Register for VAT in Canada

Updated on Friday 18th October 2019

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The Canadian taxation system is made of direct and indirect taxes. The most important indirect tax is the value added tax (VAT), however, in Canada, it is known as the Goods and Services Tax (GST). In certain provinces, the GST is known as the Harmonized Sales Tax (HST) and in order to collect this tax, a Canadian company or individual is required to register for VAT with the tax authorities.

In order to understand how VAT registration works in Canada, our local consultants have prepared a guide on this important tax. We can help foreign investors who want to set up companies and register for VAT in Canada.
 

The VAT in Canada


In order to understand how VAT registration must be completed by Canadian companies, sole proprietorships and individuals involved in the sale of goods and products, one must first understand how this tax applies considering the complex taxation system of this country.

Here is what one should know about the Canadian VAT:
 
  1. the GST is levied at a federal level and it applies to all taxable goods and services;
  2. the HST combines the federal and provincial VAT and it is applied at different rates;
  3. the HST is levied in Ontario, New Brunswick, Newfoundland and Labrador, Prince Edward Island and Nova Scotia;
  4. Quebec has its own VAT levied under the form of the Quebec sales tax or QST;
  5. British Columbia, Saskatchewan and Manitoba impose provincial sales taxes (PST).

VAT registration must be completed with the local tax office in the province/territory the business is registered in. The same principle applies to individuals selling goods and services in Canada. For example, those paying the QST must register with the Quebec Revenue Agency.

Our company formation agents in Canada can offer more information on how to register for VAT.
 

When is VAT registration required in Canada?


A person or business is required to register for VAT in Canada at the moment they start to make taxable supplies. It is worth noting that trusts and associations are also required to register for VAT in Canada in case they sell goods or services.

VAT registration is not mandatory until the entity or individual has made taxable supplies of goods and services of at least 30,000 CAD in a quarter or a calendar year. If this amount of money is not reached, the applicant can register for GST/HST/QST voluntarily.

There are also special rules related to VAT registration in Canada. These apply to charities, taxi companies and non-resident book and magazine sellers and publishers entering Canada for a limited period of time.

Our company registration advisors in Canada can offer more information on the special requirements related to GST/HST/QST registration.
 

Voluntary VAT registration in Canada


Non-resident companies can register voluntarily for VAT in Canada under the GST regulations. These can register in one of the following situations:
 
  • they order goods or services which are exported or delivered in Canada;
  • they have entered agreements for the supply of goods and services in Canada;
  • they have entered agreements related to the use of intangible or real estate property in Canada.

Our local advisors can also help non-resident investors interested in starting a business in Canada.
 

Documents required for VAT registration in Canada


In order to register for GST/HST/QST in Canada, a company, entity or individual is required to file a few documents with the tax authorities. Among these, the application form (Form RC1 or RC1A depending on the situation), the company’s registration documents (where applicable), the GST/HST questionnaire in the case of non-resident companies and non-resident investors.

It is also good to know that non-residents could be required to provide security upon the registration for VAT in Canada.

VAT registration requirements are different across Canadian provinces and territories, this why it is good to request specialized services in this sense. For non-residents in need of registered agent services, our Canadian agents can be of help.
 

VAT rates and filing requirements in Canada


The VAT is imposed at different rates in Canada, while the filing requirements are also different. Here is what you need to know about VAT rates and filings in Canada:
 
  • the GST is levied at a rate of 5% (a reduced rate of 0% is also available for certain goods);
  • the HST is levied at rates between 13% and 15% (with a reduced rate of 0%);
  • the QST is imposed at a rate of 9.975%;
  • the PST is levied at rates ranging between 6% and 8%;
  • GST/HST/QST/PST filings can be submitted monthly, quarterly or annually.

For assistance in VAT registration in Canada, please contact our company formation agents.