C. Federal Sales Tax
A non-resident corporation must obtain a “Business Number” from the Canada Revenue Agency for federal sales tax purposes (the Goods and Services Tax—‘GST’) if it carries on business in Canada and its annual, world-wide GST taxable sales, including those of any associated persons, exceed $30,000.00. The relevant form is Form RC1. Different criteria apply for charities and public institutions. As well, non-residents who charge admissions in respect of a place of amusement, seminar, activity or event in Canada must register for GST notwithstanding the amount of sales and must do so before such admission is made.
In general, a Business Number must be obtained and a GST account opened before the thirtieth day following the day on which taxable goods or services are first supplied in Canada. Customers or clients of the non-resident will generally ask for the non-resident’s Business Number in order to claim input tax credits (ITCs) on the GST levied by the non-resident. Conversely, the non-resident must have its Business Number in order to claim its own ITCs on goods or services that it purchases in Canada. (For a description of ITCs, see the paper entitled, Canada’s Federal Sales Tax—An Overview for Non-Resident Suppliers.) In general, ITCs cannot be claimed for GST paid or payable on goods or services consumed, used or supplied before registration even if the GST is actually paid after registration. Exceptions are made only for GST paid or payable on: (i) capital property, real estate and inventory on hand for use in commercial activities at the time of registration; and, (ii) prepaid rent, royalties or similar payments that relate to the period following registration.
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