Tax IDs and registrations in Canada

May 4, 2022

In Canada, there are 3 types of indirect taxes that can be applied:

  1. GST - federal goods and service tax
  2. Provincial sales tax - sales tax applied on top of the federal rate in certain provinces i.e. QST or RST 
  3. HST - harmonized sales tax which embeds both federal and provincial tax

Whether it is Federal (GST) + provincial sales tax or only one harmonized rate (HST) applied to sales transactions depends on the province and on the registrations that a supplier is registered for.

  • GST + Provincial sales tax: Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon
  • ‚ÄćHST (ie single harmonized rate): Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island

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Registration thresholds

The Federal GST/HST registration threshold is CAD 30,000, but there are further provincial registration thresholds that would make companies liable to register and charge provincial sales tax even before they register for federal.

For eg. the British Columbia PST registration threshold is CAD 10,000, so a supplier can be registered in BC for local sales tax, but not yet at a Federal level where GST needs to be charged.

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TIN format

Every Canadian business has a unique Business number (BN) which is 9 digits long.

Then, for different governmental functions, businesses with have different Canada Revenue Agency (CRA) program account numbers which are 15 digits long.

The structure of these CRAs is BN + program code + reference number to identify an individual program account (since businesses can have more than one in the same program).

Some of the common programs / program codes are: RT (for GST/HST collection), RP (payroll deductions), RC (Corporate income tax), and RM (Import-export).

A single company can have multiple CRAs, but still, one and only Business number = GST/HST ID in case they are registered.

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Validating GST/HST registrations

GST/HST registration can be validated against the central database in Canada, and the required data points to provide are the full legal name of the company in the exact form in which it was registered with the revenue authority (meaning that slight typos will throw off the validation).

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Fonoa Lookup - Approach with Canada

Fonoa Lookup supports TIN validation in Canada both at the Federal level, and for QST ID, ie Quebec sales tax registrations.

When it comes to the Federal GST/HST registration validation, we have witnessed that companies have issues with not collecting full legal names of companies in the exact form as it should be input to the validation database, which results in errors and inability to perform the validation.

For that reason, our API is able to validate the GST/HST registrations only by receiving the Business Number of a company, and in the background, we check for the full legal name of that company based on either its CRA or BN across all publicly available registers in Canada, including both Federal and provincial.

This allows our users to perform GST/HST validations on their customers and / or suppliers even if they don’t have the full legal name of the company in their database.

Finally, there are situations where private individuals who operate as businesses / sole proprietors do not show in any of the publicly available databases, and there we would need to receive both the relevant Tax ID and the full name of the legal entity in order to perform the validation.

We have further identified routes to validate provincial sales tax registrations in British Columbia and Saskatchewan - please reach out if of interest.

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