GST/HST Information for Charities

RC4082(E) Rev. 21

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

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

Table of contents

• Is this guide for you?
• Definitions
• General rules for charities
• What is the GST/HST?
  • Who pays the GST/HST?
  • Who charges the GST/HST?
  • How does the GST/HST work for charities that are GST/HST registrants?
  • How does the GST/HST work for charities that are not GST/HST registrants?
• Does a charity have to register for the GST/HST?
  • Small supplier limits
  • Voluntary registration
  • Branches and divisions
  • Members of unincorporated organizations
  • How do I register?
  • Cancelling your registration
• Exempt supplies
  • Exemptions for charities
  • Other exemptions
• Taxable supplies
  • Taxable supplies (other than zero-rated)
  • Zero-rated supplies
  • Charities providing employment assistance to individuals with disabilities
• Donations, grants, subsidies and sponsorships
  • Donations and gifts
  • Grants and subsidies
  • Sponsorships
• Rebate information for charities
  • Rebate for public service bodies
  • Rebate for charities that provide municipal services
  • Rebate for exported property and services
  • Rebate for purchases of printed books
  • Rebate for property or services removed from a participating province or imported goods for use in another province
• Determining your net tax as a charity
  • Designated charities
  • Reporting periods
  • Net tax calculation for charities
• Input tax credits
• How to claim both rebates and input tax credits
  • Charities using the net tax calculation for charities
  • Charities not using the net tax calculation for charities
  • Capital property
• Real property
  • Sales and leases
  • Who remits the tax on a taxable sale of real property – vendor or purchaser?
  • Input tax credits and real property
  • Real property changes in use
  • Election for real property of a public service body
  • Subsidized housing
• Digital services
• For more information

Is this guide 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.

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:

• two or more corporations
• an individual and a corporation 
• a person and a partnership or trust
• two persons, if they are associated with the same third person

Basic tax content of a property generally means the amount of the 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 considered 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 a property if they file a rebate under section 257 of the Excise Tax Act.

For more information, see Calculating the basic tax content and 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:

• the making of exempt supplies
• any business or adventure or concern in the nature of trade carried on without a reasonable expectation of profit by an individual, a personal trust, or a partnership where all the members are individuals

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:

• One of the main purposes of the charity is to provide employment of employment-related assistance to individuals with disabilities.
• The charity must supply, on a regular basis, certain services that are performed, in whole or in part, by individuals with disabilities.

Designated municipal property means property of a person who is, at any time, designated to be a municipality for the purposes 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 they acquired to make exempt supplies. However, a charity may be eligible to claim a PSB rebate for such expenses.

Fair market value of property or a service supplied to a person generally means the highest dollar value you can get for your property in an open and unrestricted market between a willing buyer and a willing seller who are unrelated to 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 an selected listed financial institution (SLFI) 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.

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.

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

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

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

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

Public 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:

• a mobile home or floating home and any leasehold or ownership interest in such property
• in Quebec, immovable property and every lease of such property
• in any other place in Canada, all land, buildings of a permanent nature, and any interest in real property

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

Selected public service body means:

• a school authority, a university or a public college that is established and operated other than for profit
• a hospital authority
• a municipality
• a facility operator
• an external supplier

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

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

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

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

Zero-rated supplies are supplies of property and services that are taxable at the rate of 0%. This means there is no GST/HST charged on these supplies, but GST/HST registrants may be eligible to claim ITCs for the GST/HST paid or payable on property and services they 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:

• Most supplies made by charities are exempt while most supplies made by businesses are taxable.
• Many charities are not required to register for GST/HST purposes while most businesses are required to do so.
• Businesses making taxable supplies can generally recover GST/HST paid or payable on property and services they acquired for use in those activities by claiming input tax credits (ITCs), while charities are generally restricted in the ITCs they may claim.
• If a charity is registered for GST/HST purposes it must calculate its net tax by using the net tax calculation for charities.

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% PSB 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 many 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).

Who pays the GST/HST?

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

Who charges the GST/HST?

Generally, GST/HST registrants have to 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.

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 complete 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 an ITC 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 complete one rebate application for each reporting period (monthly, quarterly, or annually). For more information, see Rebate information for charities.

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 complete 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:

• you provide taxable supplies in Canada
• you are not a small supplier

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

You may voluntarily register for GST/HST purposes if you:

• provide taxable property and services in Canada
• you are a small supplier

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:

• the $250,000 gross revenue test
• the $50,000 taxable supplies test

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:

• You do not charge tax on your supplies except for taxable sales of real property. However, you may not have to collect the tax from the purchaser. For more information, see Who remits the tax on a taxable sale of real property – vendor or purchaser?
• You cannot claim ITCs to recover the GST/HST paid or payable on property and services you acquired.
• You can claim a PSB rebate at the applicable rate for the GST/HST paid or payable on your eligible purchases and expenses.

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:

• If you are in your first fiscal year, you do not have to register for GST/HST.
• If you are in your second fiscal year, calculate your gross revenue from your first fiscal year. If this amount is $250,000 or less, you are considered a small supplier and you do not have to register for GST/HST.
• If you are in your third or later fiscal year, calculate your gross revenue in each of your two previous fiscal years. If this amount is $250,000 or less in either of these years, you are considered a small supplier and you do not have to register for the GST/HST.

Gross revenue includes:

• income from a business, or from an adventure or concern in the nature of trade
• gifts and donations
• grants, subsidies, forgivable loans and other assistance
• property and investment income
• any amount that is a capital gain from the disposition of property for income tax purposes
• other revenue of any kind whatever during the year, including revenue from both taxable and exempt supplies

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.

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:

• your total world-wide revenue, and those of your associates, from taxable supplies in the current calendar quarter
• your total world-wide revenue, and those of your associates, from taxable supplies in the last four calendar quarters

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:

• it has taxable supplies of $50,000 or less in the current calendar quarter and also $50,000 or less over the last four consecutive calendar quarters
• you can separately identify the branch or division by either its location or the nature of its activities
• it has its own accounting systems and maintains separate records and books of account
• you have not revoked an earlier designation of the branch or division within the previous 365 days

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 supplies transferred between branches or divisions that are part of one legal entity.

For more information, see 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 fill out and send 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.

How do I register?

To register for the GST/HST, go to Business Registration Online or fill out and send Form RC1, Request for a business number and certain program accounts.

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.

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

• long-term rentals of residential accommodation (of one month or more) and residential condominium fees
• child care services, where the primary purpose is to provide care and supervision to children 14 years of age or under for periods of less than 24 hours per day
• personal care services for children, underprivileged individuals, or individuals with disabilities, when supplied by a person operating an establishment for these individuals, in either institutional or non-institutional settings

Exemptions for charities

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

• most services
• supplies of used or donated goods
• short-term rentals of residential accommodation (less than one month of occupancy)

• meals-on-wheels programs (this exemption is for a supply of food or beverages to seniors, underprivileged individuals, or individuals with a disability, under a program established and operated to provide prepared food to such individuals in their places of residence. Any supply of food or beverages made to a charity for these programs is also exempt)
• catering services for private functions (for example, wedding receptions)
• certain parking space and facility rentals (for example, halls for weddings)

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:

• the amount you paid when you bought the goods or service
• the amount you paid for an article or material (other than capital property or designated municipal property) directly used to manufacture, produce, process, or package the goods
• GST, HST, Quebec sales tax (QST), and non-recoverable provincial taxes, duties, and fees you paid when you bought the goods or services

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.

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).

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:

• a supply of blood or blood derivatives
• a parking space if the supply of the space is made for consideration by way of lease or licence or similar arrangement in the course of a business carried on by the charity

Fund-raising activities

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

• you sell these property or services regularly or continuously throughout the year, or a significant part of the year
• your clients are entitled to receive these property or services regularly or continuously throughout the year, or a significant part of the year

Examples of supplies that are exempt include:

• greeting cards you sell only in the Christmas season
• chocolate bars you sell in an eight-week fund-raising drive

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:

• goods you sell year-round in a tuck shop
• subscriptions to your charity's magazine

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.

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 the following conditions:

• volunteers run the event and take the bets
• for bingo and casino nights, the event is not held in a commercial hall or temporary structure (such as a bingo tent put up on a fair ground) used mainly for gambling activities

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:

• free or reduced admission to a place of amusement
• the right to use facilities at a place of amusement
• the right to participate in a recreational or athletic activity at a place of amusement

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

• you provide it primarily to children 14 years of age or under and it does not involve overnight supervision throughout a large part of the program
• you provide it primarily to individuals who are underprivileged or who have a disability

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?

Taxable supplies (other than zero-rated)

The following are examples of taxable (other than zero rated) supplies:

• supplies of certain personal property that you used in your commercial activities, or in the case of capital property, primarily in your commercial activities (such as the sale of a cash register used exclusively in a gift shop where you sell taxable supplies)
• new goods that you bought, manufactured, or produced to resell (such as sales of new goods that you bought to resell in a gift shop for a price that is more than their direct cost). Sales of used goods or goods donated to the charity remain exempt
• certain sales and leases of real property (see Sales and leases)
• admissions to a place of amusement such as a museum, recreational complex, or theatre if any admission charged is more than $1 (except for certain fund-raising activities and certain amateur events). For example, if you charge adults a $5 admission and children a $0.50 admission, both admissions will be taxable
• memberships that entitle members to benefits such as free or discounted admission to a place of amusement (for example, a museum, a theatre, or a recreational complex), the use of facilities, or the right to participate in recreational activities at a place of amusement. However, if the value of these benefits is insignificant (less than 30%) in relation to the membership fee, the membership is exempt
• a service involving, or a membership that allows the member to receive, supervision or instruction in a recreational or athletic activity, unless it is provided primarily to children 14 years of age or under and does not involve overnight supervision throughout a substantial part of the program, or unless it is provided primarily to individuals who are underprivileged or who have a disability
• services of performing artists if you provide the services to another organization that is selling taxable supplies of admissions to the performance
• lottery tickets (tax is included in the price of the ticket) if your charity sells them for a provincial lottery corporation (see Gambling events)
• restaurant operations
• professional theatre subscriptions
• most services rendered to an individual for the purpose of enhancing or otherwise altering the individual's physical appearance and not for medical or reconstructive purposes

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

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.

Some examples of zero-rated supplies are:

• basic groceries such as milk, bread, vegetables
• exports (most property and services for which you charge and collect the GST/HST in Canada are zero-rated when exported)
• prescription drugs and dispensing services
• certain medical devices such as hearing aids and artificial teeth
• feminine hygiene products
• many transportation services where the origin or destination is outside Canada

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:

• one of the main purposes of the charity is to provide employment or employment-related assistance to individuals with disabilities
• the charity must supply, on a regular basis, certain services that are performed, in whole or in part, by individuals with disabilities

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
Excise and GST/HST Rulings Directorate
11th 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 payment 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 Technical Information Bulletin B-067, Goods and Services Tax Treatment of Grants and Subsidies (TIB).

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:

• Sponsorships when a business financially supports your activity in return for which you promote the business. For example, your charity organizes a softball team and you agree to feature a sponsor's trade name on your team uniforms or you run a sporting event and publish an acknowledgment of the sponsor in the event's program.
• Sponsorships when you receive funding in return for allowing the sponsor the right to use your charity's logo. For example, a corporation uses a national charity's logo in its advertising campaign.

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 completing 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.

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 completing 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 or imported goods for use in another province

Imported goods for usein another province

If you are resident in a participating province and have paid the provincial part of the HST on goods that you imported into Canada at a place in another province for consumption or use in a province other than your province of residence, you may be entitled to a rebate of the provincial part of the HST you paid. A rebate of the amount is not available to the extent that you may otherwise recover the amount, for example by claiming a rebate or an input tax credit for the amount.

To qualify for the rebate of the provincial part of the HST that you paid on goods that you imported into Canada, you have to meet all of the following conditions:

• you are a resident of a participating province
• the goods were imported for consumption or use exclusively in a province different from the participating province in respect of which the provincial part of the HST paid on importation was calculated
• you paid all provincial taxes, if any, that were imposed on the goods
• you file the rebate application no later than one year after the day the tax became payable
• the total amount of eligible tax is at least $25

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

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

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

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 are a resident of Canada
• you bought the goods for consumption, use, or supply exclusively (generally 90% or more) outside the participating province
• you removed the goods from the participating province to a non-participating province or a participating province with a lower HST rate no later than 30 days after they were delivered to you (excluding any amount of time that the goods were in storage)
• you paid any applicable provincial sales tax of the province to which the goods were removed and any other applicable provincial taxes
• you file the rebate application no later than one year after the day you remove the goods from the participating province
• each receipt for an eligible good shows an eligible amount of tax of at least $5
• the total amount of eligible tax is at least $25

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

The following goods are not eligible for this rebate:

• excisable goods such as liquor
• most gasoline, diesel fuel, and certain other types of fuel

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 completing 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 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 are a resident of Canada
• the intangible personal property or service is acquired for consumption, use, or supply significantly (10% or more) in non-participating provinces or participating provinces with lower HST rates
• you file the rebate application no later than one year after the day the tax became payable
• each receipt for eligible intangible personal property or eligible service shows an eligible amount of tax of at least $5
• the total amount of eligible tax is at least $25

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

To apply for the rebate, use Form GST189, General Application for Rebate of GST/HST. 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.

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 at 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:

• 60% of the GST/HST the charity was required to be charged, whether the charity collected it or not, on most taxable supplies, including taxable supplies for which point of sale rebates and Ontario First Nations point of sale relief were given by the charity in the reporting period
• 100% of the GST/HST collected or collectable on taxable sales of capital and real property (land or buildings), including deemed taxable sales of capital and real property
• 100% of the GST/HST deemed collected on property (other than capital property) or services appropriated to, or for the benefit of, a member or relative of a member of the charity (for example, an inventory item given to this person)
• 100% of the GST/HST deemed collected on any property or service that the charity provided to an employee that is a taxable benefit for income tax purposes
• 100% of the GST/HST collected or collectible on supplies of goods the charity made while acting as an agent (including a billing agent), or auctioneer and agent, of a person where the charity has to account for the tax
• 100% of any GST/HST collected in error
• 100% of all amounts required to be taken into account as GST/HST by the charity because of the recovery of a bad debt for a taxable sale of capital property or real property
• the amount of GST/HST adjusted, refunded, or credited to the charity by the seller of capital property or real property to the extent that the amount was previously claimed by the charity as an ITC
• any amount that the charity carried forward from designated reporting periods for which the charity received approval from the Canada Revenue Agency (CRA) to temporarily stop filing GST/HST returns for those periods in which it had $1,000 or less of net GST/HST to report

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:

• 100% ITCs for the GST/HST paid or payable on the charity's purchases of, or improvements to, capital property or real property for use primarily (more than 50%) in the charity's commercial activities, including the deemed GST/HST payable when capital property is brought into a participating province for use primarily in its commercial activities
• any ITC for the GST/HST paid or payable on the charity's purchase of, or improvement to, real property based on the percentage of use of the real property in the charity's commercial activities (must be more than 10%) and for which it 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, that is effective the day the property is acquired
• any ITC for the GST/HST considered paid on the deemed purchase of real property based on the percentage of use (also referred in this document as “extent of use”) of the property in the charity's commercial activities (must be more than 10%), where the election (Form GST26) takes effect on a day other than the day the property was acquired by the charity or the day the charity becomes a registrant
• 100% ITCs for the GST/HST paid or payable on goods that the charity acquired, imported, or brought into a participating province that will be sold by a person acting as an agent (including a billing agent), or an auctioneer and agent, for the charity
• 100% ITCs for the GST/HST paid on goods imported by the charity on behalf of a non resident person for use exclusively in the charity's commercial activities and sold when the charity was acting as an agent, or auctioneer and agent, for the non resident person
• 60% of the total of the GST/HST adjustments (for example, for price reductions and rebates for foreign conventions and for artistic works produced for export) or of point of sale rebates for the provincial part of the HST that the charity gave in the reporting period (no amount should be included for any Ontario First Nations point of sale relief credited in the reporting period as the charity may claim this amount by filing Form GST189, General Application for Rebate of GST/HST, using code 23)
• 60% of the total tax amount of a tax adjustment note issued by the charity in the reporting period to a pension entity
• the GST/HST adjusted, refunded, or credited in a credit note issued by the charity in the reporting period for tax charged in excess of the GST/HST collectible on certain supplies of property or services
• GST/HST adjustments relating to bad debts written off during the reporting period in respect of sales of capital property or real property
• the GST/HST adjusted, refunded, or credited in a credit note issued by the charity in the reporting period in respect of sales of capital property or real property
• GST/HST adjustments relating to the GST/HST new housing rebate where the charity is a builder and paid or credited the rebate to an individual purchasing new housing
• 100% ITCs that the charity was entitled to claim and that it carried forward from a reporting period when it did not have to use the net tax calculation for charities

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.

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:

• general operating expenses, such as office rent and utilities, to the extent that they are for use in your commercial activities (making taxable supplies for consideration)
• property and services you acquired which are related to restaurant sales
• new merchandise bought to sell year round at a price equal to or more than its direct cost and you charged tax separately on the selling price
• meals and entertainment expenses relating to your commercial activities
• allowances and reimbursements relating to your commercial activities that you paid to employees and volunteers
• capital personal property (such as office furniture, photocopiers, computers, and vehicles) that you bought for use more than 50% in your commercial activities
• real property that you bought for use more than 50% in your commercial activities
• improvements to real property that you bought if you use the real property more than 50% in commercial activities

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 it is claimed by the due date of the return for the reporting period that ends within four years after the period in which the credit could first have been claimed.

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

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 ITCs. 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.

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 an ITC 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 an ITC 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 ITCs for allowances and reimbursements, 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:

• depreciable property. This means property that is eligible, or would be eligible, for capital cost allowance for income tax purposes
• property, other than depreciable property, from which any gain or loss if you disposed of the property would be a capital gain or capital loss for income tax purposes

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:

• capital personal property includes computers, photocopiers, office furniture, cash registers, equipment, and machinery
• capital real property includes land and buildings

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.

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:

• your capital property that was used 50% or less in commercial activities is now used more than 50% in commercial activities
• your capital property that was used more than 50% in commercial activities is now used 50% or less in commercial activities

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:

• 1
• the fair market value of the property at the time of the change in use divided by the total cost (not including the GST/HST) for your last acquisition of the property and for later improvements you made to it

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.

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.

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:

• sales of new or substantially (90% or more) renovated housing
• sales of used housing if you are the builder of the housing for GST/HST purposes and you claimed ITCs on your last acquisition of, or on an improvement to, the housing
• sales of new or substantially renovated housing that you are considered to have made (self-supplies). For example, this may occur if you are a builder of the housing for GST/HST purposes and you first give possession of the housing, or a unit in it, to an individual for use as a place of residence
• most sales of real property that you are considered to have made due to a change in use of the property from more than 50% in commercial activities to 50% or less in commercial activities . For more information, see Changing the use to 50% or less in commercial activities
• sales of real property to an individual or a personal trust , other than a supply of real property on which is situated a structure that you used as an office or in commercial activities or in making exempt supplies
• sales of real property that you used more than 50% in your commercial activities immediately before the time of the sale
• certain supplies of designated municipal property if you are a designated municipality and if no other exemptions (for example, for housing or for free supplies) apply
• otherwise exempt supplies of real property that you choose to treat as taxable by filing an election with the CRA (see Election for real property of a public service body), as long as no other exemptions (for example, for housing or for free supplies) apply

Are you a builder for GST/HST purposes?

For GST/HST purposes, the term builder has a very specific meaning that may not include a person who physically constructs housing unless that person 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.

Sales of new housing

New housing in New Brunswick

Effective July 1, 2016, the HST at 15% applies to a taxable sale by a builder of newly constructed or substantially renovated housing in New Brunswick where both ownership and possession of the housing are transferred to the purchaser after June 2016.

There is an exception to this general rule, where the written agreement of purchase and sale was entered into before March 31, 2016, and ownership and possession transfer to the purchaser after June 2016.

For more information on this grandparenting rule, including information about grandparented self-supplies of housing, see GST/HST Info Sheet GI-190, New Brunswick and Newfoundland and Labrador HST Rate Increases: Sales and Rentals of New Housing.

New housing in Newfoundland and Labrador

Effective July 1, 2016, the HST at 15% applies to a taxable sale by a builder of newly constructed or substantially renovated housing in Newfoundland and Labrador where both ownership and possession of the housing are transferred to the purchaser after June 2016.

There is an exception to this general rule, where the written agreement of purchase and sale was entered into before May 4, 2016, and ownership and possession transfer to the purchaser after June 2016.

For more information on this grandparenting rule, including information about grandparented self-supplies of housing, see GST/HST Info Sheet GI-190, New Brunswick and Newfoundland and Labrador HST Rate Increases: Sales and Rentals of New Housing.

New housing in Nova Scotia

Effective July 1, 2010, the HST at 15% applies to a taxable sale by a builder of newly constructed or substantially renovated housing in Nova Scotia where both ownership and possession of the housing are transferred to the purchaser after June 2010.

There is an exception to this general rule where the written agreement of purchase and sale was entered into before April 7, 2010 and ownership and possession transfer to the purchaser after June 2010.

For more information on this grandparenting rule, see GST/HST Info Sheet GI-104, Nova Scotia HST Rate Increase: Sales and Rentals of New Housing.

New housing in Ontario

Generally, the HST at 13% applies to a taxable sale by a builder of newly constructed or substantially renovated housing in Ontario where, under the written agreement of purchase and sale, both ownership and possession of the housing transfer to the purchaser after June 2010. 

There is an exception to this general rule where the written agreement of purchase and sale was entered into before June 19, 2009, and ownership and possession transfer to the purchaser after June 2010.

For more information on this grandparenting rule, see GST/HST Info Sheet GI-083, Harmonized Sales Tax: Information for Builders of New Housing in Ontario.

New housing in Prince Edward Island

Effective October 1, 2016, the HST at 15% applies to a builder’s taxable sale of newly constructed or substantially renovated housing in Prince Edward Island where both ownership and possession of the housing were transferred to the purchaser after September 2016.

There is an exception to this general rule, where the written agreement of purchase and sale was entered into before June 17, 2016, and ownership and possession transfer to the purchaser after September 2016.

For more information on this grandparenting rule, including information about grandparented self-supplies of housing,see GST/HST Info Sheet GI-194, Prince Edward Island HST Rate Increases: Sales and Rentals of New Housing.

Grandparented housing for the purposes of the Prince Edward Island HST rate increase

Housing that is grandparented only for the purposes of the HST rate increase is subject to the HST at the rate of 14%. This situation occurs where both ownership and possession of the housing transfer to the purchaser on or after October 1, 2016 under a written agreement of purchase and sale entered into:

• in the case of a detached house, semi-detached house, rowhouse unit, or residential condominium unit, after November 8, 2012, and before June 17, 2016
• in the case of a duplex, mobile home, or floating home, before June 17, 2016

Owner-built houses, apartment buildings, and condominium complexes are not grandparented for the purposes of the HST rate increase.

Grandparented housing for the purposes of Prince Edward Island harmonization

Housing that is grandparented only for the purposes of harmonization is subject to the GST at the rate of 5% and is not subject to the provincial part of the HST. This situation occurs in the case of a sale of a detached house, semi-detached house, rowhouse unit, residential condominium unit, or condominium complex that is sold under a written agreement of purchase and sale entered into before November 9, 2012, where both ownership and possession of the housing transfer under the agreement after March 2013 and before October 1, 2016.

Owner-built houses, duplexes, apartment buildings, mobile homes, and floating homes are not grandparented for the purposes of harmonization.

Grandparented housing for the purposes of both the Prince Edward Island HST rate increase and Prince Edward Island harmonization

Housing that is grandparented for the purposes of both the HST rate increase and harmonization is subject to the GST at the rate of 5% and is not subject to the provincial part of the HST. This situation occurs in the case of a sale of a detached house, semi-detached house, rowhouse unit, residential condominium unit, or condominium complex that is sold under a written agreement of purchase and sale entered into before November 9, 2012, where both ownership and possession of the housing transfer under the agreement on or after October 1, 2016.

Owner-built houses, duplexes, apartment buildings, mobile homes, and floating homes are not grandparented in this situation.

For more information about sales of grandparented housing in Prince Edward Island, refer to:

• GST/HST Notice 302, Prince Edward Island HST Rate Increase – Questions and Answers on Housing Rebates and Transitional Rules for Housing and Other Real Property Situated in Prince Edward Island
• GST/HST Info Sheet GI-194, Prince Edward Island HST Rate Increase – Sales and Rentals of New Housing
• GST/HST Info Sheet GI-146, Harmonized Sales Tax: Information for Builders of New Housing in Prince Edward Island
• GST/HST Info Sheet GI-150, Harmonized Sales Tax: Information on the Transitional Tax Adjustment for Builders of Housing in Prince Edward Island

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 the CRA 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:

• The purchaser is registered for the GST/HST. This rule does not apply if you make a taxable sale to an individual of housing or a cemetery plot or place of burial, entombment, or deposit of human remains or ashes.
• You are a non-resident of Canada. This rule still applies if you are considered a resident for only certain activities you carry on through a permanent establishment in Canada.
• You and the purchaser have made a type 2 election on Form GST22, Real Property – Election to Make Certain Sales Taxable. For more information, see the election form.

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:

• If you are registered for the GST/HST, include the GST/HST collectible on your regular GST/HST return, for the reporting period during which the GST/HST became collectible (in your line 105 calculation if you are filing electronically or on line 103 if you are filing a paper GST/HST return).
• If you are not registered for the GST/HST, report the tax collectible on line 103 of Form GST62, Goods and Services Tax/Harmonized Sales Tax (GST/HST) Return (Non-personalized). File this return by the end of the month following the month in which the tax became collectible and remit the net tax due with that return.

If the purchaser has to pay the tax directly to the CRA

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:

• if you are a GST/HST registrant and will use or supply the real property:
  • more than 50% in your commercial activities, report the tax due on line 205 (GST/HST due on the acquisition of taxable real property) of your GST/HST return for the reporting period in which the tax became payable and remit any positive amount of tax owing for that return
  • 50% or less in your commercial activities, report the tax due on Form GST60, GST/HST Return for Purchase of Real Property or Carbon Emission Allowances. File this return by the end of the month following the month in which the tax became payable and pay the tax due with that return
• if you are not a GST/HST registrant, report the tax due on Form GST60, GST/HST Return for Purchase of Real Property or Carbon Emission Allowances. File this return by the end of the month following the month in which the tax became payable and pay the tax due with that return.

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:

• If you intend to use the property more than 50% in your commercial activities, you can generally claim a full ITC. In this case, you cannot claim a PSB rebate.
• If you intend to use the property 50% or less in your commercial activities, you generally cannot claim an ITC. However, you can claim a PSB rebate.

Purchases of improvements to real property

The availability of an ITC for the purchase of 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 purchase of 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 purchase of 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.

Real property changes in use

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

• you were using real property more than 50% in your commercial activities and you begin to use that property 50% or less in commercial activities
• you were using real property 50% or less in commercial activities and you begin to use that property more than 50% in commercial activities

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

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:

• capital real property
• real property that you hold in inventory for the purpose of supply
• real property that you acquired by way of lease, licence or similar arrangement, in order to supply all of that property by way of lease, licence or similar arrangement or to assign the arrangement

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.

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:

• it is for use more than 10% in your commercial activities
• the election becomes effective on the same date you purchased the real property
• you were a GST/HST registrant before you purchased the real property

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:

• the lease payments become due on or after the day you acquired the property
• the election for the real property becomes effective on the same day that you acquire the property
• the real property is for use more than 10% in your commercial activities

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.

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:

• an ITC equal to the basic tax content of the property (to recover previously unrecoverable GST/HST payable by you on the last acquisition of the property, and for improvements you made to it) since you are considered to have made a taxable sale of the property
• an ITC for the GST/HST you are considered to have paid on your repurchase of the property, based on the extent of use of the property in your commercial activities, as long as you use the property more than 10% in those activities (no PSB rebate is available). The primary use rule that you would normally use to determine your ITCs for a purchase of real property does not apply while the election is in effect
• ITCs for the GST/HST paid or payable on property and services you acquired that relate to the real property (such as utilities and maintenance) but only if you filed the election not to use the net tax calculation for charities. If you filed that election, the ITC you may be eligible to claim is based on the extent that the purchase or expense is for use in your commercial activities (as long as it is for use more than 10% in those activities). If you did not file the election, you can claim a PSB rebate of tax paid or payable on these expenses

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:

• you filed the election not to use the net tax calculation for charities
• the lease payments became due on or after the effective date of the Form GST26 election
• the real property is for use more than 10% in your commercial activities

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.

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 an ITC 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 day construction is substantially completed
• the day you first give possession or use of a unit in the housing to an individual under a lease, licence, or similar arrangement entered into for its use as a place of residence

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

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. 

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?

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 Rebate of GST/HST) 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.

Digital services

Handling business taxes online

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

• make payments to the CRA online with My Payment or a pre-authorized debit agreement or create a QR code to pay in person at a Canada Post
• file a return, view the status of filed returns and adjust returns online
• submit documents to the CRA
• authorize a representative for online access to your business accounts
• register to receive email notifications and to view mail from the CRA in My Business Account
• manage addresses
• manage direct deposit information
• file an election related to GST/HST
• view and pay account balance
• calculate instalment payments
• calculate a future balance
• transfer payments and immediately view updated balances
• make an online request regarding your account and view answers to common enquiries
• submit an enquiry

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

• My Business Account, if you are a business owner
• Represent a Client, if you are an authorized representative or employee.

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

CRA BizApp

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

You can access CRA BizApp on any mobile device with an Internet browser - no app store needed! To access the app, go to Mobile apps.

Receiving your CRA mail online

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

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

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

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 service, or the Mobile apps. PADs are flexible and managed by you. You can use My Business Account to view historical records and modify, cancel, or skip a payment. For more information, go to Pay by pre‑authorized debit.

Electronic payments

Make your payment using:

• your Canadian financial institution's online or telephone banking services
• the CRA's My Payment service
• your credit card, Interac e-transfer through one of the CRA's third-party service providers
• pre-authorized debit at My Business Account.

For more information, go to Make a payment to the Canada Revenue Agency.

For more information

What 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 get your CRA payments directly into your account at a financial institution in Canada. For more information and ways to enrol, go to Direct deposit.

Forms and publications

The CRA encourages electronic filing of your return. If you need a paper version of our forms and publications, go to GST/HST-related forms and publications or call 1-800-959-5525.

Teletypewriter (TTY) users

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

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

GST/HST rulings and interpretations

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

Service complaints

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

If you are not satisfied with the service you received:

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

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.

Formal disputes (objections and appeals)

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

For more information about objections and formal disputes, and related deadlines, go to Reprisal complaints.

Reprisal complaints

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

For more information about complaints and disputes, go to Reprisal Complaints.

Electronic mailing lists

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

Tax information videos

The CRA has 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.