1. Tax Information for Starting a Business
Obtaining a Retail Sales Tax (RST) Licence/Vendor's Permit
The RST, also known as the Provincial Sales Tax (PST), is a tax based on the retail price of most goods. Businesses that sell taxable goods, provide a taxable service, or charge more than $4.00 admission to a place of amusement are responsible for collecting the tax and remitting it on a regular basis.
Merchandise and equipment used in a business, other than certain categories of production machinery and materials used in manufacturing, are taxable. Certain purchases, such as food products and children's clothing, are exempt from the tax. There is no fee for this permit. Further information on vendor permits and tax-exempt purchases may be obtained from the Ontario Ministry of Finance, Retail Sales Tax Office.
What does the RST apply to?
The RST rate in Ontario is 8% on most purchases of goods and on labour charges to install, repair and maintain taxable goods and equipment. Tax is also payable at the same rate on all prepared food products purchased from an eating establishment, where the total charge is more than $4.00.
For further information:
please call 1-800-263-7965
visit the Web site:
Tax Revenue Division
http://www.trd.fin.gov.on.ca
see the documents:
Vendor Permits and the Retail Sales Tax
Purchase Exemption Certificates for Retail Sales Tax
Business Number (BN)
The BN is a reference numbering system that replaces the multiple numbers businesses required to deal with government. The BN can encompass one or more of the following accounts: Goods and Services Tax, Payroll Deductions, Importer/Exporter account number and Corporate Income Tax.For further information:
visit the Web site:
The Business Number and Your Canada Customs and Revenue Agency Accounts
http://www.cra-arc.gc.ca/E/pub/tg/rc2/
see the document
Business Number - BN
Goods and Services Tax (GST) and Harmonized Sales Tax (HST)
Since July 1st, 2006, most goods and services sold or provided in Canada are taxable at the rate of 6% (GST) or 14% (HST). The HST applies in the provinces of New Brunswick, Nova Scotia, Newfoundland and Labrador. Certain items, such as sales of basic groceries and prescription drugs, are also taxable, but at a rate of 0%. These are referred to as zero-rated goods and services. A limited number of goods and services are exempt from the GST/HST.
Who must obtain a BN for the GST/HST?
Most individuals or businesses engaged in a commercial activity with annual sales and revenues of GST/HST-taxable goods or services totalling more than $30,000 must register and charge the GST/HST.
If your total annual sales are less than or equal to $30,000, you are considered to be a small supplier and are not required to have a BN for the purpose of GST. If you do not obtain a BN, you do not charge GST/HST.
For further information:
visit the Web site:
Goods and Services Tax/Harmonized Sales Tax (GST/HST)
http://www.cra-arc.gc.ca/tax/business/topics/gst/menu-e.html
see the document
Goods and Services Tax and Harmonized Sales Tax - GST/HST
You may contact CRA directly to inquire about the regulations mentioned above, by calling 1-800-959-5525 or by visiting your closest CRA Tax Services Office or Tax Centre, listed in the appendix below.
2. Tax Information for New Employers
All employers must contact CRA to register for a Business Number (BN) and open a payroll deduction account. For more information, please see the section on the BN mentioned above .
Trust Accounts Division (Canada Pension Plan Contributions, Employment Insurance Premiums)
Remittances for the Canada Pension Plan (CPP) and Employment Insurance (EI) are shared by the employer and employee. The Trust Accounts Division handles enforcement and some collection activities related to payroll deductions. The Trust Accounts Division also calculates and prepares the Payroll Deduction Tables used by employers.
For further information:
visit the Web site:
Payroll
http://www.cra-arc.gc.ca/tax/business/topics/payroll/menu-e.html
see the document
Trust Accounts Division
Payroll Deductions - Tables on Diskette (TOD)
TOD is an electronic version of the payroll deductions tables. TOD calculates the income tax, CPP and EI contributions that the CRA requires an employer to withhold from an employee's income. TOD reduces paper handling and storage for clients. Each TOD diskette, in either Windows or Macintosh versions, includes information for all pay periods and all provinces and territories.
For further information:
visit the Web site:
Tables on Diskette (TOD)
http://www.cra-arc.gc.ca/tax/business/tod/menu-e.html
see the document
Tables on Diskette - Payroll Deductions
New Employer Visits
This is a service provided to new employers to educate business about source deductions and their legal obligations and responsibilities.
For further information:
see the document
New Employer Visits
You may contact CRA directly to inquire about the above-mentioned programs and regulations by calling 1-800-959-5525 or by visiting your closest CRA Tax Services Office or Tax Centre, listed in the appendix below.
Workplace Safety and Insurance Board (WSIB)
The WSIB provides compensation benefits to workers injured on the job or who contract an occupational disease. Most businesses in Ontario that employ workers (including family members and sub-contractors) must register with the WSIB within 10 days of hiring their first full- or part-time worker. Contact the nearest WSIB office to obtain a registration kit, which includes information on assessments, coverage, accident reporting requirements and appeals procedures.
For further information:
please call (416) 344-1000 or 1-800-387-5540
visit the Web site:
Workplace Safety and Insurance Board (WSIB)
http://www.wsib.on.ca/wsib/wsibsite.nsf/public/home_e
see the document
Workplace Safety and Insurance Board - WSIB
Employer Health Tax (EHT)
The Employer Health Tax (EHT) is paid by employers who have a permanent establishment in Ontario and who:
- have employees who report for work at the Ontario permanent establishment, or have employees who do not report for work at a permanent establishment of the employer but are paid from an Ontario permanent establishment of the employer; and
- have a total Ontario remuneration for the year (paid to employees or former employees) that exceeds the exemption amount allowed, if any.
For the first $400,000 of the payroll, eligible employers are exempt from paying the Employer Health Tax.
For further information:
please call 1-800-263-7965
see the document
Employer Health Tax - EHT
3. Income Tax Information
Reporting Self-employed Income - T1-General Income Tax Return
Non-incorporated self-employed individuals use the T1-General income tax return and the Guide to self-employed business income to determine their income tax obligations under the laws of Canada and of all provinces and territories, except Quebec. The Business and Professional Income tax guide supplements the T1-General guide.
For further information:
visit the Web site:
T1 General Returns, Forms and Schedules
http://www.cra-arc.gc.ca/menu/LBA-e.html
see the document
Income Tax Returns - T1 General Income Tax and Benefit Return
T2 Corporation Income Tax Return and the T2 Short Return
All corporations-including non-profit organizations, tax-exempt corporations, and inactive corporations-have to file a T2 return for every taxation year, even if there is no tax payable. The only exception to this rule is a corporation that was a registered charity throughout the year. The T2 Corporation Income Tax Return has eight pages. Any corporation can use it. The T2 Short return is two pages plus a Schedule 1, a Schedule 8, and a Schedule 50. It is a simpler version of the T2 Corporation Income Tax Return, but, in order to use this declaration, the corporation must meet the requirements.
For further information:
visit the Web site:
T2 Corporation Income Tax Return (2005 and later taxation years)
http://www.cra-arc.gc.ca/E/pbg/tf/t2/README.html
see the document
Income Tax Returns - the T2 Corporate Income Tax Return and the T2 Short Return
You may contact CRA directly to inquire about the above-mentioned regulations by calling 1-800-959-5525 or by visiting your closest CRA Tax Services Office or Tax Centre, listed in the appendix below.
Ontario Ministry of Finance - Corporations Tax Branch
Any corporation doing business in Ontario must file a separate income tax return with the provincial Ministry of Finance. However, certain corporations may be eligible for exemptions. For more information, contact the Ontario Ministry of Finance's Customer Service Centre at 1-800-263-7965.
4. General Tax Information
The Ontario Health Premium
Since July 1, 2004 all employees working in Ontario are required to pay an additional tax called The Ontario Health Premium. This tax will is deducted from pay and pensions as part of personal income tax requirements. The premiums range from $60 to $900 a year for people with a taxable income of $21,000 a year or more. For detailed information on The Ontario Health Premium and employer responsibilities regarding payroll and deductions please contact the Canada Revenue Agency.
For further information:
please call 1-800-959-5525
visit these Web sites:
Ontario Health Premium - Frequently Asked Questions
http://www.health.gov.on.ca/healthpremium/faq_healthprem.html
Ontario Health Premium
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_36551_1.html
Collection of Tax Arrears
This service provides information on the general policy regarding the collection of taxes and amounts owing under the Income Tax Act, the Canada Pension Plan Act, the Employment Insurance Act, the Excise Tax Act, the Customs Act, and the Petroleum and Gas Revenue Tax Act.For further information:
see the document
Collection of Tax Arrears
Objections and Appeals
The Income Tax Act and the Excise Tax Act allow a person to dispute an assessment of taxation by filing a formal objection. These disputes can include Income Tax assessment, GST assessment or other taxes imposed under the Excise Tax Act.
For further information:
see the document
Objections and Appeals - Income Tax Act/Excise Tax Act
Rulings and Interpretation Program
The Rulings and Interpretations Program of the CRA provides clients with rulings and technical interpretations of the Excise Tax Act and related statutes, and offers technical publications which explain these rulings and technical interpretations.
For further information:
see the document:
Services of the Income Tax Rulings Directorate
You may contact CRA directly to inquire about the above-mentioned programs and regulations by calling 1-800-959-5525 or by visiting your closest CRA Tax Services Office or Tax Centre, listed in the appendix below.
Online Requests for Business
The Online Requests for Business service allows Business clients to electronically ask for certain financial actions to be processed on an account. It lets business clients inform the Canada Revenue Agency via the Internet of an action or review they want them to do, request items they require or inform them of communication items they no longer wish to receive.
For further information:
see the document:
Online Requests for Business - Financial Transactions
5. Municipal Taxation Information
For information regarding local taxation requirements, contact your local municipal tax office. Municipal government offices are listed in the government section of your telephone book. A selection of Ontario Municipal Government Web links is available at the following address: http://www.amo.on.ca/YLG/ylg/ontario.html.
6. Web Sites and Publications of Interest
- General Information for GST/HST Registrants, CRA,
http://www.cra-arc.gc.ca/E/pub/gp/rc4022/README.html
- The Business Number and Your Canada Customs and Revenue Agency Accounts, CRA, http://www.cra-arc.gc.ca/E/pub/tg/rc2/README.html
- Employee or Self-employed?, CRA,
http://www.cra-arc.gc.ca/E/pub/tg/rc4110/README.html
- Business and Professional Income, CRA,
http://www.cra-arc.gc.ca/E/pub/tg/t4002/README.html
- Guide for Canadian Small Business, CRA,
http://www.cra-arc.gc.ca/E/pub/tg/rc4070/README.html
- Employers' Guide to Payroll Deductions - Basic Information, CRA,
http://www.cra-arc.gc.ca/E/pub/tg/t4001/README.html
- The Basic of Retail Sales Tax, Ministry of Finance,
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_6865_1.html
- Purchase Exemption Certificates, Ministry of Finance,
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_4059_1.html
To obtain copies of the CRA or the Ministry of Finance publications, contact their toll-free numbers listed in the document.
Appendix
CRA Tax Services Office or Tax Centre Locations - Ontario Region
81 Mulcaster Street, Barrie
11 Station Street, Belleville
55 Bay Street North, Hamilton
31 Hyperion Court, Kingston
166 Frederick Street, Kitchener/Waterloo
451 Talbot Street, London
333 Laurier Avenue West, Ottawa
185 King Street West, Peterborough
32 Church Street, St. Catharines
1050 Notre Dame Avenue, Sudbury
130 South Syndicate Avenue, Thunder Bay
1 Front Street West, Toronto Centre
200 Town Centre Court, Toronto East (Scarborough)
5001 Yonge Street, Suite 1000, Toronto North (North York)
5800 Hurontario Street, Toronto West (Mississauga)
185 Ouellette Avenue, Windsor