Canada GST/HST Registration for Foreign Companies

Foreign businesses selling in Canada must register for GST/HST to avoid customs delays, withheld payments, and CRA penalties. This guide covers registration triggers, filing steps, and compliance rules for non-resident companies entering the Canadian market.

Why Non-Resident Firms Must Register for GST/HST in Canada

Failing to complete GST/HST registration in Canada can lead to blocked listings, frozen funds, customs delays, and CRA penalties. It also limits input tax credits and weakens trust with Canadian buyers expecting full tax compliance.

Non-resident firms must complete GST/HST registration if their total taxable revenues exceed CAD 30,000. Commenda ensures full CRA compliance, accurate documentation, and fast account activation to prevent business delays.

When Does a Foreign Business Need to Register in Canada? Key Triggers

Foreign businesses must evaluate GST/HST registration in Canada if they meet certain criteria, even without a physical presence. Key triggers for GST/HST registration in Canada include:

• Carrying on Business in Canada: GST/HST registration for non-resident businesses in Canada is required if you’re considered to be “carrying on business” in Canada, such as:
  • Having agents, employees, or warehouses in Canada
  • Signing contracts or delivering goods within Canada
  • Regularly providing services or digital products to Canadian customers
• Supplying Taxable Sales to Canadian Consumers: Registration is mandatory if worldwide taxable sales exceed CAD 30,000 in four consecutive quarters, including:
  • Selling digital products like apps, SaaS, or eBooks
  • Offering remote services like design or consulting
  • Operating as a platform or marketplace
• Selling Through Specified Platforms: Since July 1, 2021, foreign digital suppliers and platform operators must register under the simplified framework if they:
  • Sell to Canadian customers directly or via platforms
  • Exceed CAD 30,000 in taxable sales over 12 months
• Importing Goods into Canada: Foreign businesses importing goods for sale or distribution may need to register, especially if warehousing or fulfilling orders within Canada.

Country-Specific Examples

Below are a few examples that illustrate when foreign businesses must register for GST/HST in Canada:

• United States: A US SaaS company earning over CAD 30,000 in annual sales to Canadian customers must register under the simplified system.
• Germany: A German eBook platform selling digital books to individual Canadian buyers must register once it hits the CAD 30,000 threshold.
• Singapore: A Singapore-based design agency regularly providing services to Canadian clients and entering contracts from within Canada must register under the regular GST/HST system.

Note: For more detailed information on the registration process, refer to the Canada Revenue Agency’s official GST/HST guidance for non-residents to ensure compliance.

Registration Thresholds & Nexus Tests

Foreign businesses must register for GST/HST in Canada once their total taxable revenues exceed CAD 30,000 over four consecutive calendar quarters or in a single quarter. This applies when foreign suppliers conduct qualifying activities in Canada. Key points include:

• Digital Services: Non-resident digital service providers fall under Canada’s simplified GST/HST regime for “specified supplies.” Registration becomes mandatory when total taxable sales to Canadian consumers exceed CAD 30,000 over any 12-month period.
• Low-Value Imported Goods: Sales of low-value goods (under CAD 20) may also trigger registration if these goods are sold through a platform that facilitates deliveries into Canada.
• Nexus for GST/HST Registration: GST/HST registration for foreign companies in Canada is required as soon as they carry out taxable activities connected to the country. There is no turnover threshold; non-resident businesses must register immediately once a nexus is established.

Canada GST/HST Number Format Explained

When handling GST/HST registration in Canada, it’s important to understand the structure of a Canadian GST/HST number. The table below outlines the format used for GST/HST numbers in Canada:

Sample GST/HST numbers include:

• 123456789 RT0001
• 987654321 RT0001

Common mistakes include omitting the “RT” letters, dropping digits, or incorrect formatting such as missing spaces or adding extra characters (e.g., 123456789R0001 or 123-456-789 RT0001).

Is a Local Tax Agent or Fiscal Representative Required?

Non-resident tax registration in Canada does not require appointing a local tax agent or fiscal representative for GST/HST purposes. However, many non-residents choose to appoint one to simplify compliance, manage filings, and streamline audits with the CRA.

Special Schemes & Simplifications

Canada offers several special schemes to simplify GST/HST registration in Canada, especially for small and non-resident businesses. These measures reduce compliance burdens and support better cash flow management. Key examples include:

• Input Tax Credit Simplifications: The CRA allows simplified methods for claiming input tax credits, with higher thresholds for documentation (e.g., less detail needed for invoices under CAD 100).
• Quick Method of Accounting: Small businesses with sales up to CAD 400,000 can use a fixed percentage to calculate GST/HST, simplifying remittances and recordkeeping.
• Small Supplier Threshold: Businesses earning under CAD 30,000 in four consecutive quarters are exempt from GST/HST registration, easing compliance for very small businesses.
• Deferment of GST/HST on Imports: Registered importers can defer GST/HST payments on imports until their next return, improving cash flow.
• Zero-Rated Supplies: Certain exports and special supplies are zero-rated, letting businesses claim input tax credits without charging GST/HST.

Step-by-Step: How to Register for GST/HST in Canada

Registering for GST/HST in Canada is required for businesses meeting specific criteria, especially foreign companies operating in Canada. Follow these steps to comply with tax laws and avoid penalties.

1. Determine if Registration Is Required: Register if your taxable sales in Canada exceed CAD 30,000 annually or if you are a non-resident carrying on business in Canada.
2. Gather Required Information: Prepare your business details, including legal structure, business address, activities, and estimated Canadian sales.
3. Choose Registration Method: Register for GST/HST online in Canada via the CRA Business Registration Online, or apply by phone, mail (Form RC1), or through a Canadian representative.

4. Complete and Submit Application: Provide accurate information, select your accounting and filing methods, and submit your application.
5. Receive Confirmation: Wait for your Business Number and GST/HST account from the CRA.
6. Comply with Ongoing Obligations: Charge GST/HST, file returns on time, remit taxes, keep records, and claim input tax credits.
7. Update Business Information: Notify CRA promptly about any changes to your business details.

Required Documents Checklist

When completing GST/HST registration in Canada as a foreign business, you must submit the correct documentation to the CRA. The following items are typically required to register for GST/HST in Canada:

• Business registration: Certificate of incorporation or equivalent from your home country.
• Tax ID: Local tax identification or business number.
• Business description: Summary of your activities and services sold to Canadian customers.
• Supporting proof: Invoices, contracts, or purchase orders tied to Canadian sales.
• Financial info: Estimated Canadian revenue and bank account details.
• Contact details: Business and mailing addresses, authorized contact person’s name, and info.
• Residency status: Documents proving non-residency (if applicable).
• Power of attorney: If a third party is handling the registration.
• ID proof: Passport or government-issued ID for business owners or reps.

Processing Time & Government Fees

GST/HST registration for foreign companies in Canada can take up to 45 business days, though some online applications may be faster. No government fee applies, but most non-resident businesses must provide a security deposit between CAD 5,000 to CAD 1,000,000. 

To simplify the process, service providers like Commenda offer bundled plans that include GST/HST registration filing and authorized representation before the CRA. These services are especially useful for non-residents unfamiliar with Canadian tax compliance procedures.

Post-Registration Obligations

After GST/HST registration in Canada, foreign businesses must stay compliant with CRA rules. Here are the key post-registration obligations for non-resident businesses:

• File GST/HST Returns: Submit GST/HST returns monthly, quarterly, or annually, based on your assigned reporting period.
• Charge and Collect GST/HST: Apply the correct rate of GST/HST on taxable supplies made in Canada.
• Remit GST/HST Collected: Pay the tax collected from customers to the CRA by the due date for your reporting period.
• Claim Input Tax Credits (ITCs): Claim credits for GST/HST paid on eligible business expenses incurred in Canada.
• Maintain Records: Keep detailed records of all sales, purchases, and GST/HST collected or paid. Records must be stored for at least 6 years and be available for review by the CRA.
• Update CRA on Changes: Notify the CRA of changes to your business information, including address, contact details, or business structure.
• Cancel Registration if Required: Apply to cancel your GST/HST registration if you stop making taxable supplies in Canada or no longer meet registration requirements.

Claiming Input-Tax Credits & Refunds as a Non-Resident

Non-resident businesses can recover GST/HST paid on business expenses in Canada, provided certain conditions are met:

• GST/HST Registration: You must be registered for GST/HST before claiming input tax credits (ITCs).
• Business Use: Only expenses used in your commercial activities qualify. For mixed-use items, claim only the business-use portion.
• Valid Invoices: A proper tax invoice is required, showing the supplier’s GST/HST number, the amount of tax paid, and a clear description of the supply.
• Time Limits: You must claim ITCs within four years of the reporting period in which the tax was paid.
• Imported Goods/Services: If GST/HST is self-assessed under reverse charge rules, you can still claim ITCs if the import relates to your business.
• Refunds: When your ITCs exceed the GST/HST you owe, you can request a refund on your return.

Penalties for Late Registration or Non-Compliance

Foreign businesses that fail to register for GST/HST when required can face serious consequences. These may include penalties, interest charges, and restrictions on doing business in Canada.

• Late Registration Penalty: CRA may charge 1% of the GST/HST owed per month, up to 12 months.
• Failure to File After Demand: A CAD 250 penalty may apply if you ignore a CRA demand to file.
• Interest Charges: Unpaid GST/HST accrues daily compound interest from the due date.
• Customs Delays: Shipments may be held if GST/HST rules aren’t met, causing delays and extra costs.
• Marketplace Restrictions: Platforms like Amazon may suspend your account without a valid GST/HST number.
• Director Liability: Corporate directors may be personally liable for unpaid GST/HST, interest, and penalties.

Deregistration & GST/HST Number Changes

When your business no longer needs to be registered for GST/HST in Canada or if you need to make changes to your GST/HST number, there are specific conditions and steps to follow. The details are:

• Cancel your GST/HST registration within 21 days of selling, closing, or restructuring your Canadian business operations.
• Use the CRA’s My Business Account online portal to request deregistration.
• Contact your registered tax professional or business agent for assistance.
• Call the CRA Business Enquiries line at 1-800-959-5525 (Monday to Friday, 9:00 am to 6:00 pm).
• Alternatively, complete and mail the Form RC145 – Request to Close Business Number Accounts to the CRA.
• Keep in mind that cancelling your GST/HST registration may impact other related registrations, such as payroll or import/export accounts.
• The deregistration effective date is the date you select and cannot be backdated.
• Non-resident businesses can request GST/HST deregistration by contacting the CRA directly via email or phone, and may use simplified procedures.

Conclusion

Navigating GST/HST registration in Canada is crucial for any foreign business selling to Canadian customers. From meeting CRA requirements to avoiding delays at customs or issues on online marketplaces, staying compliant ensures smooth operations.

GST/HST registration can be complex, but Commenda simplifies the process. Our experts specialize in helping non-resident businesses register with the CRA and stay compliant with Canadian tax regulations.

Focus on expanding your business in Canada while we take care of your GST/HST obligations. Book a free demo today to get started.

FAQs: Foreign Business GST/HST in Canada

Q. Do non-resident remote sellers need to register for GST/HST in Canada if they only supply digital services?

Yes. If you supply digital products or services to Canadian consumers, the simplified GST/HST regime applies. However, registration is only required once your taxable sales to Canadian customers exceed CAD 30,000 over four calendar quarters.

Q. What is the sales-threshold that triggers mandatory foreign business GST registration in Canada?

The threshold of CAD 30,000 applies. Foreign businesses must register for GST/HST once their total taxable supplies to Canadian customers exceed CAD 30,000 over four consecutive calendar quarters.

Q. How long does the GST number application process take for a company with no local branch?

Typically 1 to 3 weeks, depending on document quality and CRA queue time. Delays are more likely for non-resident businesses due to additional verification steps.

Q. Can I reclaim input tax in Canada without a resident tax representative?

Yes, but clear documentation and valid invoices are required. Commenda helps with filings. Our team ensures your input-tax credit claims meet CRA standards to avoid delays or rejections.

Q. Which documents are required to open a non-resident GST/HST account online?

Certificate of incorporation, director ID, proof of activity, bank letter, and power of attorney (if applicable).

Q. What penalties apply for late or missed GST filings by overseas entities?

CRA imposes late filing fees, interest, and may suspend import clearances. Repeated non-compliance can also trigger audits and limit your ability to claim input-tax credits.

Q. Is there a simplified or low-value import scheme for cross-border e-commerce sellers?

Yes, for items under CAD 20 and digital goods. The marketplace may bear collection duty. However, foreign sellers must still ensure proper GST/HST registration and reporting if required by the CRA.

Q. How do currency conversions affect GST payments from foreign bank accounts?

You must use the Bank of Canada’s exchange rate on the transaction date or nearest reporting date.

Q. Can multiple marketplaces share one Canada GST registration or must each seller register separately?

Each seller must hold their own GST/HST number. Marketplaces may collect on your behalf only under certain rules.