In general, GST/HST applies to most properties and services that non-profit organizations (NPOs) supply. As a result, most NPOs must charge GST/HST on the goods and services that they supply, and remit collected amounts to the Canada Revenue Agency (CRA).
Organizations that sell exempt supplies of property and services do not need to charge GST/HST and thus cannot claim input tax credits (ITCs) on purchases of taxable supplies of property and services. However, these organizations may be eligible for the Public Service Body (PSB) rebate. These topics are discussed in more detail below.
Organizations that sell taxable supplies of property and services that are zero-rated supplies do not need to charge GST/HST but can claim ITCs on purchases of taxable supplies of property and services.
GST/HST Registration
An organization should register for the GST/HST account if taxable supplies are provided in Canada unless if the organization is a small supplier. In general, most property and services supplied in Canada are considered taxable supplies and are subject to GST/HST. However, there are exemptions for various supplies made by NPOs including free supplies, fund-raising activities, memberships sold by an NPO or professional organization, and supplies of food, beverages, or short-term accommodation for relief of poverty, suffering, or distress. There supplies may be exempt from GST/HST when made under specific conditions. More information on taxable supplies and more information on the exemptions.
An NPO would be considered a small supplier if worldwide annual GST/HST taxable supplies (including zero-rated supplies) are less than $50,000 in a 12-month period. When the $50,000 limit is exceeded in any calendar quarter, an organization is no longer considered a small supplier and must register for GST/HST. Please note that small suppliers may choose to register voluntarily even if the NPO’s revenue is below the threshold. This can be beneficial to obtain ITCs for expenditures where eligible.
After Registration for GST/HST
Organizations must charge GST/HST on taxable supplies of property and services sold (other than zero-rated supplies). GST/HST collected must be remitted to the CRA with a GST/HST return.
Generally, an ITC can be claimed on the GST/HST return to recover GST/HST paid or payable on purchases and expenses utilized or consumed in commercial activity (business in the nature of trade with a reasonable expectation of profit) unless the purchase/expense relates to an exempt supply. More information on ITCs.
NPOs providing exempt supplies generally cannot claim ITCs to recover GST/HST paid on expenses. However, NPOs may be eligible to claim a GST/HST public service bodies’ rebate to recover some of the tax, as discussed below.
Filing Frequency
The frequency in which NPOs should file a GST/HST return depends on the revenue earned in the year. Please note that GST/HST returns can be elected to be filed more frequently if desired.
- Organizations with $1.5 million or less revenue from taxable supplies in the previous fiscal year must file annually.
- Organizations with more than $1.5 million and up to $6 million revenue from taxable supplies in the previous fiscal year must file quarterly.
- Organizations with over $6 million revenue from taxable supplies in the previous fiscal year must file monthly.
PSB Rebate
A public service body (PSB) which includes both charities and NPOs may be able to claim a PSB rebate. The rebate allows qualifying NPOs to recover:
- 50% of GST;
- the federal part of HST paid on eligible purchases and expenses for which ITCs cannot be claimed; and
- a portion of the provincial part of HST paid for residents in participating provinces
PSB Rebate Eligibility
To be eligible for the PSB rebate, the NPO must either be a qualifying NPO or a registered charity. Generally, an NPO would be considered a qualifying NPO if at least 40% of revenue for the fiscal year is government funding. Form GST523-1 NPO Government Funding must be completed for qualifying NPOs.
NPOs do not need to be registered for the GST/HST to claim the PSB rebate. More information on how to apply for the PSB rebate.
Visit the CRA website to read a more information about reporting periods for GST/HST Registrants, exemptions for non-profit organizations, or about public service bodies’ rebate.
Looking for more tax information for your NPO? Reach out to our team at npo.consulting@uwaterloo.ca.