Businesses in Canada should be prepared to provide their GST/HST and QST registration numbers to satisfy requests from their non-resident suppliers. Under new GST/HST rules that came into effect July 1, 2021, businesses in Canada that do not provide their GST/HST registration number may be liable for GST/HST to non-resident businesses and platform operators. Further, businesses may not be able to claim input tax credits (ITC) for these taxes under a new specified GST/HST registration system.

Background

Based on new GST/HST rules that came into effect on July 1, 2021, certain non-resident businesses and many foreign platform operators must register under a new simplified GST/HST registration system. These businesses and platform operators are required to collect and remit GST/HST on certain sales of taxable services or intangible personal property (IPP) to Canadian customers who have not provided their GST/HST registration number, or where they facilitate such sales.

Further, businesses in Canada cannot claim ITCs for GST/HST paid to entities registered under the new simplified GST/HST registration system, even if the business is engaged exclusively in commercial activities. Similar rules apply for QST purposes.

For details, see TaxNewsFlash-Canada 2021-34, "Non-Resident Businesses and Operators - Prepare for GST Registration", TaxNewsFlash-Canada 2021-07, "Platform operators — Get ready for GST/HST changes on July 1, 2021" and TaxNewsNow, "Non-resident Businesses — Get Ready for GST/HST Changes on July 1, 2021".

KPMG observation

Businesses in Canada should expect these requests from their suppliers and be ready to share their GST/HST and QST registration numbers to help ensure they are not liable for tax under the simplified rules.

Businesses should carefully review whether certain non-resident suppliers have started to collect GST/HST effective July 1, 2021 and determine whether these suppliers are registered under the new simplified GST/HST registration system. The CRA cannot refund taxes collected by a supplier registered under the simplified rules.

For more information, contact your KPMG adviser.

Information is current to August 9, 2021. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500