When you hire a subcontractor or purchase goods from a supplier, GST/HST rules determine whether tax applies, who collects it, and what you can recover. If the subcontractor is GST/HST registered, they charge you tax on their invoice, which you can typically claim back as an input tax credit. If they're not registered (or below the threshold), no GST/HST applies to their bill. However, in certain construction and temporary worker scenarios, you may need to withhold tax directly. Understanding these rules helps you avoid overpaying, stay compliant with the Canada Revenue Agency (CRA), and protect your cash flow. When a subcontractor invoices you, they're required to charge GST/HST if they're registered or if they've chosen to register voluntarily. The tax amount appears as a separate line item on their invoice. Key points: - A registered subcontractor must charge you GST/HST on their services - You can claim this tax back as an input tax credit on your next GST/HST return - If the subcontractor is not registered, no tax is charged (and you cannot claim a credit) - Ask your subcontractor for proof of their GST/HST registration number before hiring Verifying registration is simple.
No. You can only claim input tax credits on invoices from GST/HST registered businesses. If your subcontractor is not registered, no GST/HST appears on the invoice and no credit can be claimed. Always verify registration status before hiring.
No, you don't withhold GST/HST itself. However, in construction and some temporary worker situations, you may need to withhold a percentage of income tax. Check with the CRA or your provincial authority to confirm if this applies to your payments.
The CRA may not allow you to claim the input tax credit if the invoice doesn't clearly show the supplier's registration number and the GST/HST amount. Ask the supplier for a corrected invoice before claiming the credit.
Yes, as long as the supplier is GST/HST registered and the invoice shows the correct tax rate for the province where goods were delivered. Different provinces charge different rates, so verify the tax shown matches the delivery location.
The CRA requires you to keep all GST/HST documentation for at least six years. This includes invoices, receipts, contracts, and proof of payment. Digital copies are acceptable if they're clear and complete.