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GST/HST Information for Charities

From: Canada Revenue Agency

RC4082(E) Rev. 23

The CRA's publications and personalized correspondence are available in braille, large print, e-text, and MP3. For more information, go to About multiple formats or call 1-800-959-5525.

Unless otherwise stated, all legislative references are to the Excise Tax Act or, where appropriate, the GST/HST Regulations.

The CRA uses the term “Indian” as it has legal meaning under the Indian Act.

La version française de ce guide est intitulée Renseignements sur la TPS/TVH pour les organismes de bienfaisance.

Table of contents

Find out if this guide is for you

This guide explains how the goods and services tax/harmonized sales tax (GST/HST) applies to you as a registered charity or a registered Canadian amateur athletic association.

The information in this guide does not apply to you if you are a public institution (such as a registered charity for income tax purposes that is a school authority, public college, university, hospital authority, or a local authority determined to be a municipality).

Also, see Guide RC4022, General Information for GST/HST Registrants. It has basic information on charging, collecting, and remitting the GST/HST.

Digital economy businesses 

This guide does not cover the new digital economy measures applicable to digital economy businesses including businesses that are registered or required to be registered under the simplified GST/HST registration regime of the digital economy provisions of Subdivision E of Division II of the Excise Tax Act, and to platform operators and non-resident digital economy businesses that are registered or required to be registered under the normal GST/HST registration regime. You can refer to “GST/HST for digital economy businesses: Overview”, or contact us at 1-833-585-1463 (from Canada and the U.S.) or 1-613-221-3154 (from elsewhere – collect calls are accepted) for more information.

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 a selected listed financial institution (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, or call 1-800-567-4692. If you are an SLFI, go to Financial institutions.

Definitions

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:

Basic tax content of a property generally means the amount of GST/HST that was payable for the last acquisition of the property, and for any improvements made to the property since that last acquisition, less any amounts that were, or would have been, able to be recovered (for example, by rebate or remission, but not by input tax credits(ITC)). The calculation for the basic tax content takes into account any depreciation in the value of the property since it was last acquired (for example, when it was purchased or when it was last deemed to have been purchased, whichever occurred more recently).

Registrants may have to calculate the basic tax content of a property if they increase or decrease their use of the property in their commercial activities. Non-registrants may have to calculate the basic tax content of real property if they file a rebate under section 257 of the Excise Tax Act.

For more information on how to calculate basic tax content, see Guide RC4022, General Information for GST/HST Registrants.

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

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.

For the definition of charity for the purposes of the public service bodies’ rebate, see Guide RC4034, GST/HST Public Service Bodies' Rebate.

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.

Consideration includes any amount that is payable for a supply by operation of law.

Designated charity means a charity that has been designated by the Minister of National Revenue to have certain exempt services it provides to registrants made taxable. To qualify for this designation, a charity must meet both of the following conditions:

Designated municipal property means property of

a person who is, at any time, designated to be a municipality for the purpose of claiming the municipal rebate. Generally, it is property, or an improvement to it, that the designated municipality intended to consume, use, or supply more than 10% in the course of activities specified in its designation, and an amount for the property or improvement to it has been included in the calculation of non-creditable tax charged. Once property qualifies as designated municipal property, it is treated as such for as long as it is held by the designated municipality.

Designated municipality means a person designated by the Minister of National Revenue to be a municipality, but only in respect of activities specified in the designation that involve the making of supplies (other than taxable supplies) by the person of municipal services.

Election means a way for businesses and organizations to choose various options that may make it easier to comply with the GST/HST. Each election has its own eligibility criteria.

Exempt supplies means 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. 

Fair market value generally means the highest price, expressed in dollars, that property or services would bring in an open and unrestricted market, between a willing buyer and a willing seller who are both knowledgeable, informed, and prudent, and who are acting independently of each other. Fair market value does not include the GST/HST payable on the fair market value of the property. For sales of real property, fair market value does not include any provincial land transfer taxes payable on the sale.

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. Where the person is a selected listed financial institution that is either an investment plan or a segregated fund of an insurer, it generally means a calendar year.

Government means the federal, provincial, or territorial levels of government.

Gross revenue, for charities, includes business income, donations, grants, gifts, property income, and investment income, less any amount considered a capital loss for income tax purposes. Whether your charity is incorporated or unincorporated, you have to use the gross revenue of your organization as a whole (the legal entity) to determine if you qualify as a small supplier under this test.

Gross revenue test – The fiscal-year limit for the gross revenue test for a charity is $250,000. When calculating your gross revenue for this test, you do not have to determine if the goods and services you sell or provide are subject to GST/HST. The test is as follows:

Improvement to capital property generally means any property or service acquired or imported to improve the capital property when the amount paid or payable for the property or service is included in the capital property's adjusted cost base for income tax purposes.

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.

Municipality means an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality, or other incorporated municipal body however designated, and such other local authority that the Minister of National Revenue may determine to be a municipality for GST/HST purposes.

Note

For the purposes of the public service bodies' rebate, a municipality includes a person designated by the Minister of National Revenue to be a municipality, but only in respect of activities, specified in the designation, that involve the making of supplies (other than taxable supplies) by the person of municipal services.

For more information, see Guide RC4049, GST/HST Information for Municipalities.

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 a body that is a society, a union, a club, an association, a commission or other organization of any kind.

Property means any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, 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 sector body means a government or a public service body.

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

Real property includes:

Registrant means a person that is registered or required to be registered for the GST/HST, but generally excludes a person that is registered or required to be registered under special rules applicable to digital economy businesses unless that person registered under those special rules begins carrying on business in Canada, requiring them to register under the regular rules that apply to most persons.

Selected public service body means:

Service means anything other than:

Small supplier means 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 single calendar quarter and over the last four consecutive calendar quarters. The calculation excludes consideration attributable to the sale of goodwill of a business, supplies of financial services, and supplies by way of sale of capital property.

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

For more information, see GST/HST Memorandum 2-2, Small suppliers.

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

Taxable supply means a supply that is made in the course of a commercial activity and is generally 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 may be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to provide these supplies.

General rules for charities

Some GST/HST rules that apply to charities are very different from those for businesses. For example:

Where ITCs are not available, charities can recover some of the GST and the federal part of the HST paid or payable on their purchases and expenses (subject to certain exceptions) by claiming a 50% GST/HST Public service bodies’ rebate.

Charities may also be able to claim a PSB rebate for some of the provincial part of the HST if they are a resident in a participating province. For more information, see Rebate information for charities.

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 Guide RC4022, General Information for GST/HST Registrants.

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 on the HST and the place-of-supply rules, see Guide RC4022.

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) under “Most requested.”

Exception for certain sales of new housing

The general rules for charities may not apply to certain taxable sales of residential condominium units. For more information, see Guide RC4052, GST/HST Information for the Home Construction Industry.

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, in some situations, individuals registered under the Indian Act, Indian bands and band-empowered entities are relieved of paying the GST/HST on taxable supplies. In addition, some groups and organizations, such as certain provincial and territorial governments, do not always pay the GST/HST on their purchases. For more information, go to GST/HST for businesses or see Guide RC4022.

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. However, there are some exceptions for taxable sales of real property. For more information, see Real property.

How does the GST/HST work for charities that are GST/HST registrants?

If you are a GST/HST registrant, you generally have to charge and collect the GST/HST on taxable supplies (other than zero-rated supplies) you make in Canada and file regular GST/HST returns to report that tax.

Exception

In certain cases, you do not have to collect the GST/HST on a taxable sale of real property. Instead, the purchaser may have to pay the tax directly to the CRA. For more information, see Real property and Guide RC4022.

You are limited in the ITCs that you can claim because of the special calculation method called the net tax calculation for charities that you must use to fill out your GST/HST return.

Generally, you can claim ITCs only on the GST/HST paid or payable in respect of certain items such as purchases of, or improvements to, capital property or real property that you used primarily (more than 50%) in your commercial activities, where all the conditions for claiming ITCs are met.

You may be eligible to claim ITCs for the GST/HST paid or payable on the purchase of, or improvements to, real property where it is used less than primarily, but more than 10%, in your commercial activities and for which you filed Form GST26, Election or Revocation of an Election by a Public Service Body to Have an Exempt Supply of Real Property Treated as a Taxable Supply. For more information, see Election for real property of a public service body.

As a registrant, you are entitled to claim a PSB rebate of the GST/HST paid or payable on eligible purchases and expenses for which you cannot claim ITCs or any other rebate, refund or remission whether that tax relates to your commercial or exempt activities.

You can fill out one rebate application for each reporting period (monthly, quarterly, or annually). For more information, see Rebate information for charities.

Note

If you are an annual filer and your net tax for the previous year is $3,000 or more, you may have to make quarterly instalment payments even if your rebate reduces your amount owing to less than $3,000. You can use the Instalment payment calculator service to calculate your instalment payments and view their due dates, using our online services at My Business Account or Represent a Client. For more information, go to GST/HST for businesses or see Guide RC4022.

How does the GST/HST work for charities that are not GST/HST registrants?

If you are not a GST/HST registrant, you do not have to collect the GST/HST even if you supply taxable property and services. However, you may be required to collect the GST/HST on taxable sales of real property even if you are not a registrant. For information about liability for tax, see GST/HST Memorandum 19-4-1, Commercial Real Property - Sales and Rentals.

You can recover a percentage of the GST/HST paid or payable on your eligible purchases and expenses by claiming a PSB rebate. You can fill out two rebate applications for each fiscal year – one rebate application for the first six months of your fiscal year and another for the last six months of your fiscal year. For more information, see Rebate information for charities.

Does a charity have to register for the GST/HST?

You have to register for the GST/HST if both of the following conditions are met:

You cannot register for GST/HST purposes if you provide only exempt supplies.

You may voluntarily register for GST/HST purposes if both of the following conditions are met:

If you qualify as a small supplier, you do not have to register for the GST/HST, but you may choose to do so voluntarily. For more information, see Voluntary registration.

Small supplier limits

As a charity, you may qualify as a small supplier under either of the following tests:

You only have to meet one of these tests to be a small supplier.

If you are a small supplier and you decide not to register:

The $250,000 gross revenue test

The fiscal year limit for the gross revenue test for a charity is $250,000. When calculating your gross revenue for this test, you do not have to determine if the property and services you sold or provided were subject to the GST/HST.

The test is as follows:

Gross revenue includes:

Subtract any amount that is a capital loss from the disposition of property for income tax purposes.

Whether your charity is incorporated or unincorporated, you have to use the gross revenue of your organization as a whole (the legal entity) to determine if you qualify as a small supplier under this test.

The $50,000 taxable supplies test

The taxable supplies limit for charities and other PSB is $50,000.

Note

If your charity is a small supplier under the gross revenue test, you do not have to do this test.

The taxable supplies test includes your revenues, and those of your associates, from worldwide taxable supplies of property and services including zero-rated supplies.

Do not include revenues from exempt supplies, sales of capital property, supplies of financial services, and goodwill from the sale of a business.

To determine if you are a small supplier under this test, calculate each of the following separately:

If each of these amounts adds up to $50,000 or less, you do not have to register, but you may do so voluntarily. For more information, see Voluntary registration.

If your charity has branches or divisions, you can apply to have them treated by the CRA as individual small supplier divisions. For more information see Branches and divisions.

If a branch or division qualifies as a small supplier division, it will not have to collect or remit GST/HST on its supplies of taxable property and services (except for certain taxable sales of real property, capital municipal property, and designated municipal property).

Voluntary registration

If you make taxable supplies of property and services but you are a small supplier based on either the $250,000 gross revenue test or the $50,000 taxable supplies test, you do not have to register for GST/HST. However, you can choose to register voluntarily, even though you do not have to.

If you register voluntarily, your effective date of registration is usually the date the application is received. However, CRA will accept an earlier effective date, provided that the date is within 30 days of the date the application for registration is received, regardless of the method of registration.

Once you are registered, you have to charge and remit the GST/HST on your taxable supplies of property and services and you may also be able to claim ITCs (subject to the limitations explained in Net tax calculation for charities) to recover the GST/HST paid or payable on purchases related to these supplies.

If you have made sales and already charged GST/HST for more than 30 days before setting up your GST/HST account, call 1-800-959-5525 for more information.

A PSB rebate may be available for the GST/HST paid or payable on eligible purchases and expenses for which you cannot claim ITCs or any other rebate, refund or remission. For more information, see Rebate information for charities.

Branches and divisions

Branches or divisions that are part of one legal entity cannot register separately. Therefore, if you register for the GST/HST, you have to do so as a single entity. You have to take into account the total revenue of the entity to determine whether or not you have to register.

However, if your charity has branches or divisions, you may apply to have each branch or division with $50,000 or less in taxable supplies designated as a small supplier division.

To apply for this treatment, the head office has to fill out and send Form GST31, Application by a Public Service Body to Have Branches or Divisions Treated as Eligible Small Supplier Divisions. If the CRA approves the designation for a small supplier division, the branch or division will no longer collect GST/HST on its taxable supplies (except for certain taxable sales of real property, capital municipal property and designated municipal property) and ITCs cannot be claimed by either the head office or the branch or division to the extent that a property or service is acquired for activities of the branch or division.

A branch or division will qualify as a small supplier division if it meets all of the following conditions:

Once a branch or division no longer qualifies as a small supplier division, it has to start collecting the GST/HST on its taxable supplies and may qualify for ITCs, subject to the limitations in the net tax calculation for charities.

The GST/HST does not apply to property or services transferred between branches or divisions that are part of one legal entity.

For more information, see GST/HST Memorandum 2-4, Branches and Divisions.

Members of unincorporated organizations

Generally, when one unincorporated organization (such as a club or association) is a member of an unincorporated main organization, but is a separate entity, the organizations have to charge the GST/HST on taxable transactions between them, if they are GST/HST registrants. However, such organizations can apply jointly to have the member organization considered a branch of the main organization.

To do so, the organizations jointly send us a completed Form GST32, Application to Deem One Unincorporated Organization to be a Branch of Another Unincorporated Organization. If the application is approved, the GST/HST will not apply to transfers of property and services between the member organization and the main organization.

Note

When two unincorporated organizations are members of the same unincorporated main organization and each member applies jointly with the main organization, using Form GST32, the GST/HST will not apply to taxable transactions between the two member organizations if both applications are approved.

How to register

Before you register for a GST/HST account, you need a business number (BN). Your BN will be your business identification for all your dealings with us.

If you are incorporated, you may already have a BN and a corporate income tax account.

To set up a BN, a GST/HST account, and any other account, you may need certain documents (such as a payroll deduction or import/export account), use our Business Registration Online, or send Form RC1, Request for a Business Number and Certain Program Accounts.

Note

When you register for a business number (BN) using Business Registration Online (BRO), you will be provided with a new 9 digit BN. You must retain this new BN for your own records and future interactions with the Canada Revenue Agency.

Representatives can now access the Business Registration Online (BRO) service directly through Represent a Client. For more information, go to Business number.

Note

It is the person or business entity that registers for the GST/HST. For example, it is the partnership that registers and not each partner. 

If the physical location of your business is in Quebec, contact Revenu Québec at 1-800-567-4692.

Cancelling your registration

If you are registered for the GST/HST and you determine, after using the small supplier tests, that you do not have to be registered, you can ask the CRA to cancel your GST/HST registration. You can only cancel your registration if you have been registered for at least one year.

If your registration is cancelled, you do not charge the GST/HST (other than on a taxable supply of real property by way of sale) and you cannot claim ITCs. You may also have to pay back some of the ITCs you claimed while you were a registrant. You do not have to be registered for GST/HST purposes to claim the PSB rebate.

To cancel your registration, fill out Parts A, B, and E of Form RC145, Request to Close Business Number Program Accounts, and send this form to the Prince Edward Island Tax Centre or the Sudbury Tax Centre within six months of the date it was signed or it will not be processed. The tax centres are listed at Tax centres.

Usually, the CRA has to receive your request within 30 days of your year-end to cancel your registration, which will take effect after the last day of your fiscal year.

If other situations arise (for example, you stop making taxable supplies) and you no longer need to be registered, you should cancel your registration immediately as described above.

Exempt supplies

Most property and services that charities supply are exempt from GST/HST. When property or services are exempt, it means that, even if you are a GST/HST registrant, you do not charge GST/HST on them. Also, you generally cannot claim ITCs for the GST/HST paid or payable on property and services you acquired to make your exempt supplies.

Note

Special rules apply if you are a designated municipality. For more information, see Guide RC4049, GST/HST Information for Municipalities.

Some property and services are exempt regardless of who supplies them. Examples of these property and services are:

Exemptions for charities

The following are examples of property and services that are exempt when your charity supplies them:

Exception

If you filed an election to treat your exempt supplies of that real property as taxable, the supply of the short-term accommodation will be taxable unless the amount payable for the supply is $20 or less for each day of occupancy. For more information, see Election for real property of a public service body.

Exceptions

If you filed an election to treat your exempt supplies of that real property as taxable, these supplies are taxable. For more information, see Election for real property of a public service body.

Also, although the supply of a parking space at a public hospital is generally exempt where the supply is made by a charity or a public sector body (for example, a hospital authority) to persons such as patients, visitors, and individuals volunteering at the hospital, parking that is supplied to hospital staff and medical professionals is generally taxable. For more information, see GST/HST Notice 285, Application of the GST/HST to Supplies of Parking by Charities and Public Sector Bodies.

Other exemptions

Admissions

Admissions to places of amusement, such as museums, recreational complexes, and theatres are exempt if the maximum admission price  charged is $1 or less.

Admissions to a fund-raising dinner, ball, concert, show or similar fund-raising event are exempt where you are permitted to issue a donation receipt for income tax purposes for part of the admission price, or could issue a donation receipt if the recipient of the supply were an individual. This exemption does not require a charity to issue a donation receipt.

Admissions you sell in the course of a fund-raising activity are also exempt except where you sell the admissions, or your clients are entitled to receive the admissions, on a regular or continuous basis throughout the year or a significant part of the year.

Admissions to be a spectator of a performance, athletic, or competitive event are also exempt where 90% or more of the performers, athletes, or competitors are not paid, directly or indirectly, for their participation other than by government and municipal grants, and reasonable amounts as gifts, prizes, or compensation for travel, or other incidental costs.

The admissions will not be exempt if they are for events specifically advertised as featuring paid participants or for events at which professional athletes compete for cash prizes.

Direct cost exemption

Tangible personal property (goods) and services you sell for an amount that is not more than your direct cost may also be exempt. The direct cost exemption applies to sales of goods (other than capital property or designated municipal property) and services that are bought for resale.

Direct cost includes the following amounts:

Direct cost does not include administrative or overhead expenses, or employee salaries that you incur to provide these goods or services.

If you only want to recover your direct cost, you can choose to make your sales taxable or exempt depending on your tax treatment of the sale.

If you sell particular goods or services for a price that is no more than your direct cost and you do not charge the GST/HST, these sales are exempt.

Example

You buy T-shirts with your logo in Nova Scotia for $20 each plus $3 HST. You sell them to customers in Nova Scotia for $23 and do not charge the HST on the $23. Since the price you charged was not more than your direct cost ($20 + $3 = $23), and since you did not charge the HST on the selling price, your sales of these T-shirts are exempt.

However, if you sell particular goods and services for a price that is equal to or more than your direct cost (not including GST, HST, and QST, where you are a QST registrant), and you charge an amount as GST/HST on the selling price, these sales are considered to be taxable sales (if no other exemption applies).

Example

You buy new T-shirts with your logo in Nova Scotia for $20 each plus $3 HST. You sell them to customers in Nova Scotia throughout the year for $20 each plus $3 HST. Since you charged an amount equal to your direct cost not including the HST ($20), and you charged HST separately, the sales of these T-shirts are taxable.

The sale of the T-shirt would be exempt if you sold it for less than $20, even if you charged the HST to your customer. In this case, you would have collected the tax in error.

Free supplies

If 90% or more of supplies of a property or a service you make are free of charge, all of your supplies of that property or service are exempt, including any for which an amount is charged.

This exemption does not apply to:

Fund-raising activities

Most property and services you sell in the course of a fund-raising activity of the charity are exempt unless:

Examples of supplies that are exempt include:

Examples of supplies this exemption does not cover and that you will generally have to collect tax on if you are a GST/HST registrant, include:

Fund-raising events

Admissions to a fund‑raising dinner, ball, concert, show, or similar fund-raising event are exempt where you are permitted to issue a donation receipt for income tax purposes for part of the admission price, or could issue a donation receipt if the recipient of the supply were an individual. This exemption does not require a charity to issue a donation receipt.

Example

You sell tickets to a fund-raising dinner for $100 but $75 of the ticket price qualifies for a charitable donation receipt for income tax purposes. You do not charge the GST/HST on any part of the admission.

Gambling events

GST/HST does not apply to revenues you receive from sales of lottery, break-open, or raffle tickets. However, lottery tickets you sell for a provincial or inter-provincial lottery corporation are taxable, and the tax is included in the price of the tickets. Lottery corporations are required to remit any tax collected on lottery tickets and will tell you how to treat the proceeds from these lottery tickets.

If you operate bingo games or casino nights, the fees you charge for the sale of bingo cards or the taking of bets during a casino night are exempt.

If you run a bingo game, casino night, or other gambling event and charge admission, the admission is exempt if you meet both of the following conditions:

Volunteers run the event and take the bets.

Memberships

A supply of a membership by a charity is exempt, unless the value of the following benefits is significant (generally considered to be 30% or more) in relation to the cost of the membership:

A service, membership, or right you supply is not exempt if it includes supervision or instruction in any recreational or athletic activity unless:

For more information, see Taxable supplies.

Recreational programs

If you provide recreational programs primarily for children 14 years of age or under, the fees you charge are exempt. However, if there is overnight supervision throughout a substantial part of these programs, the fees are taxable.

If you provide recreational services primarily for underprivileged individuals, or individuals with a disability, these services are also exempt.

Relief of poverty, suffering, or distress

Supplies of food, beverages, or short-term accommodation that are provided in the course of an activity, the purpose of which is to relieve the poverty, suffering, or distress of individuals, and is not fund-raising, are exempt.

For example, GST/HST does not apply to charges for meals or accommodation at a shelter for disadvantaged individuals.

Taxable supplies

If no exempting provisions apply to your supply of a particular property or service, the supply is a taxable supply.

Although a supply of a property or service may be taxable, you do not collect tax on your supplies (except for certain taxable sales of real property, capital municipal property and designated municipal property) unless you are a registrant. For more information, see Does a charity have to register for the GST/HST?

Note

If you make a taxable sale of real property, you do not have to collect the tax payable if the purchaser is registered for the GST/HST, unless the purchaser is an individual (whether registered or not) and you make a taxable sale to the individual, of housing or a cemetery plot or place of burial, entombment or deposit of human remains or ashes. For more information, see Who remits the tax on a taxable sale of real property – vendor or purchaser?

Taxable supplies (other than zero-rated)

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

For the list of all applicable GST/HST rates, go to GST/HST calculator (and rates) under “Most requested.”

Zero-rated supplies

Supplies of zero-rated property and services are taxable at a rate of 0%. Therefore, you do not collect GST/HST when you supply zero-rated property and services.

Generally, GST/HST registrants (other than charities) may be eligible to claim ITCs for the GST/HST paid or payable on property and services they acquired to provide zero-rated supplies. Special rules concerning ITCs apply to charities. For more information, see Net tax calculation for charities.

If your supply of a particular property or service does not satisfy any exempting provisions, a zero-rating provision may nevertheless apply to zero-rate the supply.

The following are examples of supplies taxable at 0% (zero-rated):

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

Charities providing employment assistance to individuals with disabilities

If your charity regularly provides employment or employment assistance to individuals with disabilities and supplies services that are performed by such individuals to clients, these supplies would usually be exempt. However, you can apply to the CRA in writing to be designated for the purpose of having the supply of these services made taxable when provided to a GST/HST registrant (unless you are providing them to a public sector body or to a board, commission, or other body established by a government or a municipality).

To qualify for this designation, a charity must meet the two following conditions:

A charity requesting designation should submit governing documents, a statement of activities and the requested effective date of designation. This information, including the charity’s legal name and business number should be sent to the following address:

Director
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
5th Floor, Tower A, Place de Ville,
320 Queen Street, Ottawa, ON  K1A 0L5

Donations, grants, subsidies and sponsorships

Donations and gifts

The GST/HST does not apply to donations and gifts. A donation or a gift is a voluntary transfer of money or property for which the donor does not receive any benefit in return. If the donor receives property of nominal value, such as a key ring, a pin, or an envelope seal, in exchange for the donation, the donation will still not be subject to the GST/HST.

However, if the donor receives a property or a service of more than nominal value in exchange for the donation, the donation may be subject to the GST/HST, unless the property or service is an exempt or zero-rated supply.

Grants and subsidies

As a charity, you may receive grants, contributions, subsidies, forgivable loans and similar payments (often referred to as transfer payments).

If there is a direct link between a payment you receive and a supply you provide to either the grantor of the transfer payment or to a specified third party, the transfer payment may be regarded as consideration for a supply. If this is the case, the transfer payment may be subject to the GST/HST.

Generally, this would not apply to a payment for services, since most services provided by a charity are exempt. The tax treatment of transfer payments will be determined on a case-by-case basis. For more information, see GST/HST  Memorandum 18-4, Determining Whether a Transfer Payment is Consideration For a Supply.

Sponsorships

Sponsorships may not be subject to the GST/HST depending on the nature and the extent of the promotional benefits you give to the sponsor.

The following are examples of sponsorships that are not subject to the GST/HST:

The CRA does not consider the payments you receive from a sponsor in either of these two circumstances to be payment for a property or service. These payments are not subject to the GST/HST.

If the payment by the sponsor is made primarily (more than 50%) for advertising on television or radio, or in a newspaper, magazine, or other publication issued periodically, the payment received is not payment for a sponsorship, but rather a payment for advertising services. However, advertising services are generally exempt from the GST/HST when provided by a charity.

Receiving donations, grants, subsidies, and sponsorships does not affect your entitlement to GST/HST rebates or ITCs. For more information, see Rebate information for charities and Input tax credits.

Rebate information for charities

There are special rebates that allow certain PSB including charities, to recover a percentage of the GST/HST paid or payable on their eligible purchases and expenses.

Rebate for public service bodies

As a charity, you may be eligible for a PSB rebate of 50% of the GST and the federal part of the HST, paid or payable on eligible purchases and expenses. If you are eligible to claim this rebate, enter the amount on line 305 of Part D of your rebate application (Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund).

If you are a resident of a participating province, you may also be eligible for a PSB rebate for some of the provincial part of the HST. If you are eligible to claim this rebate fill out the provincial schedule (Form RC7066 SCH, Provincial Schedule – GST/HST Public Service Bodies' Rebate) and attach it to your rebate application.

For more information, see Guide RC4034, GST/HST Public Service Bodies’ Rebate.

Rebate for charities that provide municipal services

As a charity that receives municipal designation for the purposes of the PSB rebate, you may be eligible to claim a 100% rebate of the GST and the federal part of the HST paid or payable on eligible purchases and expenses that relate to your designated activities for which you could not claim ITCs, or any other rebate, refund, or remission.

You can claim this amount on input line 300 of Part D of Form GST66. You can file this application with your GST/HST return either by paper, or electronically by using our online services either through GST/HST NETFILE or through My Business Account or Represent a Client.

If you are a non‑registrant, you can file your rebate application by paper or electronically by using our online services at My Business Account or Represent a Client. If you file this rebate application electronically, you must also file any associated provincial schedule electronically.

You remain eligible to claim the PSB rebate at the applicable rate on your other activities.

If you are a charity resident in a participating province and you receive municipal designation for the purposes of the PSB rebate, you may be eligible to claim a municipal rebate for some of the provincial part of the HST paid or payable on eligible purchases and expenses that relates to your designated activities for which you could not claim ITCs, or any other rebate, refund, or remission. If you are eligible to claim this rebate, fill out the provincial schedule (Form RC7066-SCH, Provincial Schedule – GST/HST Public Service Bodies’ Rebate) and attach it to your rebate application.

For more information, see Guide RC4049, GST/HST Information for Municipalities.

Rebate for exported property and services

You may be eligible to claim a rebate to recover 100% of the GST/HST paid to your suppliers on property and services you exported outside Canada and for which you cannot claim ITCs. In this case, you can recover all of the GST/HST paid, whether or not you are registered for the GST/HST.

You can claim this amount by filling out line 308 of Part D of Form GST66. Amounts included on this line cannot be included anywhere else in the calculation of your rebate on this form.

If you are a GST/HST registrant, you can file this application with your GST/HST return either by paper, or electronically by using our online services either through GST/HST NETFILE, or through My Business Account or Represent a Client. 

If you are a non‑registrant, you can file your rebate application by paper or electronically by using our online services at My Business Account or Represent a Client. If you file this rebate application electronically, you must also file any associated provincial schedule electronically.

Note

You will still be entitled to claim a PSB rebate of GST/HST paid or payable on eligible purchases or expenses for which you cannot claim ITCs or any other rebate, refund, or remission.

For more information, see Guide RC4034, GST/HST Public Service Bodies' Rebate.

Rebate for purchases of printed books

If you operate a public lending library, you may be eligible to claim a 100% rebate of the GST and the federal part of the HST payable on publications such as most printed books, audio recordings of printed books, and printed versions of religious scriptures you buy or import, if you are not reselling these items or giving them away.

If the primary purpose of your charity is the promotion of literacy, and you are prescribed by regulation, you could be entitled to this rebate. In addition, a rebate of the GST and the federal part of the HST, is also available to your prescribed charity on acquisitions or importations of printed books and their updates, audio recordings of printed books and printed versions of religious scriptures that are to be given away at no cost.

A provincial point-of-sale rebate is also available for the provincial part of the HST on the above mentioned publications supplied in a participating province. This means the person supplying the publication should provide the rebate at the time of the sale. For more information, see GST/HST Info Sheet GI-065, Point-of-Sale Rebate on Books.

For more information, see GST/HST Memorandum 13-4, Rebate for Printed Books, Audio Recording of Printed Books, and Printed Versions of Religious Scriptures, or go to GST/HST for businesses.

You can claim this amount by filling out line 307 of Part D of Form GST66. Amounts included on this line cannot be included anywhere else in the calculation of your rebate on this form.

If you are a GST/HST registrant, you can file this application with your GST/HST return either by paper, or electronically by using our online services either through GST/HST NETFILE or through My Business Account or Represent a Client.

If you are a non‑registrant, you can file your rebate application by paper or electronically by using our online services at My Business Account or Represent a Client.

If you file this rebate application electronically, you must also file any associated provincial schedule electronically.

For more information, see Guide RC4034, GST/HST Public Service Bodies' Rebate.

Rebate for property or services removed from a participating province

Tangible personal property

You may be eligible to claim a rebate of the provincial part of the HST you paid on tangible personal property (goods) that you bought in a participating province and removed from the province. A rebate of the amount is not available to the extent that you may otherwise recover the amount, for example by claiming a different rebate or an ITC for the amount.

To qualify for the rebate of the provincial part of the HST that you paid on eligible goods that you bought in a participating province, you have to meet all of the following conditions:

You cannot file more than one rebate application in a calendar month.

The following goods are not eligible for this rebate:

To apply for this rebate, use Form GST495, Rebate Application for Provincial Part of Harmonized Sales Tax (HST). The form describes the documentation that is required to support your rebate claim.

You can claim a rebate of the federal part of the HST paid on the property by filling out Form GST66. You can file this application with your GST/HST return either by paper, or electronically by using our online services either through GST/HST NETFILE, or through My Business Account or Represent a Client.

If you are a non-registrant, you can file your rebate application by paper or electronically by using our online services My Business Account or Represent a Client. If you file this rebate application electronically, you must also file any associated provincial rebate application electronically.

Intangible personal property and services

You may be eligible for a rebate of the provincial part of the HST payable on intangible personal property (such as goodwill, contractual rights, trademarks, and intellectual property) or services you acquire in a participating province for consumption, use, or supply, in whole or in part, in non-participating provinces or in participating provinces with lower HST rates. A rebate of the amount is not available to the extent that you may otherwise recover the amount, for example by claiming an ITC for the amount.

Generally, the rebate is calculated by multiplying the eligible amount of the provincial part of the HST payable by the percentage to which the intangible personal property or service is acquired for consumption, use, or supply outside the participating province.

To qualify for the rebate of the provincial part of the HST on intangible personal property or a service you acquired in a participating province, you have to meet all of the following conditions:

You cannot file more than one rebate application in a calendar month.

To apply for the rebate, use Form GST189, General Application for GST/HST Rebates. The form describes the documentation that is required to support your rebate claim.

For more information, go to GST/HST for businesses or see Guide RC4033, General Application for GST/HST Rebates.

Determining your net tax as a charity

If you are a GST/HST registrant, you have to file your GST/HST return either by paper or electronically by using our online services either through GST/HST NETFILE, or through My Business Account or Represent a Client.

If you file a paper return use Form GST34-2, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return for Registrants, which is automatically sent to you; or Form GST62, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return (Non personalized), which you can order at Order forms and publications.

On your return, you calculate your net GST/HST remittance or refund.

Note

When a charity fails to remit tax, the directors, officers, or members may be liable to remit the amount of net GST/HST owing.

If your charity is a GST/HST registrant, you have to use a special net tax calculation for charities (see Net tax calculation for charities). When you use this calculation, you generally remit 60% of the GST/HST you charge and claim ITCs only on certain items, where all the conditions for claiming ITCs are met (listed in Step 2 of Net tax calculation for charities). In addition, you can claim the PSB rebate of the GST/HST paid or payable on your eligible purchases and expenses and for which you cannot claim ITCs, whether the GST/HST relates to your commercial activities or exempt activities.

You can elect not to use the net tax calculation for charities if you make supplies outside Canada or zero-rated supplies in the ordinary course of your business, or if 90% or more of your supplies are taxable.

To make the election, fill out and send Form GST488, Election or Revocation of an Election Not To Use the Net Tax Calculation for Charities. You can then calculate your net tax using the general rules. In addition, you may be eligible to use the simplified method to calculate ITCs. For more information on the general rules for calculating net tax and the simplified method to calculate your ITCs, see Guide RC4022.

Designated charities

A designated charity is a charity that has applied for designation and has been designated by the Minister of National Revenue to have certain exempt services it provides made taxable. For more information, see Charities providing employment assistance to individuals with disabilities.

If your charity is a designated charity, you cannot use the net tax calculation for charities. Instead, use the general rules to calculate your net tax. For more information, go to GST/HST for businesses or see Guide RC4022.

Reporting periods

The CRA assigns all charities registered for the GST/HST an annual reporting period, regardless of their revenues. This means that most charities registered for the GST/HST file annual returns. You can choose to file your GST/HST returns either monthly or quarterly.

You can change your reporting period by using our online services My Business Account or Represent a client, or by filling out and sending Form GST20, Election for GST/HST Reporting Period.

Net tax calculation for charities

To calculate your net tax remittance for a reporting period using the net tax calculation for charities, follow these steps:

Step 1 – Determine the total GST/HST and adjustments for the reporting period:

Enter this total on line 105 if you are filing your return electronically or on line 103 if you are filing a paper GST/HST return.

Step 2 – Determine the total ITCs and adjustments:

Enter this total on line 108 if you are filing your return electronically or on line 106 if you are filing a paper GST/HST return.

Step 3 – Determine the net tax

Subtract the total in Step 2 (line 108) from the total in Step 1 (line 105). The result is the charity's net tax. The amount should be entered on line 109 of the charity's GST/HST return.

Example

You are a charity resident in Alberta, and you are registered for the GST/HST. You operate an art gallery and use the net tax calculation for charities. Your main revenue is taxable gallery admissions.

During the reporting period, you earned revenues from exempt supplies of parking spaces and exempt supplies of admissions to a fund-raising dinner. Given that these revenue sources are from exempt supplies, they will not be included in your taxable revenues. In addition, you purchased computer equipment for use more than 50% in your commercial activities. You also purchased and installed a ventilation system in a building that you own and use more than 50% in commercial activities.

Your taxable revenues and expenses are as follows:

Taxable revenues:

Gallery admissions: $20,000

Sales from gift shop: $5,000

Total: $25,000

GST collected ($25,000 × 5%): $1,250

Taxable purchases and expenses:

Contracted services (maintenance): $3,000

Utilities: $1,500

Ventilation system: $9,200

Computer equipment: $2,000

Gift shop inventory purchases: $2,500

Catering services for fundraising dinner: $3,500

Total: $21,700

GST paid on purchases and expenses ($21,700 × 5%): $1,085

Net tax calculation for charities

Step 1

Enter $750 on line 105 if you are filing your return electronically or on line 103 if you are filing a paper GST/HST return (60% of the $1,250 GST collected).

Step 2

You can claim ITCs for the GST you paid for the ventilation system (improvement to real property) and for the computer equipment (capital property purchase) that you intend to use more than 50% in your commercial activities, where all the other conditions for claiming ITCs are met.

ITC       5% × ($9,200 + $2,000): $560

Step 3

The amount you calculate in Step 1 less the amount you calculated in Step 2 equals your net tax before any rebates.

Net tax    $750 – $560 = $190

Enter this amount on line 109.

You would also be entitled to claim a PSB rebate for the remaining GST/HST paid. For more information, see Rebate information for charities.

Input tax credits

This section is for charities that elected not to use the net tax calculation for charities by filing Form GST488, Election or Revocation of an Election Not to Use the Net Tax Calculation for Charities. If you use the net tax calculation for charities, see Net tax calculation for charities.

You can use the general rules or a simplified method to calculate input tax credits (ITCs). For more information, see Guide RC4022, General Information for GST/HST Registrants.

Examples of property and services you acquired for which you may be eligible to claim ITCs include:

Charities can claim a rebate to recover part of the GST/HST paid or payable on expenses for which they cannot claim ITCs or any other rebate, refund, or remission. For more information, see Rebate information for charities.

Most GST/HST registrants claim their ITCs for their acquisitions of property and services when they file GST/HST returns for the reporting period in which they acquired the property and services. However, you can generally claim ITCs in a later return, as long as they are claimed by the due date of the return for the reporting period that ends within four years after the period in which the credits could first have been claimed.

Example

You are a quarterly filer and you pay GST on goods for resale in the reporting period of January 1, 2022, to March 31, 2022, for which you can claim ITCs. Since the end of the reporting period is March 31, 2022, you can claim ITCs no later than April 30, 2026 (the due date of the return for the last reporting period that ends on or before March 31, 2026).

There are different rules for claiming ITCs for charities that are financial institutions. For more information, go to GST/HST for businesses.

Note

You generally cannot claim ITCs for the GST/HST paid or payable on property and services you acquired to sell, use, or consume in the course of your exempt activities.

For more information on ITC allocation, see GST/HST Memorandum 8-1, General Eligibility Rules and GST/HST Memorandum 8-3, Calculating Input Tax Credits.

How to claim both rebates and input tax credits

This section applies to charities that are GST/HST registrants and that are involved in both commercial and exempt activities. It explains how to claim both ITCs and a PSB rebate on property and services you acquired.

Charities using the net tax calculation for charities

For charities using the net tax calculation for charities, all amounts of GST/HST paid or payable on eligible purchases and expenses that are not included as ITCs in the net tax calculation for charities qualify for the PSB rebate (whether the GST/HST amounts relate to commercial activities or exempt activities). For more information, see Step 2 in Net tax calculation for charities.

Charities not using the net tax calculation for charities

General operating expenses

The rules outlined in this section apply if you have elected not to use the net tax calculation method for charities.

General operating expenses include those for management, administration, and other support functions of your charity, such as office rent, utilities, and office supplies such as paper and pens.

You may claim an ITC equal to 100% of the GST/HST paid or payable by you for a particular operating expense (property or service) if all or substantially all (generally 90% or more) of your consumption or use of that property or service is (or is intended to be) in the course of your commercial activities (in other words, to make taxable supplies for consideration) and all the other ITC criteria are satisfied.

You generally cannot claim an ITC for any of the GST/HST paid or payable by you for a particular operating expense (property or service) if all or substantially all of your consumption or use of that property or service is (or is intended to be) otherwise than in the course of your commercial activities (for example, for consumption or use in making exempt supplies). However, you may be eligible to claim a PSB rebate.

If you acquire a particular operating expense for consumption or use partly (more than 10%) to make taxable supplies and partly more than 10%) to make exempt supplies, you must apportion the GST/HST paid or payable on the property or service if you are claiming an ITC. You have to determine the extent (in other words, the percentage) that the property or service was acquired for use in your commercial activities, and you may be eligible to claim an ITC to that extent. You may be eligible to claim a PSB rebate of a portion of the remaining tax on eligible purchases and expenses.

The method you use to determine the extent that a particular property or service is acquired for use in your commercial activities (making taxable supplies for consideration) and for other purposes (such as in your exempt activities) has to be fair and reasonable and be used consistently throughout the year.

Example

You are a charity operating in Saskatchewan which makes both taxable supplies and exempt supplies. You pay $2,000 per month plus $100 GST for office rent. You use a fair and reasonable ITC allocation method to determine that 40% of the office is for use in making taxable supplies for consideration.

You claim ITCs and a PSB rebate as follows:

GST paid: $100

Amount related to commercial activities
eligible for an ITC ($100 × 40%): $40

Amount related to exempt activities eligible
for a public service bodies' rebate ($100 × 60%): $60

Rebate ($60 × 50%): $30

Include $40 on line 108 if you are filing your return electronically or on line 106 if you are filing a paper GST/HST return, and $30 on line 305 of Part D of Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-Government Refund.

For more information on ITC allocation, see GST/HST Memorandum 8-1, General Eligibility Rules and GST/HST Memorandum 8-3, Calculating Input Tax Credits.

Allowances and reimbursements

You may be eligible to claim ITCs for the GST/HST part of reasonable allowances you pay to employees or volunteers for taxable expenses that they incur in Canada, or for the use of a motor vehicle in Canada that relates to your commercial activities. You may also be eligible to claim ITCs for the GST/HST included in the reimbursements you pay to your employees or volunteers for property or services based on the extent they are used in your commercial activities. For example, you pay a volunteer an allowance for the use of his or her automobile for errands related to your commercial activities. You may be eligible to claim an ITC for the GST/HST part of the allowance paid.

If the allowances or reimbursements you pay relates to your exempt activities, you may claim a PSB rebate at the applicable rate for the GST/HST paid or payable on eligible expenses. For example, you may claim a PSB rebate at the applicable rate for the GST/HST included in the reimbursement you give a volunteer for fuel used to transport meals to seniors in their own homes for a meals-on-wheels program.

For more information and details on how to calculate the GST/HST included in allowances and reimbursements for purposes of claiming ITCs and rebates, see Guide RC4022, General Information for GST/HST Registrants.

Capital property

Special rules exist for calculating ITCs for capital property. For GST/HST purposes, capital property is based on the meaning of the term for income tax purposes and includes:

For GST/HST purposes, capital property does not include property in Classes 12, 14, 14.1, or 44 of Schedule II to the Income Tax Regulations.

There are two types of capital property – capital personal property and capital real property:

A charity that is not a financial institution may be eligible to claim full ITCs for both types of capital property if it uses the property more than 50% in its commercial activities.

If the charity uses the property 50% or less in commercial activities, the charity generally cannot claim an ITC. However, the charity may be entitled to claim a PSB rebate of the GST/HST paid or payable on the acquisition of the property.

Example

You bought a computer for $2,000 plus $100 GST. You use the computer 60% in your commercial activities and 40% in your exempt activities. Since the computer is used more than 50% in your commercial activities, you can claim the full amount of GST paid ($100) as an ITC, where all the other conditions for claiming ITCs are met.

Capital property changes in use

You may change the use of capital property over time. The change-in-use rules apply in the following situations:

In each situation, you have to determine the basic tax content of the property when the change occurs. If you change the use from 50% or less in commercial activities to more than 50% in commercial activities, you may be eligible to claim an ITC to recover all or part of the GST/HST you paid when you last acquired the property. However, if you change the use from more than 50% in commercial activities to 50% or less in commercial activities, you have to repay all or part of the tax you claimed as an ITC when you last acquired the property.

Calculating the basic tax content

The following basic tax content formula in its simplified form can be used by most registrants:

(A - B) × C

where:

A is the GST/HST payable for your last acquisition of the property and for later improvements you made to the property

B is any rebate or refund you were entitled to claim (or would have been entitled to claim if you had not been entitled to claim an ITC) for the GST/HST payable on your last acquisition of the property and for later improvements you made to it but not including ITCs you were entitled to claim

C is the lesser of:

This formula may not apply to a charity that has been determined or designated to be a municipality. For more information, call 1-800-959-8287.

For more information see Guide RC4049, GST/HST Information for Municipalities.

Changing the use to more than 50% in commercial activities

When you buy capital property for use 50% or less in commercial activities, you generally cannot claim an ITC to recover the GST/HST paid or payable. However, if you later change the use of the property to more than 50% in commercial activities, the CRA considers you to have purchased the property, and to have paid the GST/HST equal to the basic tax content of the property at that time. This means that you may be eligible to claim an ITC based on the basic tax content of the property at that time.

Note

If you later change the use again and begin to use the property 50% or less in commercial activities, you may have to repay part or all of the GST/HST that you claimed as an ITC. For more information, see Changing the use to 50% or less in commercial activities.

Example

Your charity is registered for the GST/HST and operates in Alberta. You paid the GST on a machine bought for use 60% in exempt activities and 40% in commercial activities. Since you are not using the machine more than 50% in commercial activities, you could not claim an ITC for the GST you paid on the purchase. However, you claimed and received a PSB rebate of the GST you paid on the purchase.

Cost of machine: $50,000

GST payable ($50,000 × 5%): $2,500

50% PSB rebate ($2,500 × 50%): $1,250

Later, you change the use of the machine to 70% in commercial activities. As you are now using the machine more than 50% in commercial activities, you can claim an ITC to recover part of the GST you paid to purchase the machine based on the basic tax content of the machine when the use changed where all of the other conditions for claiming an ITC are met. If you made any improvements to the machine, the basic tax content would also include the GST that was paid or payable on these improvements. However, in this case, no improvements were made.

The fair market value of the machine is $40,000 at the time of the change in use. You calculate the basic tax content of the machine as follows:

Basic tax content = (A - B) × C

                               = ($2,500 - $1,250) × $40,000 / $50,000

                               = $1,000

Where all of the other conditions for claiming an ITC are met, you can claim an ITC of $1,000 by including this amount in the total on line 108 if you are filing your return electronically or on line 106 if you are filing a paper GST/HST return.

Changing the use to 50% or less in commercial activities

When you buy capital property for use more than 50% in commercial activities, you may be eligible to claim an ITC to recover the GST/HST paid or payable on your purchase. However, if you change the use of the capital property from more than 50% in commercial activities to 50% or less in commercial activities, the CRA considers you to have sold and repurchased the property, and to have collected and paid the GST/HST equal to the basic tax content at the time of the change in use. You have to include the GST/HST you are considered to have collected in your net tax calculation for charities for the reporting period in which the change in use occurred.

Notes

There is no entitlement to the PSB rebate for the change in use, as the basic tax content formula takes this rebate into account.

If you later change the use again and begin to use the capital property more than 50% in commercial activities, you may be entitled to claim an ITC. For more information, see Changing the use to more than 50% in commercial activities.

Example

Your charity is a GST/HST registrant resident in Ontario. On January 1, 2022, you bought a machine for $50,000 plus $6,500 HST for use 80% in commercial activities. Since you were using the machine more than 50% in commercial activities, and all of the other conditions for claiming an ITC were met, you were entitled to, and you claimed, a full ITC for the $6,500 HST.

You later change the use of the machine to 40% in commercial activities. Since you are no longer using the machine more than 50% in commercial activities, you have to pay tax based on the basic tax content of the property at the time of the change in use.

No improvements were made to the property since you acquired it. The fair market value of the machine at the time of the change in use is $40,000.

You calculate the basic tax content as follows:

Basic tax content = (A - B) × C

                               = ($6,500 – $4,530) × $40,000 / $50,000

                               = $1,576

Amount B is equal to $4,530 because you would have been entitled to claim a PSB rebate of the HST you paid (50% of the federal part plus 82% of the provincial part since your charity is resident in Ontario) when you purchased the property if you had not been entitled to claim a full ITC for that tax.

As the basic tax content calculation already takes into account the amount of the PSB rebate you would have been entitled to claim, the amount of tax you have to pay is reduced. Therefore, you are not entitled to claim a PSB rebate of the tax you have to pay on your change in use of the capital property.

The basic tax content of the capital property at the time of the change in use is $1,576. When determining your net tax, include this amount on line 105 if you are filing your return electronically or on line 103 if you are filing a paper GST/HST return for the reporting period in which the change occurred.

Real property

This section explains the GST/HST rules for sales, leases, and other types of supplies of real property when made by charities. It summarizes the general rules for claiming ITCs and rebates. It also discusses the special election available to have exempt supplies of real property treated as taxable supplies and the special self-supply rules for subsidized housing.

Sales and leases

Generally, most sales, leases, or other supplies of real property made by a charity (other than a charity that is a designated municipality for the purposes of the PSB rebate) are exempt from GST/HST.

However, if your charity makes the following supplies of real property, the supplies are not covered by the general exemption for charities and are subject to the GST/HST:

Note

If a charity makes an exempt supply by way of lease of real property to a person together with goods that the charity is supplying by way of lease to the person, the supply of those goods is also exempt. For example, if a charity makes an exempt supply of a meeting room by way of lease  together with a supply of audio visual equipment by way of lease, the supply of that equipment is also exempt.

Are you a builder for GST/HST purposes?

For GST/HST purposes, the term builder has a very specific meaning that is not limited to only a person who physically constructs housing. A builder may be a person who has an interest (ownership or leasehold) in the property at the time of construction. It may also include a person who purchases new housing that is fully constructed.

It is important to determine whether you are a builder of housing for GST/HST purposes as there are many special rules that apply to builders of housing (including builders of subsidized housing).

For more information, see Guide RC4052, GST/HST Information for the Home Construction Industry.

Who remits the tax on a taxable sale of real property – vendor or purchaser?

If you make a taxable sale of real property, you generally have to charge and collect the tax on the sale, even if you are not registered for the GST/HST. However, in some cases it is the purchaser who has to remit the tax directly to us instead of paying it to you.

Generally, if you are a vendor, you do not collect the tax from the purchaser when you make a taxable sale of real property if:

Note

These rules only apply to taxable sales of real property. They do not apply, for example, if you lease real property or supply it in any other way.

If you do not have to collect the tax on your taxable sale of real property because one of these conditions applies, the purchaser has to pay any tax due on the purchase directly to the CRA.

If the vendor has to collect and remit the tax

If you are a vendor who has to collect the tax payable from a purchaser on your taxable sale of real property, including housing, account for the tax as follows:

Note

Only a Form GST62 in the pre-printed format may be used to file your return or make a payment at your financial institution. To order a pre-printed Form GST62, go to Order forms and publications.

If the purchaser has to pay the tax directly to us

If you are a purchaser who has to pay the tax on the purchase of real property directly to the CRA, account for the tax as follows:

Note

Form GST60 is available on our website at GST/HST related forms and publications. You cannot file Form GST60 electronically.

Input tax credits and real property

Acquisitions related to real property

If you are a GST/HST registrant and you made the election not to use the net tax calculation for charities, you may be entitled to claim ITCs for the GST/HST paid or payable on property and services you acquired that relate to real property (such as rent, maintenance and utilities) based on the percentage of use of those expenses in your commercial activities. For more information, see General operating expenses.

Purchases of real property

Charities generally have to use the primary use rule to determine their ITCs for purchases of real property.

The primary use rule is as follows:

Exception

If a charity has filed an election for a particular real property, you are required to claim ITCs for the GST/HST paid or payable on that property based on the extent of its use in commercial activities, instead of using the primary use rule for that property.  For more information, see Election for real property of a public service body.

Improvements to real property

The availability of an ITC for the GST/HST paid on an improvement to real property depends on the use of the underlying real property in commercial activities, not the use of the improvement itself in such activities. For ITC purposes, it does not matter whether the improvement to the property can be attributed entirely to a commercial activity, to other purposes such as the making of exempt supplies, or some combination of the two.

Therefore, where the primary use rule applies, a charity may be eligible to claim a full ITC for the GST/HST paid on an improvement to real property if the real property to which the improvement is made is being used more than 50% in the charity’s commercial activities at the time that the tax on the improvement becomes payable or is paid without having become payable. However, a charity cannot claim any ITCs for the GST/HST paid on an improvement if the real property is being used 50% or less in its commercial activities at that time.

The charity may become eligible to claim ITCs at a later date if a triggering event (a change in use, taxable sale, or deemed taxable sale of the property) takes place. 

Exception

If a charity has filed an election for a particular real property, the primary use rule does not apply for determining ITCs for the purchase of that particular property or for improvements made to it. For more information, see Election for real property of a public service body.

Real property changes in use

Ordinarily, the change-in-use rules apply in the following situations:

For more information on the change-in-use rules, see Capital property changes in use.

Note

If the charity changes its use of a particular real property for which it filed an election, different change-in-use rules will apply. For more information, see Election for real property of a public service body.

Election for real property of a public service body

Charities can elect, on a property-by-property basis, to treat certain exempt sales and leases of real property as taxable supplies by filing Form GST26, Election or Revocation of an Election by a Public Service Body to Have an Exempt Supply of Real Property Treated as a Taxable Supply. This election may be available whether you are a GST/HST registrant or not.

This election can apply to the following real property:

For the purposes of this election, real property generally means the entire estate or interest in the real property (including a leasehold interest) held by the charity and that is contained within a single legal description (which includes the land and all structures and other improvements that are fixtures to the land). Real property acquired by licence refers to the charity's entire entitlement to use the property under the licence.

Effect of election

When you make this election for real property, a supply of the property that would normally be exempt will now generally be treated as taxable.

Exception

Certain supplies of the real property will remain exempt even when the election is in effect, such as supplies of long-term residential rental accommodation.

If you are a GST/HST registrant, you will have to collect the GST/HST on all taxable supplies of the real property by way of lease, licence, or similar arrangement. Both registrants and non-registrants would have to collect the GST/HST on taxable supplies of the real property by way of sale unless the purchaser is required to remit the tax directly to the CRA.

The election for real property may also affect your tax recovery entitlements: If you are a GST/HST registrant, once the election is in effect you may also be entitled to claim ITCs for GST/HST paid or payable for the property. For example, if you purchase the real property and elected to treat your exempt supply (or supplies) of that property as taxable, you may be entitled to claim ITCs for the tax paid or payable on the purchase. For more information, see Form GST26.

If you acquired the real property by way of lease, licence or similar arrangement and you filed the election not to use the net tax calculation for charities, you may be entitled to claim ITCs for the GST/HST paid or payable on your lease payments that become due while the election for the property is in effect.

If you filed the election not to use the net tax calculation for charities, you may also become entitled to claim ITCs for the GST/HST paid or payable on eligible property and services you acquired that relate to the real property, such as utilities and maintenance.

Election effective the day of acquisition

The following sections discuss the effect of the election if you are a GST/HST registrant on the day the election takes effect. If you are not a GST/HST registrant when you make the election, see Form GST26 for information on the effect of this election.

Acquisitions of real property by way of purchase

If you purchased real property, you may be eligible to claim an ITC for the GST/HST paid or payable on the purchase based on the percentage of use of the property in your commercial activities if:

Acquisitions of real property by way of lease, licence, or similar arrangement

If you elected not to use the net tax calculation for charities (most charities are not eligible to make this election) and you acquired real property by way of lease, licence or similar arrangement, you may be eligible to claim ITCs for the GST/HST paid or payable on your lease payments, based on the percentage of use of the property in your commercial activities if:

If you use the net tax calculation for charities, you cannot claim ITCs for the GST/HST you pay on your lease payments. Instead, you include 60% of any GST/HST you charge on your supply of the property by way of lease, licence or similar arrangement when you calculate your net tax. For more information, see Net tax calculation for charities.

Example

You are a charity that is registered for the GST/HST and you have filed the election not to use the net tax calculation for charities. You buy a four-story non-residential building (including the land) and you paid the HST on your purchase. You will supply all of the space in the building by way of exempt leases.

Since the entire building will be used for exempt activities, you cannot claim an ITC to recover the HST you paid on your purchase. However, if you file Form GST26 and make the election effective on the day you acquire the building, you will charge the HST on the rent you charge to your tenants and you will generally be entitled to claim an ITC for the HST you paid on your purchase of the building.

Since you filed the election not to use the net tax calculation for charities, you will also generally be entitled to claim ITCs for the HST paid or payable on utilities and maintenance that relate to the building.

Election effective after the day of acquisition

Acquisitions of real property by way of purchase

If the election becomes effective after the day you acquired the real property and you were a GST/HST registrant before the election took effect, you are considered (that is, deemed) to have made a taxable sale of the property immediately before the effective date of the election and to have purchased the property again on the effective date of the election. You are also considered to have collected GST/HST on that sale and to have paid the GST/HST on this purchase equal to the basic tax content (see Calculating the basic tax content) of the property on the effective date of the election.

You have to report the GST/HST you are considered to have collected in your line 105 calculation if you are filing your return electronically, or on line 103 if you are filing a paper GST/HST return, for the reporting period during which you are considered to have sold the property.

Because you are considered to have made a taxable sale of real property, you may be entitled to claim:

Acquisitions of real property by way of lease, licence, or similar arrangement

If the election becomes effective after the day you acquire the real property by way of lease, licence or similar arrangement and you were a GST/HST registrant before the election took effect, you may be eligible to claim ITCs for the GST/HST paid or payable on your lease payments to the extent that you use the property in your commercial activities if:

If you did not file the election to not use the net tax calculation for charities, you cannot claim any ITCs for the tax paid or payable on the lease payments. However, you may be eligible to claim a PSB rebate at the applicable rate for the GST/HST paid or payable on your lease payments. You would also include 60% of any GST/HST you charge on your supplies of that property by way of lease, licence, or similar arrangement when you calculate your net tax. For more information, see Net tax calculation for charities.

Example

You are a charity that is a GST/HST registrant and you have filed the election not to use the net tax calculation for charities.

In 2020, you bought a building, including the land, in Manitoba for $300,000 plus $15,000 GST. At that time 70% of the building was used in your exempt activities and you supplied the remaining 30% of the building by way of lease, therefore, you also used the remaining part of the building in an exempt activity. Since the property was not for use more than 50% in your commercial activities, you could not claim an ITC. However, you were able to claim the PSB rebate of 50% of the GST paid ($15,000 × 50% = $7,500).

You filed the election to treat the exempt leases as taxable using an effective date of July 2, 2023. This means that you are now using the property 30% in your commercial activities. The fair market value of the property on July 2, 2023 is $310,000. You have not made any improvements to the property.

You are considered to have made a taxable sale of the property on July 1, 2023, and to have collected the GST on the sale equal to the basic tax content of the property on July 2, 2023. You are also considered to have repurchased the property and to have paid the GST on that purchase on July 2, 2023.

You calculate the amount of the GST that you are considered to have collected and that you have to report on your GST/HST return as follows:

Basic tax content = (A - B) × C

                               = ($15,000 – $7,500) × $310,000/$300,000

                               = ($15,000 - $7,500) × 1 (the maximum)

                               = $7,500

You report $7,500 in your line 105 calculation if you are filing your return electronically or on line 103 if you are filing a paper GST/HST return, for the reporting period during which the election was made.

You calculate your ITC for the tax you are considered to have paid on the repurchase of the property when the election takes effect, which is based on the basic tax content of the property, as follows:

ITC = $7,500 × 30% (use in commercial activities)

       = $2,250

In addition, since you are considered to have made a taxable sale of the property, you can claim an ITC for $7,500 (which is equal to the basic tax content of the property) to recover the GST that you paid, or that was payable, on your last acquisition of the property that you could not previously recover where all of the other conditions for claiming an ITC are met.

Therefore, the total ITCs you are entitled to claim as a result of making the election is $9,750 ($2,250 + $7,500) where all of the other conditions for claiming an ITC are met.

Since you filed the election to not use the net tax calculation for charities, you may also be entitled to claim ITCs to recover the GST paid or payable on operating expenses (such as utilities and maintenance) that relate to the property, to the extent that they are for use in your commercial activities.

You cannot claim a PSB rebate of any of the tax you are considered to have paid on the repurchase of the property on July 2, 2023, as the basic tax content calculation takes the amount of the PSB rebate into account (amount B).

Election effective the same day you become a registrant

Provided that just before you became a registrant, you were a small supplier and you owned the real property for consumption, use, or supply in your commercial activities, you may be entitled to claim an ITC to recover tax paid on its purchase or on improvements you made to it before becoming a registrant. The amount of the ITC will be based on the tax you are considered to have paid (which is equal to the basic tax content of the property), and the extent to which you use the property in your commercial activities.

If you acquired the real property by way of lease, licence or similar arrangement, and provided you elected to not use the net calculation for charities, you may be eligible to claim ITCs for tax on rent that was payable before you became a registrant, but only to the extent that it relates to the period after you became a registrant, and to the extent to which you use the property in your commercial activities. Otherwise, your tax recovery would be restricted to a PSB rebate.

Filing the election

To make the election, you have to fill out and send Form GST26, within one month after the end of the reporting period in which the election is to become effective. You have to file a separate election for each property that you want to treat as taxable.

If you are a GST/HST registrant, your reporting period is the period for which you regularly file your GST/HST returns.

If you are not a GST/HST registrant, your reporting period is a calendar month.

Change-in-use rules when the election is in effect

The following rules will only apply to you if you are a GST/HST registrant who purchased capital real property and you made an election to treat exempt supplies of that real property as taxable supplies.

When you make the election to treat exempt supplies of real property as taxable supplies, an ITC for the purchase of the property is calculated based on the percentage of use of the property in commercial activities.

It is possible that this percentage will change over time. If you increase the percentage of use in commercial activities, you may be able to claim an additional ITC. If you decrease the percentage of use in commercial activities, you may have to repay some or all of the ITC you previously claimed.

Increasing use in commercial activities

When you increase the percentage of use of real property in your commercial activities by 10% or more cumulatively and you filed the election not to use the net tax calculation method for charities, you may be eligible to claim an ITC equal to the basic tax content of the property multiplied by the percentage of the increase in the use of the property in your commercial activities.

Decreasing use in commercial activities

When you decrease the use of real property in your commercial activities by 10% or more cumulatively (without stopping or reducing the total commercial use to 10% or less), the CRA considers you to have supplied the part of the property that you no longer use in your commercial activities and to have collected the GST/HST on that supply.

The amount of the GST/HST you are considered to have collected is equal to the basic tax content of the property multiplied by the percentage of the decrease in the use of the property in your commercial activities.

You have to report the amount in your line 105 calculation if you are filing your return electronically or on line 103 if you are filing a paper GST/HST return, for the reporting period during which you decreased the use of the property in your commercial activities. The amount reported will depend on what method you use to calculate your net tax.

Stopping use in commercial activities

When you stop using the real property for commercial activities or when you decrease the use in commercial activities to 10% or less, the CRA considers you to have sold and repurchased the property. If the sale is considered to be a taxable sale, you are considered to have collected GST/HST on that sale and you have to include that tax in determining your net tax for the reporting period in which you stopped using the property in commercial activities. The GST/HST you are considered to have collected is equal to the basic tax content of the property at the time of the change in use.

If the sale is considered to be a taxable sale of the property and you had paid the GST/HST on that property when you last acquired it, you may also now be able to claim an ITC for all or part of that tax if you were unable to previously recover that tax. For more information, call 1-800-959-8287.

Revoking the election

You can revoke this election by filing another Form GST26. The revocation will be effective on the day you specify on Form GST26 as long as you file the form within one month after the end of the reporting period in which the election ceases to be effective. You have to file a separate revocation for each property for which you are revoking an election.

If you revoke the election, you are considered to have sold the property immediately before the effective day of the revocation and to have collected and paid the GST/HST equal to the basic tax content of the property on the day of revocation. You have to include the GST/HST you are considered to have collected on the deemed sale of the property in your net tax calculation for charities. For more information, see Form GST26.

In addition, you are considered to have repurchased the property on the day the revocation becomes effective, and to have paid the GST/HST equal to the basic tax content of the property on that day. However, you are not entitled to claim a PSB rebate of the tax that you are deemed to have paid, because the basic tax content formula already incorporates that amount.

Subsidized housing

The following rules apply to charities that receive government funding to build housing (or an addition to housing) where at least 10% of the residential units in the housing are intended to be leased to seniors, youths, students, or to individuals with a disability, or who are in distress, in need of assistance, or have limited financial resources.

For the purposes of the special rules for subsidized housing, government funding means an amount of money paid or payable by a grantor (or paid or payable by another organization that received the money from a grantor) to a builder of the housing (or addition) for the purpose of making residential units available to the individuals mentioned above. Government funding can include a forgivable loan from a grantor. The funding must be measurable and identified in your financial statements as government funding.

A grantor can be a federal or provincial government, a municipality, or an Indian band. Corporations controlled by federal or provincial governments, municipalities or Indian bands (and bodies established by such persons or corporations) will also be considered grantors if one of the main purposes of the corporation or body is to fund charitable or non-profit endeavours. However, federal and provincial Crown corporations and municipal corporations, all or substantially all (90% or more) of whose activities are commercial activities or the supply of financial services or any combination thereof, are not grantors.

During the construction phase, you can register for the GST/HST and claim ITCs for the property and services you buy that relate to the construction of the housing.

You are considered to have made and received a taxable sale (self-supply) of the housing on the later of:

The amount of GST/HST that you are considered to have collected and paid on the self-supply of the housing is equal to the greater of:

  1. the amount of the GST/HST calculated on the fair market value of the housing at the time of the self-supply; and

  2. the total amount of all of the GST/HST that would have been payable on the acquisition of the land, the construction of the building, and any other improvements to the property (collectively, the housing inputs) if the GST/HST rate that applied to those housing inputs had been the same GST/HST rate that applies to the self-supply of the housing

This rule is for determining the amount of the GST/HST that you are considered to have collected and paid. This applies to any self-supply of housing that occurs on or after April 1, 2013. However, if the construction or substantial renovation of the housing began on or before April 8, 2014, you can choose to continue to use the former rule that applied before
April 1, 2013, whichever rule is more to your advantage.

For more information, see Guide RC4052, GST/HST Information for the Home Construction Industry. 

Note

You may be entitled to claim a PSB rebate of some of the tax that applies to the self-supply of the housing. (Depending on the type of housing you provide, you may be eligible to use the municipality rebate rate). See Rebate for charities that provide municipal services.

If your housing is in Ontario, you may be eligible to claim either the PSB rebate for the provincial part of the HST, or the provincial new residential rental property (NRRP) rebate for the provincial part of the HST, that applies to self-supply of the housing.

For more information, see GST/HST Info Sheet GI-093, Harmonized Sales Tax: Ontario New Residential Rental Property Rebate.

How do you remit the tax?

If you are a GST/HST registrant, you have to report the GST/HST due in your line 105 calculation if you are filing your return electronically, or on line 103 if you are filing a paper GST/HST return, for the reporting period during which you are considered to have made the taxable sale of the subsidized housing.

If you are not a GST/HST registrant, you have to report the GST/HST on line 103 of Form GST62, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return (Non-Personalized), and remit the GST/HST due with that return by the end of the month after the month in which you are considered to have made the taxable sale of the subsidized housing. If you are not registered for GST/HST, see Are you a non-registrant?

Note

You have to order Form GST62 online at Order forms and publications or by calling 1-800-959-5525. The CRA will send you a pre-printed form to report the GST/HST collectible and you can also use this form to make a payment at your financial institution. You cannot use the working copy available on our website.

Example

You are a charity in New Brunswick and you are registered for the GST/HST. You receive government funding to construct multiple-unit long-term housing that will be rented exclusively to seniors. Rental rates are not linked in any way to a tenant’s income. On May 15, 2021, you paid $840,000 (plus $126,000 HST at 15%) on the purchase of land, and as a registrant you claimed an ITC for the HST paid since the land was acquired for use in the course of your commercial activities (in other words, the construction of the housing which leads to your taxable self-supply). In June 2021, you purchased construction materials in a non-participating province for $1,008,000 (plus $50,400 GST at 5%) and brought those materials into New Brunswick for use exclusively in the course of your commercial activities.

As a result, you were not required to self-assess the provincial part of the New Brunswick HST on those materials, and you claimed ITCs for the GST paid. Construction of the housing began in July 2021, and throughout 2021 and 2022 you purchased additional construction materials and services in New Brunswick for $2,352,000 (plus $352,800 HST at 15%) and you claimed ITCs for the HST paid.

The construction of the housing was substantially completed on April 11, 2022, and you first gave possession of a unit in the housing on May 5, 2022, to an individual who will be the first person to live in the unit as their place of residence. You are considered to have made a self-supply, that is a taxable sale of, and a repurchase of the multiple-unit housing on May 5, 2022, since this is the later of the two dates.

The fair market value of the housing (including the related land) on May 5, 2022, was determined to be $4,500,000. The amount of HST you are considered to have collected and paid on your self-supply is equal to $675,000 which is the greater of:

A. $675,000 (in other words, $4,500,000 fair market value × 15%)

B. $630,000 (in other words, the amount calculated for B that is, the HST paid on the land $126,000; the HST that would have been payable on the material purchased in a non participating province $151,200; the HST paid on the construction material and services purchased in New Brunswick $352,800)

For this property, you have to include the $675,000 HST you are considered to have collected in your line 105 calculation if you are filing your return electronically (or for line 103 if you are filing a paper GST/HST return) for the reporting period in which you are considered to have made the taxable sale. You may be entitled to claim a 50% PSB rebate of the federal part of the HST you are considered to have collected ($675,000 x 5/15) at the time of the self-supply and a 50% PSB rebate of the provincial part of the HST ($675,000 x 10/15).

Are you a non-registrant?

If you are not a GST/HST registrant, you cannot claim ITCs to recover the GST/HST paid or payable on the purchase of the real property and on costs to build or substantially renovate subsidized housing (or to make an addition to it). However, you may be entitled to claim a PSB rebate to recover some of that tax.

After the construction of the subsidized housing, when you are considered to have made a taxable sale of the housing (self-supply) and you have to account for the GST/HST on that self-supply, you may be eligible to claim a general rebate (using Form GST189, General Application for GST/HST Rebates) to recover the GST/HST you paid on the purchase of the real property and the construction costs that you could not previously recover.

For more information, go to Goods and services tax/harmonized sales tax (GST/HST Rebates), or see Guide RC4033, General Application for GST/HST Rebates, and Form GST189 or call 1-800-959-8287.

Example

You are a charity in Ontario and you are not registered for the GST/HST. You receive government funding to construct multiple-unit long-term housing that will be rented exclusively to seniors. Rental rates are not linked in any way to a tenant’s income. In June 2018 you paid $1,480,000 (plus $74,000 GST at 5%) on the purchase of land. You claimed a PSB rebate of 50% of the $74,000 GST paid. On May 1, 2021, you began construction of the housing. Throughout 2021 and 2022 you purchased construction materials and services in Ontario for $5,920,000 (plus $769,600 HST at 13%). You claimed PSB rebates in respect of the $769,600 HST payable in the relevant claim periods. The construction of the housing is substantially completed on June 29, 2022, and you first gave possession of a unit in the housing to an individual to live in on July 15, 2022. As the later of these two dates is July 15, 2022, you are considered to have made a self-supply, that is a taxable sale of, and a repurchase of the housing on that date.

The fair market value of the housing (including the related land) on July 15, 2022, was determined to be $6,300,000. The amount of HST you are considered to have collected and paid on your self-supply is equal to $843,600 which is the greater of:

A. $819,000 (in other words, $6,300,000 fair market value × 13%)

B. $843,600 (in other words, the amount calculated for B)

You must include the $843,600 HST you are considered to have collected on the self-supply on line 103 of Form GST62 and remit the tax due with that return by August 31, 2022 (the end of the month after the month in which you are considered to have made the taxable sale of the subsidized housing).

You may be entitled to claim a 50% PSB rebate of the federal part of the HST ($843,600 x 5/13) you are considered to have collected under the self-supply rules. Also, you may be entitled to claim either an 82% PSB rebate or a provincial NRRP rebate for the provincial part of the HST ($843,600 x 8/13) you are considered to have collected.

As a non-registrant, you could not claim ITCs for the tax you paid to purchase the land and construct the housing, and you were only able to recover a portion of that tax (by claiming PSB rebates for 50% of the GST/federal part of the HST paid, and when eligible, 82% of the provincial part of the HST paid).

Since you are considered to have made a taxable sale of the housing, you are now entitled to claim a general rebate (using reason code 7 on Form GST189) to recover the remaining tax that you were previously unable to recover by way of the PSB rebates on the purchase of the land and the construction costs.

Digital services

Handle your business taxes online

My Business Account lets you view and manage your business taxes online.

Use My business Account throughout the year to:

To sign in to or register for the CRA's digital services, go to:

For more information, go to Digital services for businesses.

Receive your CRA mail online

Register for email notifications to find out when CRA mail, like your notice of assessment, is available in My Business Account.

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

Create a pre-authorized debit agreement from your Canadian chequing account

A pre-authorized debit (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. PADs are flexible and managed by you. You can use My Business Account to view your account history and modify, cancel, or skip a payment. For more information, go to Pay by pre‑authorized debit.

MyBenefits CRA mobile web application

Get your benefit information on the go!

Benefit recipients can access the MyBenefits CRA mobile web application throughout the year to quickly view their benefit and credit payment details, eligibility information and application status.

For more information, go to Mobile apps - Canada Revenue Agency.

Electronic payments

Make your payment using:

For more information, go to Payment to the CRA.

For more information

If you need help

If you need more information after reading this guide, go to Taxes or call 1-800-959-5525.

Direct deposit

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

Forms and publications

The CRA encourages you to file your return electronically. If you need a paper version of the CRA's forms and publications, go to GST/HST-related forms and publications or call 1-800-959-5525.

Electronic mailing lists

The CRA can send you an 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.

Teletypewriter (TTY) users

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

If you use an operator-assisted relay service, call the CRA's 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.

Formal disputes (objections and appeals)

You have the right to file an objection if you disagree with an assessment, determination, or decision.

For more information about objections and related deadlines, see File an objection.

CRA service feedback program

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, see the Taxpayer Bill of Rights.

You may provide compliments or suggestions, and if you are not satisfied with the service you received:

  1. Try to resolve the matter with the employee you have been dealing with or call the telephone number provided in the correspondence you received from the CRA. 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. If the problem is still not resolved, you can file a service-related complaint by filling out Form RC193, Service Feedback. For more information and to learn 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 to the Office of the Taxpayers' Ombudsperson.

Reprisal complaints

If you have received a response regarding a previously submitted service complaint or a formal review of a CRA decision and feel 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, go to Reprisal Complaints.

Tax information videos

We have a tax information video series for new small businesses that provides an introduction to topics such as registering a business, GST/HST, and payroll. To watch our videos, go to Businesses video gallery.

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