CRA just revised its “Goods and services tax/harmonized sales tax (GST/HST) checklist for charities”.
The checklist is located at: http://www.cra-arc.gc.ca/chrts-gvng/chrts/chcklsts/gsthst-cfc-eng.html
The text of the checklist is below:
Goods and services tax/harmonized sales tax (GST/HST) checklist for charities Are you HST Ready? Starting July 1, 2010, the harmonized sales tax will come into effect in Ontario and B.C. For more information, go to http://www.cra.gc.ca/harmonization.
The purpose of this checklist is to help charities understand their GST/HST obligations and entitlements. Any questions regarding the content below should be directed to the CRA Business Windows Section at 1-800-959-5525.
Determine if your organization is a charity for GST/HST purposes.
A registered charity for income tax purposes is also a charity for GST/HST purposes. However, a charity for GST/HST purposes does not include a public institution (that is, a registered charity that is a school authority, a public college, a university, a hospital authority, or a local authority determined to be a municipality).
Determine if your charity is making taxable supplies.
The tax status of your charity’s supplies (for example, its sales, leases, rentals, and services) has to be determined. While most of a charity’s supplies are tax-exempt, some of its supplies can be taxable at 5% or 13% (the 13% HST applies to supplies made in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador), or zero-rated (taxable at 0%).
Calculate the small supplier tests.
Small supplier tests are used to determine if your charity must register for GST/HST purposes. Charities have two small supplier tests—the $250,000 gross revenue test and the $50,000 taxable supplies test. Gross revenue includes business income, donations, grants, gifts, property income, and investment income, less any amount considered a capital loss for income tax purposes. The $50,000 taxable supplies test includes worldwide revenues from supplies of goods and services subject to GST/HST, including zero-rated supplies. Do not include sales of capital property, supplies of financial services, or certain payments for goodwill. A charity is considered a small supplier if it has either $250,000 or less in annual gross revenue or not more than $50,000 in annual worldwide taxable supplies.
Determine if your charity is required to register for GST/HST.
If your charity makes taxable supplies, it may have to register for GST/HST. A charity that is a small supplier does not have to register for GST/HST, but it may do so voluntarily. Charities that are not small suppliers must register for GST/HST.
Complete GST/HST returns if your charity is registered for GST/HST.
If your charity is registered for GST/HST, ensure that GST/HST returns are filed and calculations are done correctly. Most charities that are registered for GST/HST have to file a return once a year using the “net tax calculation for charities.” A charity that uses this method remits 60% of the GST/HST it collects on most of its taxable supplies, but it can only claim input tax credits for the GST/HST paid on certain purchases.
Apply for the public service bodies’ rebate.
Regardless of whether your charity is registered for GST/HST, it is generally entitled to claim a 50% public service bodies’ rebate of the GST/HST it paid on its purchases.
Establish eligibility for other GST/HST rebates.
Your charity may be entitled to other GST/HST rebates, including rebates of the GST/HST paid on printed books, expenses related to providing rent-geared-to-income housing, goods and services exported outside of Canada, and goods and services removed from the participating provinces.
Maintain adequate books and records.
Generally, your charity must keep all records and supporting documents, in English or French, used to determine its GST/HST obligations and entitlements for a period of six years from the end of the year to which the records/documents relate.
More information on charities and the GST/HST can be found in Guide RC4082, GST/HST Information for Charities, and Guide RC4034, GST/HST Public Service Bodies’ Rebate.
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In Quebec, Revenu Québec administers the GST/HST. For more information on the GST/HST and Charities in Quebec, contact Revenu Québec at 1-800-567-4692, or see its publication The QST and the GST/HST: How They Apply to Charities.
•GST/HST for Charities
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.