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Canada: GST/HST registration required before acquisition or reorganization

Canada: GST/HST registration

Businesses must remember that they are required to register certain entities for goods and services tax / harmonized sales tax (GST/HST) purposes on or before an acquisition or reorganization.

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Similar rules apply for Quebec sales tax (QST) purposes.

Any entity acquiring taxable assets as part of an overall reorganization or acquisition is required to register for GST/HST purposes, on or before the date of the transaction. It is important that the correct entity is registered, particularly in situations involving partnerships or when legal and beneficial ownership is held by different entities.

There is a common perception that any GST/HST incurred before registration can be recovered once the entity is registered; however, that is only true in very limited circumstances.

Concerning this reminder for GST/HST registration, some additional items to note include:

  • There is an exception for “small suppliers.”
  • It is important to register the correct entity, and in this regard, there are two common situations when mistakes may be made.
  • The Canada Revenue Agency (CRA) will generally allow an effective registration date up to 30 days prior to the date the request for registration is submitted.
  • While entities have been able to obtain GST/HST registrations within a few days in the past, the process may take longer now, particularly when involving entities such as partnerships and trusts or non-resident persons.
  • Some entities may be assigned non-filing GST/HST registration numbers by the CRA, if for example they claim a GST/HST rebate. However, these entities are not registered for GST/HST until they request to be registered, even though they have been assigned an “RT” account.


Read an October 2019 report prepared by the KPMG member firm in Canada

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