Registration of a Charity for GST/HST

by Danielle Bloom

1 min read

There are certain circumstances when charities and amateur athletic associations in Canada are required to pay the goods and services tax or harmonized sales tax. In general, charities making taxable supplies with over $250,000 in gross revenue or $50,000 in taxable supplies during a fiscal year are required to file and pay GST/HST regardless of their charitable standing. Charities making taxable supplies with gross revenue and taxable supplies under these values are not required, but are encouraged, to register for GST/HST. To determine whether your nonprofit or charity must register, you want to take a close look at the gross revenue and taxable supplies criteria mentioned above. Gross revenue includes income from all sources, such as donations, grants, and property income. Charities in their first year are not required to register for GST/HST. Charities in their second or subsequent years of operation must register if the total gross income is over $250,000 during the previous fiscal year. Taxable supplies include memberships, ticket sales, and other goods and services sold by a charitable organization. If these total $50,000 or more during the fiscal year, your charity must register. Once your charity registers for GST/HST, you must collect and pay the appropriate fees, but the Public Services’ Bodies Rebate (PSBR) is available to assist most charitable organizations in recouping some of the taxes paid. The rebate for GST is 50%, while the HST rebate varies according to the province where your charity is registered. If, at any time, your charity falls below the thresholds for registration, submit the appropriate forms to the Canada Revenue Agency to cancel your registration. You want to keep detailed records of all revenue and taxable supplies year to year. If you meet the threshold to collect and pay GST/HST, you need to register with the CRA at the end of that tax year.

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