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4.4 Registering my Business for Tax Purposes
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4.4 Registering my Business for Tax Purposes

Details
Category: 4.0 My Legal Business

The Canada Revenue Agency (CRA) is the government agency responsible for handling taxes in Canada. CRA manages tax laws, collects and refunds taxes and provides tax benefits.

Many business need to set up a CRA account

Types of CRA Program AccountsFeatures
  1. Good and Services Tax (GST)
  2. Harmonized Sales Tax (HST)

 

The rate for HST is different in each province. Alberta has no HST.
  • In Canada, any business selling taxable goods or services must register with CRA for GST and HST
  • Businesses which have annual sales equal or less than $30,000 are not required to register for GST
  • A sole proprietor business does not need to register for GST
  1. Payroll Deductions (RP)

 
  • Payroll deductions are mandatory for all businesses with one or more employees
  • Register for payroll deductions for all full time and part-time employees
  1. Corporate Income Tax (RC)
  • Corporate taxes are paid by any business registered as a corporation
  1. Import- Export (RM)

 
  • Businesses engaged in the import and export of goods and services must register an Import-Export account

 

Importance of CRA accounts

  • The CRA provides a Business Number (BN). The Business Number is the identification required by the Federal and Provincial Government.
  • CRA accounts are mandatory for all businesses that have annual sales of more than $30,000
  • Businesses must register with the CRA within 29 days of sales exceeding the $30,000 annually
  • Businesses can register for CRA accounts voluntarily based on future expected business or staffing. Voluntary registrations must report annually
  • Tax reporting varies from monthly to quarterly and annually. Businesses must report annually if annual sales are less than $1,500,000.
  • Businesses must report to the CRA first if they are charging GST/HST to customers. All tax added sales must have invoices with the company name, date of sales, amount of sales before taxes, tax amount and paid amount after taxes by the customers.
  • Keep all sales invoices safely organized for audits and tax returns
  • Tax collection money must be kept separate from sales money, as this is payable to CRA
  • Businesses registered under the CRA are eligible for certain benefits and support by the government

Call the helpline at 1-800-959-5525 for business-specific information and the process of receiving benefits

 

Process of Opening CRA Accounts

Step 1

Gather all the required documents to open CRA accounts such as,

  1. Complete and legal name(s) of the business owner/s
  2. SIN number of the owner(s)
  3. Phone number of the owner(s)
  4. Occupational details of the owner(s)
  5. Business name (legal)
  6. Address and postal code of the business
  7. Major business activity details
  8. Specify three products and services that generate revenue
  9. Details on types of employees (full time, part-time, seasonal)
  10. Details on salary payment frequency (daily, weekly, monthly)

Step 2

Fill in the RC1 form for CRA accounts. By submitting the RC1 form I can get:

  • A business number
  • ST/HST program
  • Payroll deduction (RP)
  • Information Return (R2)
  • Import-Export (RM)

The RC1 form is available in the Forms and Fee Section of the tool and may also be downloaded from www.Canada.ca. You may complete the form online or print and deposit the RC1 form at the nearest tax service office or tax center.

For more details and clarification on CRA accounts call 1-800-959-5525, Monday to Friday from 9:00 am to 6:00 pm

 

Taxable supplies

  • Sales of new housing
  • Sales and rentals of commercial property
  • Sales and leases of automobiles
  • Car repairs
  • Soft drinks, candies, and potato chips
  • Clothing and footwear
  • Advertising
  • Taxi or commercial ride-sharing services
  • Legal and accounting services
  • Franchises
  • Hotel accomodation
  • Barber and hairstylist services

 

Non-taxable supplies  

  • Basic groceries such as milk, bread, and vegetables
  • Agricultural products such as grain, raw wool, and dried tobacco leaves
  • Most farm livestock
  • Most fishery products such as fish for human consumption
  • Prescription drugs and drug-dispensing services
  • Certain medical devices such as hearing aids and artificial teeth
  • Feminine hygiene products
  • Exports
  • Many transportation services where the origin or destination is outside Canada