Voluntary GST/HST Registration For Small Suppliers

Introduction - GST/HST Obligations in Canada

Section 165 of Canada's Excise Tax Act imposes GST/HST on "every recipient of a taxable supply made in Canada." A "taxable supply" essentially refers to any commercial activity, and it captures most business transactions-e.g., sale of goods or services; barter transactions; licensing or leasing arrangements; etc.

The GST/HST system disregards the commercial supplier while taxing the ultimate consumer. A registered supplier may recoup the GST/HST that it paid to its own business vendors by claiming those amounts as input tax credits (ITCs). Unlike the registered suppliers participating in the supply chain, the ultimate consumer cannot claim input tax credits and hence cannot recover the GST/HST paid to retailers or other suppliers.