GST HST

Question 1

Who is required to register for GST/HST?

Answer 1

Anyone who provides taxable supplies in Canada and earns over $30,000 must register for GST/HST and charge, collect, and remit it.

Question 2

Explain the flow-through nature of the GST/HST system

Answer 2

Businesses collect and pay GST/HST, but they get back what they paid through input tax credits. So they just pass the tax along — only the final consumer actually pays it.

Question 3

What are input tax credits and what are some of the limitations placed upon them? Why is it important to keep proper documentation to support input tax credits claimed?

Answer 3

ITCs let businesses get back GST/HST paid on business expenses. Some limits apply, like only 50% on meals. You usually can’t claim ITCs on costs before registering. You need proper receipts or the CRA won’t allow the claim.

Question 4

What is a small supplier and what are the implications of losing small supplier status?

Answer 4

A small supplier is someone with $30,000 or less in taxable supplies (including zero-rated). They don’t have to register for GST/HST, charge it, or remit it—and they can’t claim input tax credits. If they go over $30,000 in one quarter or over four quarters, they must register. They can also choose to register early.

Question 5

What are the similarities and differences between zero-rated supplies and exempt supplies? List some examples for each of these.

Answer 5

Think of the GST/HST return as having a collection side and an expense side.
On the collection side, both zero-rated and exempt supplies mean no GST/HST is collected from customers.
But on the expense side, they’re different:

Zero-rated suppliers can claim input tax credits (ITCs) on related expenses.

Exempt suppliers cannot claim ITCs on related expenses.

Zero-rated examples: basic groceries, prescription drugs, medical devices, exports
Exempt examples: rent, financial services, health care, education