if they are not included, are under/over-reported, or are otherwise reported incorrectly. These amounts include:

For these specific amounts, the penalties will generally be 5% of the difference between what is reported and what should have been reported plus 1% per month until the amounts are corrected (to a maximum of 10%).

Interest

Interest equal to the basic rate plus 4% will be charged on an overdue amount.

The basic rate is based on the rate charged on 90-day Treasury Bills, adjusted quarterly, and rounded up to the nearest whole percentage.

The CRA charges interest on:

Note

You cannot claim an income tax deduction for interest paid or payable for outstanding GST/HST amounts.

Books and records

Every person who carries on a business or a commercial activity in Canada, every person who is required to file a return for purposes of the GST/HST, and every person who makes an application for a rebate or refund, should keep records in English or French in Canada. If you find this impractical, you can submit a written request to your tax services office asking for permission to keep such books and records outside Canada. The request has to include both:

The CRA will review your request and notify you as to whether or not the CRA will grant permission. Permission to keep books and records outside Canada may be subject to certain conditions. These conditions will be identified in an agreement signed by you or a person authorized to sign for you. Under this agreement, you may have to:

The CRA may also ask for access to foreign-based information or records maintained or located outside Canada that we need to administer the GST/HST.

You have to keep all records and books of account for a period of six years from the end of the calendar year to which they refer.

Note

If you want to destroy your books and records before the six-year time limit, you have to get written permission from us.

For more information, see GST/HST Memorandum 15.1, General Requirements for Books and Records.

Point-of-sale rebates

Participating provinces provide a point-of-sale rebate of the provincial part of the HST payable on qualifying items, which are included in the following chart. When vendors provide point-of-sale rebates for the provincial part of the HST, they only collect the 5% federal part of the HST payable on the sale of these items.

 

Qualifying items for the point-of-sale rebate
New Brunswick and Newfoundland and Labrador BooksFootnote *   
Nova Scotia BooksFootnote *  , children’s clothing and footwear, and children’s diapers
Ontario BooksFootnote *  , children’s clothing and footwear, children’s car seats, children’s diapers, qualifying newspapers, and qualifying food and beverages
Prince Edward Island BooksFootnote *  , children’s clothing and footwear, and qualifying heating oil

A vendor's ability to claim ITCs would not be affected by crediting purchasers in this manner.

If the vendor does not credit the point-of-sale rebate, the purchaser would be able to apply for a rebate of the provincial part of the HST using Form GST189, General Application for GST/HST Rebates.

For a detailed description of the qualifying items and more information about the point-of-sale rebate, see the following publications:

Place-of-supply rules

Specific rules apply to determine whether a supply that is made in Canada is made in or outside of a participating province. The province of supply then determines whether suppliers must charge the HST, and if so, at which rate. Unless otherwise indicated, the supplies referred to throughout this section are taxable (other than zero-rated) supplies.

The following sections explains some of the place-of-supply rules. For more information, see Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province, or go to GST/HST rates and place-of-supply rules.

Sales of goods

You collect the HST if you sell goods and deliver or make them available to the customer in a participating province. Goods are also considered to be delivered in a province if you:

Note

Other rules apply to rentals and leases of goods. For more information, see Draft GST/HST Technical Information Bulletin B-103, Harmonized sales tax – Place of supply rules for determining whether a supply is made in a province, or go to GST/HST rates and place-of-supply rules.

Supplies of services

When a service is performed in whole or in part in Canada, we consider it to be made in Canada.

Rule 1: If, in the ordinary course of its business, the supplier of a service obtains a home or business address in Canada of the recipient, the supply will be regarded as made in the province in which the particular address is situated.

If, in the ordinary course of its business, the supplier of a service obtains more than one home or business address in Canada of the recipient, the supply will be regarded as made in the province in which the home or business address of the recipient that is most closely connected with the supply is situated.

If, in the ordinary course of its business, the supplier of a service does not obtain an address of the recipient that is the recipient's home or business address in Canada, the supply will be regarded as made in the province in which another Canadian address of the recipient, that is obtained by the supplier in the ordinary course of its business and is most closely connected with the supply is situated.

Rule 2: If, in the ordinary course of its business, an address in Canada of the recipient is not obtained by the supplier of a service, the supply will be regarded as having been made in a participating province if the part of the service that is performed in Canada is performed primarily (more than 50%) in the participating provinces. In such instances, the supply will be regarded as made in the participating province in which the greatest proportion of the service is performed.

Rule 3: If Rule 2 applies (in other words, no address in Canada of the recipient is obtained and the service that is performed in Canada is performed primarily in the participating provinces), but a single participating province cannot be determined as being the participating province in which the greatest proportion of the service is performed because the service is performed equally in two or more particular participating provinces, the supply will be regarded as made in the particular participating province for which the rate of the provincial part of the HST is highest.

Rule 4: If Rule 3 applies, but a single participating province still cannot be determined to be the place of supply because the particular rate of the provincial component of the HST in two or more of the particular participating provinces is the same, the supplier will be required to charge the HST by applying that particular rate.

Note

If, in the ordinary course of its business, an address in Canada of the recipient is not obtained by the supplier of a service, the supply will be regarded as having been made in a non-participating province if the services performed in Canada are not performed primarily in the participating provinces (in other words, performed primarily in non-participating provinces, or performed equally in participating and non-participating provinces).

The general rules for supplies of services described above are subject to specific place-of-supply rules for certain services, some of which are explained in the following sections. For more information, see Draft GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province, or go to GST/HST rates and place-of-supply rules.

Personal services

A personal service, generally, is a service, that is all or substantially all (90% or more) performed in the physical presence of the individual to whom the service is rendered. For example, a hair cutting service performed at a hair salon located in Sudbury, Ontario will be subject to the HST at 13%.

A personal service does not include an advisory, consulting or professional service.

The following rules apply to personal services:

Services in relation to tangible personal property

Generally, a supply of a service in relation to tangible personal property (TPP) that remains in the same province while the Canadian element of the service is being performed will be considered to be made in that province.

Note

Other rules may apply to determine whether a specific supply of a service in relation to TPP is made in a province, including where the TPP does not remain in the same province while the Canadian element of the service is performed or the TPP is situated in more than one province during that time. For more information, see Draft GST/HST Technical Information Bulletin B-103, Harmonized sales tax – Place of supply rules for determining whether a supply is made in a province, or go to GST/HST rates and place-of-supply rules.

Real property and services related to real property

A supply of real property is considered to be made in the province where the real property is situated. For example, the sale of a warehouse situated in Goose Bay, Newfoundland and Labrador, is considered to be made in Newfoundland and Labrador and is therefore subject to the HST.

The following rules apply to services in relation to real property:

Rule 1: A supply of a service in relation to real property will be regarded as having been made in a participating province if the real property in Canada to which the service relates is situated primarily in the participating provinces. The supply will be regarded as having been made in the participating province in which the greatest proportion of the real property is situated.

Rule 2: If a single participating province cannot be determined as being the participating province in which the greatest proportion of the real property is situated because equal proportions of the real property are situated in two or more particular participating provinces, the supply is made in the particular participating province for which the rate of the provincial part of the HST is highest.

Rule 3: If a single participating province still cannot be determined to be the place of supply because the particular rate of the provincial part of the HST in two or more of the particular participating provinces is the same, the supplier will be required to charge the HST by applying that particular rate.

Note

A supply of a service in relation to real property will be considered to be made in a non-participating province if the real property in Canada to which the service relates is not situated primarily in participating provinces.

Intangible personal property

Generally, the place of supply for intangible personal property (IPP), such as franchise rights, depends on where the IPP can be used.

If the Canadian rights in respect of the IPP can only be used in a single province, that province would be the place of supply.

Note

Other rules apply to determine whether a supply of IPP is made in a province. For more information, see Draft GST/HST Technical Information Bulletin B-103, Harmonized sales tax – Place of supply rules for determining whether a supply is made in a province or go to GST/HST rates and place-of-supply rules.

Goods imported into Canada

Goods imported into Canada are subject to the GST or the federal part of the HST, except for non-taxable imports. For more information, see Non-taxable imports.

You have to declare and report imported goods to Canada Border Services Agency (CBSA) for immediate inspection. When the goods are sent by common carrier, the carrier has to report their arrival to CBSA. In all other cases, the person importing the goods has to declare and report the goods to CBSA.

Generally, if you are a GST/HST registrant and the importer of record of goods that you supply and that are delivered or made available to purchasers in Canada:

If you are not a GST/HST registrant and the importer of record of goods imported into Canada that you supply:

If you are not a GST/HST registrant, you cannot claim ITCs for the GST or the federal part of the HST you pay at the time of importation. However, if a customer is a GST/HST registrant, the customer may be able to claim ITCs. For more information, see Flow-through of ITCs and GST/HST Policy Statement P-125R, Input Tax Credit Entitlement for Tax on Imported Goods.

Calculating the tax

CBSA calculates tax on the following two amounts:

Time of payment

The person responsible for paying the tax on imported goods is the person responsible for paying the customs duty, or who would be responsible if the goods were subject to duty.

Duties and taxes on imported goods are payable when CBSA processes the accounting or entry documents. Importers or their customs brokers can post security to guarantee that customs duties and the GST or the federal part of the HST will be paid. When security has been posted, the presentation of accounting documents and the payment of duties and the GST or the federal part of the HST can take place after CBSA has released the goods.

Importers who have posted security with CBSA can take advantage of periodic payment rules. Under these rules, importers can delay paying any duties and taxes until the last business day of the current calendar month for goods imported and accounted for between the 25th of the past calendar month and the 24th of the current calendar month.

Under the periodic payment system, importers still have to account for their imports daily, and will continue to have up to five business days after the date of release to present the accounting documents to CBSA.

Goods brought into a participating province

Taxable non-commercial goods imported by a resident of a participating province are generally subject to the HST on importation, except for motor vehicles required to be registered in a participating province. The provincial part of the HST on imported motor vehicles is generally payable when the vehicle is registered or required to be registered in a participating province. Taxable non-commercial goods imported by residents of a non-participating province are only subject to the GST.

Although the provincial part of the HST is not payable when you import commercial goods that are destined for the participating provinces, the goods may be subject to self-assessment of the provincial part of the HST once they are brought into a participating province.

Generally, if you are a GST/HST registrant and you use the goods (other than specified motor vehicles) 90% or more in the course of your commercial activities, you do not have to self-assess the provincial part of the HST.

If you are a GST/HST registrant and you will not use the goods 90% or more in the course of your commercial activities, you will have to self-assess the provincial part of the HST on line 405 of your regular GST/HST return for the reporting period in which the tax became payable.

If you are not a GST/HST registrant, you have to self-assess the provincial part of the HST on Form GST489, Return for Self-Assessment of the Provincial Part of Harmonized Sales Tax (HST), no later than the last day of the calendar month following the month in which the tax became payable.

Under certain conditions, the provincial part of the HST is not applied to goods brought into a participating province. For more information, including information on goods brought into a participating province from another province, see GST/HST Notice 266, Draft GST/HST Technical Information Bulletin, Harmonized Sales Tax – Self Assessment of the provincial part of the HST in respect of property and services brought into a participating province.

Temporary imports

Commercial goods imported into Canada are subject to the GST or the federal part of the HST. However, in certain circumstances such as importing goods for a temporary period, partial or full relief from the GST or the federal part of the HST may be available. If you import goods temporarily, you should contact a CBSA office to determine if relief provisions apply to your situation. A variety of relief provisions are available for temporary importations of certain classes of goods.

Item 8 outlines the Non-Taxable Imported Goods (GST/HST) Regulations. It lists the conditions under which goods can be imported into Canada without paying the GST or the federal part of the HST at the time of importation. The regulations provide relief in circumstances where the goods remain in Canada, as well as for some situations involving temporary importations of high-value items.

Examples of goods covered in these regulations are precious metals and goods for public exhibit by a public sector body such as artifacts in a King Tut exhibition for display at a public museum, as well as goods imported for repair in Canada. Certain items that are considered non-taxable importations in these regulations are described in the CBSA Memorandum D8-1-1, Amendments to Temporary Importation (Tariff Item No. 9993.00.00) Regulations.

The Value of Imported Goods (GST/HST) Regulations provide partial relief from the GST or the federal part of the HST under certain circumstances. The relief may be that the GST or the federal part of the HST is only payable on 1/60 of the value of the temporarily imported goods for every month the goods are in Canada. Examples of goods that are subject to this relief are vessels, railway rolling stock, and the temporarily imported conveyances described below. Certain items listed in these regulations are further described in the CBSA Memorandum D8-1-1.

Temporarily imported conveyances

Usually, duty and taxes do not apply to foreign-based conveyances such as buses and aircraft engaged in the international commercial transport of passengers or freight. However, buses and aircraft imported temporarily under a short-term lease for use in Canada may be subject to the GST or the federal part of the HST based on 1/60 of the value of the conveyance for each month the conveyance is used in Canada. Buses or aircraft imported under this provision must be the subject of a short-term lease, that is, two years or less cumulative, between a lessee who is a Canadian importer and a lessor who is a person outside Canada with whom the importer is dealing at arm's length. For more information, see CBSA Memorandum D8-1-1, and section 14 of the Value of Imported Goods (GST/HST) Regulations.

Imports by exporters of processing services

Generally, the GST or the federal part of the HST is payable on any goods imported into Canada for further manufacture or processing. However, registered Canadian businesses may not have to pay the GST or the federal part of the HST on goods they import that are owned by a non-resident person when the goods are imported for processing in Canada and subsequently returned to the non-resident owner.

Processing includes the alteration, assembly, manufacture, modification, production, packaging, or repackaging of the imported goods.

Certain restrictions apply. The Canadian processor has to be a GST/HST registrant. The processor cannot be closely related to the non-resident owner of the imported goods to be processed and cannot have ownership interest in the imported goods or the processed by-products. The goods must be exported from Canada within four years of the date they were reported and accounted for on importation.

You must apply for authorization to import the goods without paying the GST or the federal part of the HST. For more information, contact your tax services office. To obtain the address and phone number of your tax services office, go to Contact the Canada Revenue Agency and select “Find an address.”

Goods imported by mail or courier

Certain goods valued at $20 or less that are imported into Canada by mail or courier are not subject to the GST or the federal part of the HST when entering Canada. Some exceptions to this include excisable goods (for example, beer, spirits, wine, and tobacco products) and prescribed publications. All goods valued at more than $20 are subject to the GST or the federal part of the HST, which the CRA will assess. For more information on importing prescribed publications, see Mail or courier imports of prescribed publications.

CBSA examines all international mail to determine if a mail item is subject to customs duty, the GST, or the federal part of the HST. If an amount is payable, CBSA turns the item over to the Canada Post Corporation for delivery and collection of the amount owing from the addressee. Canada Post also collects a $9.95 handling fee from the addressee before releasing the item.

If you are mailing goods to Canada, place a customs postal declaration on the outside of packages to ensure that CBSA calculates the correct amount of duty and the GST or the federal part of the HST. The declaration should give a clear description of, and value for, the goods in the package. Without a declaration of the value, CBSA will have to use the best information available to determine the value on which to base the calculation of duty and the GST or the federal part of the HST payable.

Rebate and refund procedures

Customs duties and GST/HST paid in error on imported goods

If you are not a GST/HST registrant and you have overpaid duties, the GST, or the federal part of the HST, on imported goods, you can recover the overpayment by filing CBSA Form B2, Canada Customs – Adjustment Request. CBSA will refund the duty part of the claim and your tax services office will send you a rebate for the GST or the federal part of the HST part of the claim. If you have any questions about your GST or federal part of the HST rebate, contact the Non-Resident Tax Centre (TC) that is closest to where you conduct your business: Prince Edward Island TC or Sudbury TC. To get the mailing address and telephone number, go to Non-resident GST/HST enquiries.

If only the GST or the federal part of the HST was overpaid at the time of importation because the goods were not subject to customs duty, you can recover the overpayment by filing Form GST189, General Application for GST/HST Rebates, after CBSA Form B2 has been processed by CBSA. If the problem relates to a redetermination of tariff classification or reappraisal of the value for duty of the goods, file CBSA Form B2 with customs officials. They will ask your tax services office to pay you the rebate of the GST or the federal part of the HST you are entitled to after the claim has been reviewed and approved.

If you are a GST/HST registrant, use CBSA Form B2 to recover an overpayment of customs duties and Form GST189 to recover an overpayment of the GST or the federal part of the HST on imported goods. If the rebate claim involves a customs issue such as a redetermination of tariff classification or reappraisal of value for duty, do not file a rebate application until CBSA approves your Form B2 request. Then use the decision to support your claim for the rebate of the GST or the federal part of the HST.

Alternatively, if you have claimed an ITC to recover an amount you paid in error as the GST or the federal part of the HST on imported goods, no further action is required. If you claim an ITC for an overpayment of the GST or the federal part of the HST, you cannot claim a rebate for the same amount.

Special rebate and refund procedures

You may be able to claim a rebate of all or part of the GST or the federal part of the HST paid on goods at the time of importation. This will apply under certain conditions when the goods:

If you are not a GST/HST registrant, file a rebate request with a customs office using CBSA Form B2.

Importers who are GST/HST registrants usually recover the GST or the federal part of the HST by claiming ITCs.

Services and intangible personal property imported into Canada

This section explains how the GST/HST applies to imported services and intangible personal property (IPP) acquired outside Canada, but used in Canada. Services include management and consulting services. IPP includes copyrights to creative works, film and stage rights, patents, and industrial design.

Generally, if you are a GST/HST registrant, you have to charge the GST/HST on taxable (other than zero-rated) supplies of services, that you perform in whole or in part in Canada and on IPP that your customers acquire from you for use in whole or in part in Canada. If your customers are GST/HST registrants, they can claim an ITC for the GST/HST you charged to the extent that the services or IPP were imported for consumption, use or supply in their commercial activities.

If you are not a GST/HST registrant, you do not charge the GST/HST. If your Canadian customer imports services or IPP other than for consumption, use or supply 90% or more in a commercial activity, the customer has to self-assess the GST/HST payable on the value of the services or IPP. The customer then remits the GST/HST owing to the CRA. However, a customer who imports services or IPP for consumption, use or supply 90% or more in a commercial activity does not pay the GST/HST.

Supplies between branches

Where a person carries on business through a permanent establishment in Canada and through another permanent establishment outside Canada, the transfer of property or rendering of a service by one permanent establishment to another may be deemed to be a supply and may be subject to the GST/HST.

Self-assessment of the GST/HST applies to taxable imports of services and intangibles between separate branches of the same person. This ensures that a transfer of property or a rendering of a service exists where a person uses resources outside Canada for, or allocates costs incurred for those resources to, a Canadian business of the person.

If you are a financial institution and you are a qualifying taxpayer, you may have to self-assess the GST/HST on an amount of qualifying consideration. For more information, see GST/HST Technical Information Bulletin B-095, The Self-assessment Provisions of Section 218.01 and Subsection 218.1(1.2) for Financial Institutions (Import Rules).

Mail or courier imports of prescribed publications

Special rules allow GST/HST registration for non-resident publishers and other suppliers of prescribed publications sent to Canada by mail or courier.

Generally, if you solicit sales of prescribed publications in Canada, you are considered to be carrying on business in Canada. You have to register and collect the GST/HST from your customers, even though the order is supplied from a place outside Canada. This means that foreign publications sold to Canadian residents are taxed the same way as Canadian publications.

As a registered supplier, you collect the GST/HST from your customers in Canada. If you have collected the GST/HST on prescribed publications, we will not assess the tax on mail or courier imports, and Canada Post will not charge the $9.95 handling fee.

Prescribed publications

Prescribed publications include:

The CRA considers you to be carrying on business in Canada if you send prescribed publications by mail or courier to a recipient with a Canadian address that either situation applies:

You have to register if you solicit sales for publications and your worldwide taxable sales over four consecutive calendar quarters or in any one calendar quarter exceed $30,000.

Soliciting sales

As a guideline, soliciting sales includes:

The CRA would not consider the following to be soliciting sales for prescribed publications in Canada:

If you send a renewal notice to a Canadian resident for a subscription that you did not originally solicit, we do not consider this activity to be solicitation if you have not undertaken any activity to identify a market in Canada or to pursue that market. In these circumstances, you are continuing a business relationship that was previously established through the Canadian resident's own initiative. Even if you send a notice quoting a renewal price in Canadian dollars directly to the subscriber, we do not consider this activity to be solicitation. The fact that you are not seeking sales beyond your existing subscribers shows that you have not developed specific plans or advertising activities designed to make additional sales in Canada, and you are not soliciting sales or offering publications in Canada. Therefore, you do not have to register.

If we consider you to be soliciting sales in Canada, as described above, you have to register for the GST/HST.

If you are a GST/HST registrant offering a subscription to Canadian residents, you have to indicate whether the price includes the GST/HST or whether it is charged separately. This fulfills the requirement to disclose the tax to the buyer when the offer is the only document provided on the subscription sale.

If you are not soliciting sales or offering supplies of publications in Canada, or you are a small supplier and do not have to register for the GST/HST, it may be to your benefit to register voluntarily and collect the GST/HST payable on publications you send by mail or courier to Canadian recipients. If you register, Canada Border Services Agency (CBSA) will not delay the publications for GST/HST assessment and collection, and Canada Post will not charge the $9.95 postal handling fee. You may even be able to recover the GST/HST you pay on any goods or services you used to supply the publications in Canada (by claiming an ITC).

If you are registered, you collect the GST/HST only on sales of prescribed publications where those publications are sent to an address in Canada by mail or courier. The GST/HST applies to the sales of the publication or subscription bought by a recipient in Canada.

Customs processing of publications imported by mail

All goods arriving in Canada by mail are subject to examination by the CBSA at selected postal terminals across Canada before they are released to Canada Post for delivery.

Publications sent by mail or courier

If you are registered for the GST/HST and give proof of your registration on the documentation accompanying your shipment, CBSA will release the publications to Canada Post for delivery to the addressee.

If you are not registered for the GST/HST and you do not have to register for the GST/HST, CBSA will also release for delivery publications sent by mail or courier valued at $20 or less.

If you have to register, but fail to do so, CBSA will delay the release of the publications, regardless of their value, to assess the appropriate amount of the GST/HST, and then return them to Canada Post for delivery and collection of the GST/HST payable by the addressee, as well as the $9.95 postal handling fee.

Proof of registration

If you are registered for the GST/HST, you have to provide proof of your registration with the publications you export to Canada. Proof of registration includes your business number (BN), located in one of the following places:

If you have applied for GST/HST registration, but have not received your BN, you have to give CBSA proof of your registration documentation.

If we cannot find proof of your BN, CBSA will assess the GST/HST and return the publications to Canada Post for delivery and collection.

Bulk shipments of direct mail publications

Bulk shipments include publications that:

If you provide proof of your GST/HST registration, CBSA will not delay the release of these publications for GST/HST assessment and collection.

CBSA will document the shipment on CBSA Form B3-3, Canada Customs Coding Form, and release it for delivery to Canada Post. Importers should indicate code 48 in field 35 of CBSA Form B3-3. If there is no proof of your GST/HST registration, CBSA will collect the tax from the importer of record at the time of importation.

CBSA will treat bulk shipments that are not individually addressed to recipients in Canada in the same way as those that are individually addressed. However, you have to provide satisfactory proof that:

Bulk shipments not individually addressed and not sent by mail or courier

You should not collect the GST/HST in advance on bulk shipments of publications that are not individually addressed such as those destined for resale through bookstores, and that are sent to Canada by any mode of transport other than mail or courier. CBSA will collect the GST/HST on these shipments whether or not it finds proof of your GST/HST registration. The importer of record, or agent, has to account for the publications on customs accounting documents and pay the appropriate amount of tax.

Casual imports

Shipments of books to Canada by mail need a completed customs declaration attached to the package. You can get this form from your post office. If you are registered for the GST/HST, you should clearly show your business number on the outside of the package to facilitate customs processing. If you are not registered, CBSA will collect the GST/HST on the total value of the shipment.

Samples

If you are not registered for the GST/HST and send samples of publications to people in Canada, these samples are taxable unless the shipment is valued at $20 or less and you do not have to register. CBSA collects the GST/HST on the price for which the gift or sample publications would usually be sold to consumers on the retail market.

If you are registered for the GST/HST and provide proof of your registration, as described on the previous page, CBSA will not collect the GST/HST. In addition, you do not collect the GST/HST on sample publications if they are provided free of charge.

Exports from Canada

Exports of most property and services from Canada are zero-rated (taxable at the rate of 0%). Therefore, as long as certain conditions are met, you will not pay any GST/HST on property or services exported to you from Canada.

Proof of residency and GST/HST registration status

To export goods or services to you on a zero-rated basis, a Canadian supplier may ask to verify your non-resident status and, in some cases, your status as a non-registered person for GST/HST purposes.

The CRA will accept written certification as proof that you are not a resident of Canada and that you are not registered for the GST/HST. Please date this certification and keep it up to date. It must be signed and in effect on the date the purchase is made. You do not have to give the Canadian supplier this written certification with each purchase, but the Canadian supplier has to keep it on file.

Appendices A and B to GST/HST Memorandum 4.5.1, Exports – Determining Residence Status, contain examples of satisfactory proof of non-residence in Canada and non-registration for GST/HST purposes.

Exported goods

Generally, goods exported from Canada by a Canadian vendor are zero-rated. If the goods are delivered or made available to you outside Canada, no GST/HST is charged.

If you, the recipient, take possession of goods in Canada that you intend to export (except for excisable goods such as tobacco, beer, wine, and spirits) these goods may be zero-rated if all of the following conditions are met:

Certain services performed in relation to exporting goods, prior to their export, do not constitute further processing, transformation, or alteration. These include:

Testing goods is not considered further processing if the goods are not transformed or altered in any way as a result of the testing. However, any repairs that have to be done because of test results are considered further processing.

From your proof of export, we have to be able to trace the entire shipment of goods from its origin in Canada to its destination outside Canada. If the specific destination cannot be determined (for example, because of industry practices) we have to be able to verify that the goods left Canada. For information on what constitutes proof of exportation, see the Appendix to GST/HST Memorandum 4.5.2, Exports – Tangible Personal Property.

Generally, the following goods are zero-rated:

Rebate for exported goods

A non-resident purchaser may be able to apply for a rebate to recover the tax paid on goods acquired for commercial use primarily (more than 50%) outside Canada (other than gasoline and excisable goods, such as beer, wine, spirits, and tobacco products). To qualify for the GST/HST rebate, the non-resident purchaser has to export the goods from Canada within 60 days of delivery, as well as meet other conditions.

For more information, see Guide RC4033, General Application for GST/HST Rebates, which includes Form GST189, General Application for GST/HST Rebates.

Exported services

Generally, the GST/HST is not charged on services performed totally outside Canada, or on services that relate to real property outside Canada.

Services provided in whole, or in part, in Canada

Many services provided in whole, or in part, in Canada are zero-rated when supplied to a non-resident.

However, if you are the recipient of a service that is rendered to an individual, the individual generally has to be outside Canada while the service is being performed for the service to be zero-rated. For example, personal care and entertainment services rendered to an individual in Canada are not zero-rated.

An advertising service provided to an unregistered non-resident person is zero-rated.

A supply would be zero-rated when made to an unregistered non-resident person, other than an individual, of a service of instructing non-resident individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences, that attest to the competence of the individuals to whom the service is rendered or the examination is administered to practise or perform a trade or vocation. For more information, see GST/HST Memorandum 20-8, Educational Services Made to a Non- resident.

Certain financial services provided by financial institutions to non-residents are zero-rated. However, there are various exceptions; for example, a service relating to a debt arising from lending money primarily for use in Canada.

An advisory, consulting, or research service is zero-rated when provided to a non-resident person to help the person establish a residence or business in Canada.

Other advisory, consulting, or professional services provided to a non-resident are also zero-rated, except:

Exception 

The services of acting as an agent of a non-resident person, or of arranging for, procuring or soliciting orders for supplies by or to the non-resident are zero-rated when the service relates to a supply of property or a service that is zero-rated as an export or made outside Canada by or to the non-resident. 

Services performed on temporarily imported goods (other than a transportation service) are zero-rated. The goods must be ordinarily situated outside Canada, brought into Canada for the sole purpose of having the service performed on them, and must be exported as soon as can reasonably be expected. Any parts supplied along with these services are also zero-rated.

Certain emergency repair services are zero-rated when provided to a non-resident in respect of a conveyance or a cargo container. For more information, see Emergency repair services.

Services in respect of goods or real property are zero-rated if the services are provided to an unregistered non-resident to fulfill an obligation under a warranty issued by a non-resident person.

The following services are zero-rated when provided to an unregistered non-resident:

Other supplies of exported services eligible for zero-rating include:

For more information, see GST/HST Memorandum 4.5.3, Exports – Services and Intellectual Property.

Exported intangible personal property

Supplies of intangible personal property (IPP) made to non-residents who are not registered for the GST/HST, are generally zero-rated, except for any of the following:

A supply in Canada of an invention, patent, trade secret, trademark, trade name, copyright, industrial design, or other intellectual property, or any right to use such property that is made to a non-registered non-resident may also be zero-rated.

Supplies of IPP eligible for zero-rating include:

For more information, see GST/HST Info Sheet GI-034, Exports of Intangible Personal Property, and GST/HST Memorandum 4.5.3, Exports – Services and Intellectual Property, or go GST/HST rates and place-of-supply rules

Foreign carriers

A company incorporated in a country other than Canada, where all or most of its activities consist of international shipping and all or most of its revenues come from shipping, will be considered not to be a resident of Canada for GST/HST purposes.

Supplies bought by foreign carriers who are not registered for the GST/HST

An unregistered non-resident person can acquire property or services in Canada (except real property supplied by way of sale) on a zero-rated basis as long as the property or services are for consumption, use, or supply in any of the following activities:

Supplies eligible for zero-rating under this provision include:

Note

Fuel delivered to registered airline, rail, and shipping companies to use in international air, rail, and marine transportation of passengers and freight is zero-rated. Also, air navigation services provided to registered airlines to use in the international air transportation of passengers and freight are zero-rated.

Emergency repair services

Emergency repair services, including repair parts, are zero-rated when they are provided to a non-resident and they relate to cargo containers or conveyances while these items are being used or transported by the supplier in a business of transporting passengers and goods.

Example

A Canadian carrier is responsible for repairing damaged cargo containers and conveyances that belong to other carriers while the containers or conveyances are in the Canadian carrier's possession. The Canadian carrier often invoices the owner of the container or conveyance for the repair services provided. These repair services, including parts, are zero-rated when they are billed to a non-resident carrier.

Emergency repair services, including repair parts, are zero-rated when they are provided to an unregistered non-resident and they are for railway rolling stock that is being used in a business to transport passengers or property.

Emergency repair services, including repair parts, or a service of storing certain empty cargo containers, may be zero-rated when provided to an unregistered non-resident.

Drop-shipments

Some unregistered non-residents that supply goods to customers in Canada originally obtain those goods from another person in Canada. In this situation, the non-resident will normally arrange for the Canadian supplier to have the goods "drop-shipped" to the customer in Canada on behalf of the non-resident.

The Canadian supplier may also perform commercial services (manufacturing, processing, inspecting, testing, repair, storage, or maintenance) on goods owned by the unregistered non-resident and then deliver them to a third party. The third party may be a customer of the non-resident or another resident who is taking physical possession of the goods for the purpose of performing additional work on them.

The drop-shipment rules streamline the GST/HST treatment of drop-shipments for non-residents by generally relieving unregistered non-resident suppliers of the obligation to pay tax.

Drop-shipments to registered persons

When a GST/HST registrant transfers physical possession of your goods to a third party (consignee) who is registered for the GST/HST, the consignee must issue a drop-shipment certificate to the registrant so that tax will not apply to the supply of goods or commercial services from the GST/HST registrant to you.

Drop-shipment certificates ensure that consignees are aware of their potential GST/HST liability when another registrant transfers physical possession of your goods to them. Generally, by issuing the certificate, the consignees acknowledge that they have a potential obligation to self-assess the GST/HST payable in respect of an imported taxable supply of the goods if they do not acquire the goods for consumption, use, or supply exclusively (90% or more) in the course of commercial activities, or to collect tax in relation to the goods based on the application of the general drop-shipment rule.

The CRA accepts blanket drop-shipment certificates. These certificates cover more than one transfer of physical possession of goods from one registrant to another (the consignee). Generally, a valid drop-shipment certificate has to:

A sample of a drop-shipment certificate that is acceptable to the CRA is provided in Appendix B of GST/HST Memorandum 3.3.1, Drop-Shipments.

Example

You are an unregistered non-resident contractor and you buy radios from a GST/HST registered supplier. You instruct the supplier to have the radios delivered to a registered inspector. The inspector provides the supplier with a drop-shipment certificate. The supplier invoices you for the radios, but does not charge the GST/HST. You instruct the inspector to deliver the radios to a registered customer. The customer provides the inspector with a drop-shipment certificate. The inspector invoices you for the inspection service, but does not charge the GST/HST. You invoice the customer, and as an unregistered non-resident, you do not charge the GST/HST.

In the above example, the registered supplier transfers physical possession of the radios to the registered inspector on your behalf. After inspecting the radios, the inspector delivers them to the customer. The radio supplier and the inspector invoice you for their property and services. You invoice the customer for the radios. No GST/HST is charged on the sale of the radios to you, the inspector's services, and the resale of the radios to the registered customer, as long as the registered inspector provides the registered supplier with a drop-shipment certificate and the registered customer provides the drop-shipment certificate to the registered inspector.

Drop-shipments to unregistered persons

If you instruct a GST/HST registrant to deliver goods in Canada to an unregistered consignee such as a consumer, the GST/HST is payable by you when the registrant delivers or transfers physical possession of the goods to the recipient. The GST/HST is either:

These rules also apply if a registered consignee does not issue a drop-shipment certificate to the GST/HST registrant.

Transfer of goods to a carrier or warehouse

If a GST/HST registrant transfers physical possession of your goods to a carrier or warehouse (bailee) and at the same time instructs the bailee to transfer physical possession of the goods to a third party, for purposes of the drop-shipment rules, the registrant must obtain a drop-shipment certificate from the third party so that tax will not apply to the supply of goods or commercial services from the GST/HST registrant to you.

If a GST/HST registrant transfers physical possession of your goods to a warehouse and the warehouse operator is instructed under the agreement for the storage of the goods to store the goods until a third party purchaser is found, the registrant is not required to charge tax on the sale of the goods to you. However, the registrant remains potentially liable for tax on the fair market value of the goods unless, at the time of the transfer of physical possession of the goods to the third party, the registrant obtains a drop-shipment certificate from the third party.

If a GST/HST registrant transfers physical possession of your goods to a warehouse and instructs the warehouse operator to release the goods to you, the registrant is regarded as transferring physical possession to you in Canada and the transaction is generally subject to the GST/HST. If you plan to sell the goods to a third party who is a registrant, and the goods will not leave Canada, in order not to pay tax to the first registrant, you can instruct the warehouse to issue a drop shipment certificate to the first registrant. On issuance of the certificate, the warehouse operator becomes potentially liable for tax on the fair market value of the goods unless, at the time of the transfer of physical possession of the goods to a third party, the warehouse operator obtains a drop-shipment certificate from the third party.

If a warehouse operator acts as the importer of record for goods you transfer to the warehouse and claims an ITC for the import of the goods, we consider the warehouse operator to have taken physical possession of the goods. The warehouse operator has to pay the GST/HST to the CRA if and when physical possession of the goods is transferred to another person on your behalf, unless the warehouse operator obtains a drop-shipment certificate from the person to whom he or she transfers physical possession of the goods.

Goods kept by registered suppliers

When a GST/HST registrant sells goods to you and transfers ownership, but not physical possession of the goods to you, the registrant does not charge the GST/HST on the sale if the registrant keeps physical possession of the goods in order to either:

The registrant assumes potential liability for the goods when physical possession of the goods is transferred to another person. The registrant is relieved of this liability when the registrant receives a drop-shipment certificate from the third party at the time physical possession is transferred.

Goods subsequently exported

A GST/HST registrant does not charge the GST/HST on the sale of goods and the supply of commercial services to an unregistered non-resident if the registrant:

Events and supplies that do not qualify for the drop-shipment rules

The drop-shipment rules do not apply to common carriers that take possession of goods for the sole purpose of shipping the goods. In all cases, fees for shipping goods are subject to the GST/HST based on the normal GST/HST rules that apply to such services. The transfer of the physical possession of the goods to the carrier for transportation and delivery to another person is considered to be a transfer of physical possession of the goods to the person to whom the goods are to be delivered – that person can elect to follow the drop-shipment rules.

For more information, see GST/HST Memorandum 3.3.1, Drop-Shipments.

GST/HST rebates

Rebate for exported goods

Non-resident businesses that purchase goods for commercial export can receive a rebate of the GST/HST they pay on goods they buy in Canada. They can apply for the rebate using Form GST189, General Application for GST/HST Rebates, and Form GST288, Supplement to Forms GST189 and GST498.

For more information, see Guide RC4033, General Application for GST/HST Rebates.

Production of artistic works for export

You can apply for a rebate of the GST/HST you paid on goods, intangible property such as a patent or copyright, and services you bought in Canada to use or consume only in producing artistic works for export, if you are not a GST/HST registrant and you are not a consumer. To apply, send the CRA a filled out Form GST189. For more information, see Guide RC4033.

Assignment of rights to the rebate

You can assign your rights to a GST/HST rebate to your Canadian supplier of the goods, intangible property, or services if:

By assigning your rights to the rebate, you can, in effect, buy the goods, intangible property, or services free of the GST/HST. You will find an example of an assignment of rights agreement to the GST/HST rebate. You can use it, or design your own agreement. You have to give your supplier a copy of this assignment as documentation required to allow them to credit you the GST/HST payable.

Installation services

If you are not a GST/HST registrant, you may be eligible for a rebate of the tax paid on the charge made for installing tangible personal property in Canada. To apply, send the CRA a filled out Form GST189. For more information, see Guide RC4033.

Foreign Convention and Tour Incentive Program

After March 22, 2017, a rebate is no longer available for the GST/HST paid in respect of the Canadian accommodation portion of eligible tour packages under the Foreign Convention and Tour Incentive Program (FCTIP).

However, a rebate of the GST/HST may still be available to either:

The rebate may also still be available in respect of a supply of an eligible tour package or accommodations made after March 22, 2017, and before 2018 if the amount owing for the supply is paid in full before January 1, 2018.

The rebate will continue to be available in respect of a supply of a tour package or accommodation made on or before March 22, 2017, regardless of when the consideration for the supply is paid or the tour takes place.

For more information, go to GST/HST rebate for tour packages.

Under the same program, sponsors and unregistered organizers of a foreign convention can claim a rebate for the GST/HST paid on a convention facility and related convention supplies. Unregistered non-resident exhibitors attending domestic or foreign conventions can claim a rebate of the GST/HST paid on convention space and related convention supplies.

For more information, go to Foreign Convention and Tour Incentive Program.

Questions and answers

A non-resident company that does not have an office in Canada sells goods (other than prescribed goods) to Canadian consumers through a mail-order catalogue. Will the non-resident mail-order company have to register for the GST/HST and pay the GST/HST on services and postage?

No, the non-resident mail-order company will not have to register if it can establish that it is not carrying on business in Canada. However, it does have to pay the GST/HST on property and services it buys from Canadian suppliers.

Also, if the company solicits orders for prescribed publications, regardless of value, to be sent to Canada by mail or courier, it must register for the GST/HST.

If, in the ordinary course of carrying on business outside Canada, this company regularly solicits orders for the supply of goods for delivery in Canada, it can register voluntarily. By doing so, it will generally be able to claim ITCs for the GST/HST it pays on property and services bought from Canadian suppliers for consumption, use, or supply in its commercial activities.

A customs broker pays carrier freight charges for an importer and then invoices the importer. Will the importer pay the GST/HST on the freight charges or the customs broker's fee?

If a customs broker is paying the freight charges, the freight transportation service is presumably an international shipment and is zero-rated. The broker's fee to the importer for having made the disbursement is subject to the GST/HST.

A non-resident company supplies its Canadian subsidiary located in Ontario with taxable goods for sale within the Canadian market. Both entities are registered for the GST/HST. The goods are delivered outside Canada. Does the Canadian subsidiary pay the GST/HST when the goods are imported into Canada?

Yes. The subsidiary pays the federal part of the HST when the goods are imported. The subsidiary, as the importer, can generally claim an ITC for the federal part of the HST paid when the goods are imported, if the goods are for consumption, use, or supply in the importer's commercial activities.

An unregistered non-resident manufacturer sells goods to a buyer in Canada. The goods are shipped from the United States directly to the buyer and the manufacturer's Canadian subsidiary invoices the buyer. The goods are supplied outside Canada. How does the GST/HST apply? Does the Canadian subsidiary charge the GST/HST on the invoice to the buyer?

When goods are imported into Canada, the importer is responsible for getting the goods released from customs and paying the GST or the federal part of the HST.

The Canadian subsidiary does not charge the GST/HST on the domestic billing for the imported goods. The agreement or the invoice has to clearly state that the goods were delivered to the Canadian buyer outside Canada.

An unregistered non-resident cabinet manufacturer imports cabinets into Canada and is the importer of record. How does the GST/HST apply?

As the importer of record, the non-resident manufacturer pays the GST or the federal part of the HST when the cabinets are imported into Canada. An unregistered non-resident cannot claim an ITC for the GST or the federal part of the HST paid at the border.

However, special flow-through provisions are available so that the non-resident can pass on the ITC to the buyer of the cabinets if the buyer is a GST/HST registrant. The non-resident has to give the buyer satisfactory proof that the GST or the federal part of the HST was paid. This proof includes Canada Border Services Agency (CBSA) Form B3-3, Canada Customs Coding Form, the transaction invoice between the parties, and, if necessary, a signed letter from the non-resident to the buyer showing that GST or the federal part of the HST was paid on the cabinets.

The non-resident cabinet manufacturer can apply for GST/HST registration if, in the ordinary course of carrying on business outside Canada, the manufacturer regularly solicits orders for the supply of cabinets from abroad for export to, or delivery in Canada or is otherwise engaged in a commercial activity in Canada. Once registered, the non-resident cabinet manufacturer has to collect the GST/HST on taxable goods delivered to customers in Canada. The GST/HST would generally apply on the sale price of the goods. The registered non-resident can generally claim an ITC for the GST or the federal part of the HST paid when the goods are imported.

A Canadian subsidiary of a multinational company buys its goods from various sources: the parent company (which is not resident in Canada), related foreign subsidiaries, and Canadian companies. Canadian companies collect the GST/HST on the subsidiary's purchases of taxable goods. Would related foreign companies also have to collect the GST/HST? Does the source of the subsidiary's suppliers affect the GST/HST the subsidiary pays and the ITCs it can claim?

The CRA considers the sale of goods by a registrant to be a supply made in Canada if the goods are delivered to the recipient in Canada, and the GST/HST is collected on the price of the goods. The subsidiary in Canada has to pay the GST/HST on the goods bought in Canada from a registrant or imported by it into Canada.

Whether the subsidiary buys the goods from Canadian registrants or from foreign non-registrants, it will pay the GST or the federal part of the HST when it imports the goods into Canada. However, the subsidiary, as a GST/HST registrant, can generally claim an ITC for the GST or the federal part of the HST it paid if the goods are imported for consumption, use, or supply in its commercial activity.

If a foreign company is the importer for customs purposes, the foreign company pays the GST or the federal part of the HST when the goods are imported. A non-registered foreign company cannot claim an ITC for the GST or the federal part of the HST it paid. However, the subsidiary in Canada can generally claim an ITC under the flow-through of ITC provisions if it received the goods for consumption, use, or supply in its commercial activity and it is a GST/HST registrant. It can claim the ITC only if it has satisfactory proof that the foreign company paid the GST or the federal part of the HST.

Will non-resident vendors have to pay the GST/HST on goods such as stamps imported into Canada temporarily to sell or trade at shows? If so, can they recover the GST/HST on the goods they later export?

Stamps or other goods non-residents import temporarily for sale at a show or exhibition are subject to the GST or the federal part of the HST when they are imported.

Importers who are GST/HST registrants can recover the GST or the federal part of the HST they paid by claiming an ITC on the return for the reporting period when the GST or the federal part of the HST was paid. Importers who are not GST/HST registrants cannot claim an ITC or otherwise recover the tax paid on importation of goods that are not sold at the trade show or exhibition. If the goods imported were acquired by the person on consignment, approval, or a sale-or-return basis, and are exported within 60 days after their release for the purpose of returning them to the supplier, the importer can apply for a GST/HST rebate.

The duty and tax treatment of temporary imports varies considerably depending on the nature of the goods, the circumstances under which they are imported, and whether they are imported by a resident or a non-resident. If you plan to import goods into Canada temporarily, contact CBSA for detailed information.

An unregistered non-resident company provides technical and consulting services to a registered company for the construction of a generator in Canada. Does the non-resident company have to charge the GST/HST on its technical and consulting services?

The non-resident company does not charge the GST/HST on these services if it does not carry on a business in Canada. Generally, we consider sales of property and services by an unregistered non-resident to be made outside Canada, unless the non-resident makes such sales in the course of a business carried on in Canada.

An unregistered non-resident invoices a customer for goods sold in Canada and the registrant in Canada who supplied the goods to the non-resident delivers the goods to the customer in Canada for the non-resident. How does the GST/HST apply?

This transaction qualifies as a drop-shipment. When the registrant drop-ships the goods to a registered customer of the non-resident in Canada, on behalf of the unregistered non-resident, the supply of the goods to the non-resident is not subject to the GST/HST, provided that the registrant obtains a valid drop-shipment certificate from the registered consignee. The unregistered non-resident does not charge the registered customer the GST/HST. The registrant does not charge the non-resident the GST/HST in respect of the supply of the goods.

If the customer is a consumer who is not registered for the GST/HST, the transaction is taxable. The registrant who delivers the goods to the consumer or an unregistered person has to account for the GST/HST based on the fair market value of the goods.

A registered, non-resident corporation sells goods to a closely related Canadian affiliate. Does the non-resident corporation charge the GST/HST on such sales?

Yes, if the place of supply of the goods is in Canada. In this case, one of the corporations is a non-resident; although, the corporations may be closely related, they would not be able to make an election to have certain taxable supplies made between them to be made for no consideration. If the goods are delivered or made available in Canada, the registered non-resident corporation has to charge the GST/HST on sales made to its Canadian affiliate. However, because the Canadian corporation is a registrant, it can generally claim ITCs to recover the GST/HST paid to its non-resident supplier; to the extent the goods are for use in its commercial activity.

A non-resident buys legal services to establish a business venture in Canada. These services are zero-rated. If the non-resident later needs more legal services to establish a second business venture in Canada, is the second supply of legal services subject to the GST/HST?

Supplies of advisory, consulting, or research services to a non-resident that are intended to help a non-resident take up residence or establish a business venture in Canada are zero-rated. However, we consider a non-resident person with a permanent establishment in Canada to be resident in Canada in respect of the activities carried on through that establishment. If the second supply of legal services is acquired by a permanent establishment in Canada of the non-resident, that supply of legal services will be subject to the GST/HST.

A non-resident corporation carrying on business in Canada made sales of $520,000 in the last four consecutive calendar quarters, of which $20,000 represents Canadian sales made through an agent. Which figure should the non-resident corporation use to calculate its worldwide taxable sales for the GST/HST registration purposes, $20,000 or $520,000?

The CRA uses a non-resident corporation's total worldwide revenues from the provision of taxable property and services to determine whether or not it is a small supplier. Therefore, the non-resident corporation should use the $520,000 figure and would have to register because its total revenues are above the $30,000 small supplier threshold.

A registered non-resident company ships non-commercial goods to customers in Newfoundland and Labrador. The goods are subject to the HST. The carrier invoices the non-resident company for zero-rated freight transportation services. When the non-resident company invoices its customer, it shows the zero-rated freight charge as a separate item on the invoice. On which amount does the non-resident company charge the HST - the cost of the goods, or the total invoice including the freight transportation service?

The answer depends on whether the goods are delivered or made available in Canada, or outside Canada.

If the goods are delivered or made available to the Canadian customer in Canada (the terms of delivery under the contract are F.O.B. a Canadian destination), the registered, non-resident company has to charge the HST at the standard rate on the total amount invoiced to the customer – the cost of the goods, as well as the freight transportation service, whether or not a separate amount is indicated for that service.

If the goods are delivered or made available to the Canadian customer outside Canada (the terms of delivery are F.O.B. shipping point) and the registered non-resident has arranged for transportation on behalf of the customer (the customer is legally obligated to pay the freight transportation company) the registered non-resident does not have to charge the HST on the amount invoiced for the freight transportation service.

Example of an assignment of rights agreement

The following is an example of an assignment of rights to a GST/HST rebate agreement that would appear on the non-resident person's official letterhead:

To the Receiver General:

You are notified that (complete legal name and address of the assignor, "the assignor") assigns to (complete legal name and address of the assignee, "the assignee") all monies due or becoming due by the Crown as represented by the minister of national revenue as a rebate of tax paid under subsection 252(1) of the Excise Tax Act, for property and services bought from the assignee by the assignor in producing goods for export.

The assignor understands that all rebates in connection with this assignment of rights can be claimed only by the assignee.

This assignment will continue in effect for (specify period of not more than one year) from the date indicated below unless you are notified earlier, in writing, by the assignor or the assignee that this assignment is revoked. This arrangement is granted on the understanding that the assignee will comply with all the requirements of the applicable provisions of the Excise Tax Act.

Date
 
Signature of authorized officer of the assignor
 
Name:
 
Title:
 

The assignee accepts all rights and liabilities that come with this assignment.

Date
 

Signature of authorized officer of the assignee

 
Name:
 
Title:
 

Non-taxable imports

Certain imports into Canada are not subject to the GST/HST. They include:

1. Goods classified under the following headings of Schedule I to the Customs Tariff, if the goods are not subject to duty under that Act, but not including goods classified under tariff item No. 9804.30.00. The GST/HST does not apply to these goods when they are imported into Canada, if there are no customs duties on them under the Customs Tariff.

98.01: Foreign-based conveyances used in the international transporting of passengers or goods to and from Canada such as internationally registered aircraft, ships, and trains. This item allows these conveyances to enter Canada without incurring duties or taxes.

98.02: Conveyances temporarily imported by Canadian residents for their personal use. For example, this item allows residents of Canada who work in the United States to use a car to commute to their jobs.

98.03: Tourists' conveyances and baggage. This item allows tourists visiting Canada to bring their personal effects, vehicles, and boats into Canada for their personal use without incurring duties or taxes.

98.04: Personal exemptions for returning residents. There are duty and tax-free exemption entitlements for Canadian residents who return from a trip outside the country. For more information, see Canada Border Services Agency (CBSA) Guide BSF5056, I Declare.

98.05: Former residents' effects. This item allows a former resident of Canada who has lived abroad for at least one year to import personal and household effects duty-free and tax-free. For more information, visit the CBSA website.

98.06: Estates and bequests. Personal effects that are left as a bequest by a Canadian resident who died abroad can be imported free of duties and taxes.

98.07: Settler's effects. People immigrating into Canada can import their personal effects free of duties and taxes.

98.10 and 98.11: Military arms, stores, and other goods from certain countries may be imported into Canada free of duties and taxes under specified circumstances.

98.12: Publications of the UN and NATO, or any of their specialized agencies, can be imported without paying duties and taxes.

Books borrowed from free foreign lending libraries can be imported for a specified period of time without paying duty or taxes, if they are returned within 60 days.

98.15: Donations of clothing and books for charitable purposes can be imported duty-free and tax-free.

98.16: Gifts sent by people living abroad to friends and relatives in Canada can be imported free of duty and taxes if their value is not more than $60. Gifts do not include advertising matter, tobacco products, or alcoholic beverages.

98.19: Goods for display at a convention or public exhibition. Certain restrictions apply.

98.29: Seasonal residents. This is a one-time benefit available to non-residents of Canada who build, acquire, or lease, for at least three years, a residence in Canada for seasonal use. A time-share residence or a trailer or mobile home does not qualify. Household and personal effects for use at the seasonal residence, that were owned, possessed, and used abroad by the person before his or her first arrival in Canada to occupy the seasonal residence, are admissible free of duties and taxes. The goods must be declared at Customs on first arrival, and they may not be sold or disposed of within one year of their importation.

9823.60: Display or demonstration goods imported temporarily from a North American Free Trade Agreement (NAFTA) country.

9823.70: Commercial samples imported temporarily from Mexico or the United States can enter free of duty for a specified period of time. Certain restrictions apply.

9823.80: Advertising films imported temporarily from a NAFTA country.

9823.90: International commercial transportation of goods between NAFTA countries.

2. Medals, trophies, and other prizes, not including usual merchantable goods that are won outside Canada in competition, that are bestowed, received, or accepted outside Canada, or that are donated by persons outside Canada, for heroic deeds, valour, or distinction.

This allows someone who is awarded or wins a medal, trophy, or other prize (other than marketable goods such as an automobile) outside Canada, to import the prize free of the GST/HST.

3. Printed matter to be provided to the general public, without charge, for the promotion of tourism, when the printed matter is either:

This allows tourist literature of governments or other described bodies to be imported free of the GST/HST when such literature is for distribution without charge.

4. Goods imported by a charity or a public institution in Canada that have been donated to the charity or public institution.

This allows goods that have been donated outside Canada and then imported by a registered Canadian charity or a public institution to be imported free of the GST/HST.

5. Goods imported by a person when the goods are supplied to the person by a non-resident person for no payment, other than shipping and handling charges, as replacement parts or replacement property under a warranty.

This item is restricted to warranty replacement parts provided free of charge. If a charge other than shipping or handling costs is made to the recipient or, if during the course of a warranty repair, other modifications or improvements are made to the goods, these changes are subject to the GST/HST.

6. Goods the supply of which is included in any of Parts I to IV or VIII of Schedule VI to the Excise Tax Act (ETA).

Certain domestic supplies of goods are zero-rated in Schedule VI: for example, prescription drugs (section 2 of Part I), medical devices (Part II), basic groceries (Part III), agricultural and fishing supplies (Part IV), and supplies for international bridges (Part VIII). This section extends the same treatment to such goods when they are imported into Canada.

7. Goods, other than prescribed goods, sent by mail or courier to the recipient of the goods at an address in Canada, whose value, determined under paragraph 215(1)(a) of the ETA, is not more than $20.

With this provision, a resident of Canada does not have to pay the GST/HST on goods valued at no more than $20 that the resident receives by mail or by courier.

The prescribed goods excluded from this provision are listed in the Mail and Courier Imports (GST/HST) Regulations. These goods include:

7.1. Books, newspapers, magazines, periodicals and similar publications, as well as audio-recordings that relate to and accompany these publications, which are sent by mail or courier to a recipient at an address in Canada, if the supplier is registered when the goods are imported.

8. Prescribed goods imported in prescribed circumstances and under prescribed terms and conditions. This section provides for the granting of relief by way of regulation.

Prescribed goods for purposes of section 8 of Schedule VII to the ETA, which are listed in the Non-Taxable Imported Goods (GST/HST) Regulations, are the following:

(a) precious metals (as defined in the ETA) imported under any circumstances

(b) unwrought silver, gold, or platinum, waste and scrap of precious metal or of metal clad with precious metal, and concentrates of silver, gold, or platinum, when imported to be refined into precious metals

(c) goods imported only for public exhibit by a public sector body, if, while the goods are in Canada:

(d) goods imported only for maintenance, overhaul, or repair of those goods in Canada if:

(e) crude oil if:

(f) foreign-based conveyances if:

(g) a print, an etching, a drawing, a painting, a sculpture, or other similar work of art if:

Note

When accounting for the goods under section 32 of the Customs Act, an importer of goods referred to in paragraph 8(g) above, has to attach to, or endorse on, the accounting document the following declaration:

I expect that at least 75% of the value of the works of art in this shipment will be exported within one year of this date.

Signature

 

Date

 

When an importer imports works of art referred to in paragraph 8(g), and less than 75% of the value of the shipment is exported within one year of the import, the importer has to notify a Customs officer, in writing, of the actual percentage in value of the works of art in the shipment that was exported

(h) locomotives, railway rolling stock, and vessels imported in circumstances where customs duties have been remitted or removed under any of the following:

(i) goods described in the following items of the schedule to the Temporary Importation Regulations imported in circumstances where the terms and conditions of those regulations are met:

(j) goods imported after having been exported for warranty repair work

Note

When accounting for the goods under section 32 of the Customs Act, an importer of goods referred to in paragraph 8(j) has to attach the following to the accounting document:

  • a copy of the export report for the goods, except when subsection 32(2) applies
  • an invoice or written statement from the supplier of the goods showing that, except for shipping charges, communication expenses, and other non-repair expenses, the supplier paid the cost of warranty repair to the goods under the terms of the warranty

If the above export report is unavailable, because of circumstances beyond the importer's control, the importer has to provide one of the following:

(k) medals, trophies, plaques, or other similar articles to be presented by the importer at awards ceremonies

(l) goods enumerated in code 1910 of Schedule II to the Customs Tariff that are imported pursuant to the requirements of that code

9. Containers that, because of regulations made under Note 11(c) of Chapter 98 of Schedule I to the Customs Tariff, may be imported free of customs duties.

This ensures that if a person exports containers and later imports a similar quantity of like containers, the import is free of customs duties and the GST/HST.

10. Money, certificates, or other documents evidencing a right that is a financial instrument.

This section confirms that such things as stock certificates, bond certificates, promissory notes, and money are not taxable when brought into Canada.

CBSA administers the provisions for importing goods, and is responsible for determining how the goods will be taxed when they are imported.

Publications and forms

The CRA offers a wide range of publications in both official languages. For a list of all GST/HST publications, go to GST/HST related forms and publications.

Revenu Québec administers the GST/HST in Quebec. If the physical location of your business is located in Quebec, contact Revenu Québec at 1-800-567-4692, unless you are a person that is an SLFI for GST/HST or Quebec sale tax (QST) purposes or both then go to GST/HST and QST – Financial institutions, including selected listed financial institutions.

Forms

There are a number of options available to businesses and organizations to make it easier to comply with the GST/HST. These options, called elections or applications, allow you to adapt the administrative requirements of the GST/HST to your own business activity. While some options are available to all registrants, other options are available only to organizations and businesses that meet certain conditions.

Other forms are used to remit an amount of tax. They are called returns or remittance vouchers.

Elections

You can use an election if you meet all the eligibility criteria.

You are responsible for ensuring that you meet the conditions of the election. At the time of an audit, we reserve the right to verify your eligibility and to disallow an election if you have not met the requirements.

Applications

Applications are different from elections. You have to meet the necessary requirements, and for many applications, you can call the CRA or fill out the form and mail it to the CRA. The CRA has to acknowledge that we have processed and approved your application before you can begin to use the procedure for which you have applied.

Digital services

GST/HST electronic filing and remitting

You have several options for filing your GST/HST return or remitting an amount owing electronically. For more information, go to Complete and file a return.

Handling business taxes online

Use the CRA’s digital services for businesses throughout the year to:

To log in to or register for the CRA’s digital services, go to:

For more information, go to E-services for businesses.

CRA BizApp

CRA BizApp is a mobile web app that offers secure access for small business owners and sole proprietors to view accounting transactions, pay outstanding balances, make interim payments, and more.

You can access CRA BizApp on any mobile device with an Internet browser—no app stores needed! To access the app, go to Mobile apps – Canada Revenue Agency.

Receiving your CRA mail online

Sign up for email notifications to find out when your CRA mail, like your notice of assessment, is available online.

For more information, go to Email notifications from the CRA – Businesses.

Authorizing the withdrawal of a pre-determined amount from your Canadian chequing account

PAD is a secure, online self-service payment option for individuals and businesses to pay their taxes. A PAD lets you authorize withdrawals from your Canadian chequing account to pay the CRA. You can set the payment dates and amounts of your PAD agreement using the CRA’s secure My Business Account service, or the CRA BizApp at Mobile apps – Canada Revenue Agency. PADs are flexible and managed by you. You can use My Business Account to view historical records and modify, cancel, or skip a payment. For more information, go to Pay by pre-authorized debit.

Electronic payments

Make your payment using:

For more information, go to Payments to the CRA. 

For more information

What if you need help?

If you need more information after reading this guide, go to Non-resident GST/ HST Enquiries.

Direct deposit

Direct deposit is a fast, convenient, and secure way to get your CRA payments directly into your account at a financial institution in Canada. For more information and ways to enrol, go to Direct deposit – Canada Revenue Agency.

Forms and publications

The CRA encourages electronic filing of your return. If you need a paper version of the CRA’s forms and publications, go to Forms and publications or call one of the following numbers:

Electronic mailing lists

The CRA can notify you by email when new information on a subject of interest to you is available on the website. To subscribe to the electronic mailing lists, go to Canada Revenue Agency electronic mailing lists.

Tax Information Phone Service (TIPS)

For tax information by telephone, use our automated service, TIPS, by calling 1-800-267-6999.

Teletypewriter (TTY) users

If you have a hearing or speech impairment and use a TTY, call 1-800-665-0354.

If you use an operator-assisted relay service, call our regular telephone numbers instead of the TTY number.

GST/HST rulings and interpretations

You can request a ruling or interpretation on how the GST/HST applies to a specific transaction for your operations. This service is provided free of charge. For the mailing address or fax number of the closest GST/HST Rulings centre, see GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, or call 1-800-959-8287.

Service complaints

You can expect to be treated fairly under clear and established rules, and get a high level of service each time you deal with the CRA. For more information about the Taxpayer Bill of Rights, go to Taxpayer Bill of Rights.

If you are not satisfied with the service you received:

  1. Try to resolve the matter with the CRA employee you have been dealing with or call the telephone number provided in the CRA's correspondence. If you do not have contact information, go to Contact the Canada Revenue Agency.
  2. If you have not been able to resolve your service-related issue, you can ask to discuss the matter with the employee’s supervisor.
  3. File a service complaint by filling out Form RC193, Service Feedback. For more information and how to file a complaint, go to Submit service feedback.

If you are not satisfied with how the CRA has handled your service-related complaint, you can submit a complaint with the Office of the Taxpayers’ Ombudsperson.

Formal disputes (objections and appeals)

If you disagree with an assessment, determination, or decision, you have the right to register a formal dispute.

For more information about objections and formal disputes, and related deadlines, go to Service feedback, objections, appeals, disputes, and relief measures.

Reprisal complaints

If you have previously submitted a service-related complaint or requested a formal review of a CRA decision and feel that you were not treated impartially by a CRA employee, you can submit a reprisal complaint by filling out Form RC459, Reprisal Complaint.

For more information about complaints and disputes, go to Service feedback, objections, appeals, disputes, and relief measures. 

Cancel or waive penalties or interest

The CRA administers legislation, commonly called taxpayer relief provisions, that allows the CRA discretion to cancel or waive penalties or interest when taxpayers cannot meet their tax obligations due to circumstances beyond their control.

The CRA’s discretion to grant relief is limited to any period that ended within 10 calendar years before the year in which a request is made.

For penalties, the CRA will consider your request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make your request. For example, your request made in 2020 must relate to a penalty for a tax year or fiscal period ending in 2010 or later.

For interest on a balance owing for any tax year or fiscal period, the CRA will consider only the amounts that accrued during the 10 calendar years before the year in which you make your request. For example, your request made in 2020 must relate to interest that accrued in 2010 or later.

To make a request, fill out Form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties or Interest. For more information about relief from penalties or interest and how to submit your request, go to Cancel or waive penalties or interest.  

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