A Tax Identification Number, commonly referred to as a Business Number by the CRA, is a 15-character code assigned to your business by the CRA.
This number can be divided into three parts:
- Your company's nine-digit business identification number (BIN)
- An identifier for the program typically consists of two letters.
- The four-digit number assigned to the program account is
123456789 RT0001 would be an example of an account number. Consider your business number to be your business tax identification number since that is the purpose for which it was created. Upon registering for one of the major program accounts you will need for your business, the CRA will assign your business a Business Number:
- GST/HST (General Sales Tax/Harmonized Sales Tax).
- Deductions from payroll
- Privileges related to import and export
- Taxation of corporations
Program IDs and account numbers are the same regardless of which of the four program accounts they pertain to. However, the nine-digit tax ID number (Business Number) is unique. To get a number, you can use the Canada Revenue Agency's Business Registration Online service to do so. This is a common misunderstanding.
Please be aware that in Quebec, your GST/HST accounts are not included in your business number. Revenue Québec requires a separate account for GST/HST. A tax ID number or business number may also be required to access other tax accounts, including excise tax.
What is the GST/HST tax in Canada?
In Canada, there are two kinds of sales taxes: provincial sales taxes and GST/HST. Canadian provinces collect provincial sales taxes, the tax bases and rates of which vary from province to province.
GST/HST is a tax that functions on a system of inputs and outputs in addition to being a value-added tax. As an input tax, GST/HST is paid by taxpayers when they purchase goods or services. A taxpayer who provides goods for sale can collect GST/HST from their customers, which is defined as an output tax. Input taxes are deducted from output taxes by the taxpayer, and the tax difference is remitted to the taxing authority.
Registration Requirements for GST/HST
The general rule is that any business that engages in a commercial activity in Canada that makes sales subject to GST/HST is obliged to register for GST/HST. This doesn't apply to businesses that qualify as "small suppliers," or to businesses that don't have a permanent place of business in Canada and don't do business there.
The term "small supplier" generally refers to a company with global sales revenues that are taxable at $30,000 (CAN) or less during the quarter and for the four preceding quarters. It might also be required to register for GST and HST even if a non-resident business doesn't qualify as a Canadian resident. If it has an "established permanent presence" in Canada, it might still have to do this.
Determining whether a person who is not a Canadian resident is conducting business in Canada requires factual analysis. It's important to think about a lot of things, like where the employee or agent is, where the delivery will be, and where the payment will be made.
Is a tax identification number required for every business?
You may be considered a small supplier if your small business does not require any of the tax accounts mentioned above, implying that you do not need to file for GST or HST. If your small business is not registered for GST or HST, then you don't need a business number since you are not required to register for either tax.
According to the CRA's definition of small suppliers, businesses must have taxable revenues (before expenses) from all of their businesses that total less than $30,000 in the last four consecutive fiscal quarters and in any given quarter to qualify as small suppliers as already mentioned.
Do I Need a Separate Number for Each Business I Own?
A single business number is sufficient for a sole proprietor with multiple businesses, so long as none are partnerships, trusts, or corporations. If that's not the case, then each of the above will require a business number. This is a common misunderstanding.
Where can I get a tax identification number?
A business number can be obtained from the CRA in several ways:
- Registering your business online with CRA's BRO (Business Registration Online service) can be used to register your business online.
- Using the form RC1 on the phone at 1-800-959-5525, you will need to provide answers verbally.
- To obtain a business number, fill out Form RC1 and send it by mail or fax to the nearest office of the tax department.
At the same time that you request a business number, you may register for any of the programs.
Is Federal Incorporation Required for My Business?
ISED (Innovation, Science, and Economic Development Canada) will provide you with your business number when your business is incorporated at the federal level. Corporations Canada can help you register a federal corporation. Please learn how federal and provincial corporations differ before applying. After getting the Business Number from ISED, you can apply to the CRA for any of the tax ID programs indicated above.
Conclusion
A Tax Identification Number (TIN) is a 15-character code that the Canada Revenue Agency gives your business. It's given to you by the CRA (CRA). An identifier for the type of program, a nine-digit business ID number, and an account number are all part of this number.
It can be broken down into three parts: If a company has global sales that are taxed at $30,000 (CAN) or less, it's called a "small supplier." People who don't live in Canada may still have to register for GST and HST even if they don't meet the criteria to be residents of Canada.
Getting a business number can be done by mail, phone, or fax. The CRA can help you get one. There is only one number that is enough for a sole proprietor who owns multiple businesses, as long as none of them are partnerships or trusts. Each has its own number.