The GST/HST Self-Assessment Rules
To self-assess for GST/HST means calculating how much GST/HST should be paid on a good or service where no actual sale has been completed, and to charge yourself that GST/HST. The GST/HST self assessment rules are extremely complex and can lead to a good amount of trouble with the CRA.
The GST/HST Self-Assessment Rules
Generally, the self-assessment rules apply to consumers and persons engaged in non-commercial activities who have not been billed for GST/HST by the supplier. Where a person is not a GST/HST registrant, self-assessment for GST/HST will apply in certain circumstances. Goods purchased in a non-HST province or territory and brought into an HST province will require the person to self-assess at the applicable rate for the provincial component of the HST.
Self-assessment is also required for non-registrants where goods are purchased in a province with a lower HST rate and then brought into a province with a higher HST rate. Commercial goods imported into an HST participating province will also require the non-registrant to self-assess. Where a non-resident that is also a non-registrant delivers goods to a person who is also a non-registrant in a participating HST province, the person receiving the goods will also be required to self-assess for HST.
The non-registrant of an HST province is also required to self-assess for HST where the non-registrant uses or consumes or is supplied by significantly (more than 10$%), services and intangible personal property (IPP) (i.e. intellectual property) from a non-HST province or an HST province with a lower HST rate than that person’s province. Although special HST rules apply for imported motor vehicles, generally persons importing motor vehicles from outside Canada are also required to self-assess for HST when those vehicles are brought into an HST province and provincial laws do not require the registration of the vehicle. Non-registrants who are required to self-assess on the provincial part of the HST on goods, services and IPP must declare by filing a Return for Self-assessment of the Provincial Part of the HST.
For HST registrants, self-assessment is required where the provincial component of the HST has not been billed by the supplier for property or services that are not for consumption or use or supply exclusively in the course of their commercial activities. The threshold for a supply to be considered exclusively used in the course of commercial activity is 90% or more. Registrants who self-assess should account for the tax on their GST return for the reporting period in which the tax was payable. Registrants using certain accounting methods are also required to self-assess.
The GST/HST Self-Assessment Rules and Real Estate
In the real estate context, a builder where the self-supply rules apply (who is deemed to have sold and repurchased the property), is required to calculate the GST/HST collected on the fair market value of the property. In the case of a multiple unit residential complex (MURC), the builder must account for tax on the fair market value of the entire building and not the individual unit that was deemed to be sold and repurchased.
Certain supplies do not require self-assessment. These include zero-rated goods, services or IPP. No GST or HST applies for zero-rated supplies. No HST is assessable if the supply is exempt from HST. Furthermore, self-assessment is not required when HST has already been paid at the same or higher rate in the province of acquisition. Prizes won abroad, personal and household effects of a deceased, transportation or telecommunication services, and property donated to a charity or a public institution are other circumstances where no self-assessment is required for non-registrants.
The GST/HST Self-Assessment Rules – Calculating the GST/HST
In declaring and paying the required HST, the registrant or non-registrant must determine the type of supply and place of supply of the goods or service. Once the type of supply and place of supply are determined, HST can be calculated. The CRA has provided an GST/HST calculator for determining the amount of tax applicable to sales in Canada.
The GST/HST Self-Assessment Rules – Type of Supply
As a value-added sales tax, HST applies to a supply of nearly all goods and services consumed in Canada. For provinces and territories that participate, HST is imposed on a taxable supply of goods and services. A supply is taxable if it is made in the course of commercial activity. However, a supply that is zero-rated (i.e. groceries) will not have HST. A supply of goods or services that are exempt will also not have HST. One difference between zero-rated and exempt supplies is that Input Tax Credits (ITCs) can be claimed for the former but not the later.
The GST/HST Self-Assessment Rules – Place of Supply
The HST rates depend on the place of supply. HST applies at the rate of 13% in Ontario, New Brunswick, and Newfoundland and Labrador, 15% in Nova Scotia, and 12% in British Columbia.
The GST/HST consequences surrounding any transaction depend on the unique circumstances of each case. It is recommended to speak with a qualified tax lawyer given the complexity of the HST rules and how they can affect a person’s income tax position. If you have questions regarding the Self-Assessment rules, call us today!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.